Full text of Commercial and Financial Chronicle : September 23, 1948, Vol. 168, No. 4736

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ESTABLISHED 1839

Volume 168

New

Number 4736

24

SEP

Price 30 Cents

York, N. Y., Thursday, September 23, 1948

a

Copy

The Outlook for Our Current High-Level Economy The Business Outlook
SLICHTER
Professor,'Harvard
Can Be Maintained
Treasury Bonds
.

Lamont

By ALFRED J. CASAZZA*

f

Vice-President^ Savings Bank

i

i

Trust

;

Holds

under

] market must continue to be
:

trolled

;

nancial

be threat-

structure will

Points

capital
financing

basis for bond price pegging

as

-protect banks.

t°
i

/

///i.'/'//
States

for United

market

The

It is

economy

with the State Bank Supervisors
ground—a genuine interest in the pro¬
tection, development and betterment of our banking system. I have
been associated for many years with bank supervision under all sorts
■;;
..
y;y 0 f economi* ^
conditions.
I
on a common

Government bonds is an artificial

spent

ipnarket Wheal call a? market

.

normal

relationship vof ratio of goods and money supply, and in¬
creased public spending is not likely.
Looks for leveling off of
boom to be followed by high rate of production and employment,
rather than depression.
Concludes country is still in very strong
economic position.
'
/
,/■/.
■

is stronger than in 1920.

economy

real pleasure to be here

a

today. We meet

University

basis of his

be maintained provided an

liquid condition and national

heavy

to

demand and real estate

'j

con-

stability of whole fi-

or

?ened.

>
'

The postwar boom

l

;

is

now

virtually three

affairs

that prices are not
permitted to fluctuate freely in
response to changes in supply and
demand^ Rather, prices are deter¬
tificial, I

mean

duction

(seasonally adjusted)

hit

■

credit

Treasury

postwar

EDITORIAL

riod.

authorities.

Federal Reserve

; You can readily see the extent
to which the market-for govern
ment

bonds

artificially

is

con¬

trolled

by

of

government bond market

the

since

looking at the history

market has

the

of

end

the

passed through three

major phases.

First, there

period of pro¬
market
strength

was a

bond

nounced

following the Victory Loan drive,
Second, came a period of inter-

v;v/asome in

/

coop¬
eration with banks and some for

(Continued

on page

34)

^Address

by Mr. Casazza before

31st Annual

his

Let's Discuss the .Issues;

f

y:

;

The Presiden^ of the United States is apparently doing

best

to launch the national election

campaign on the
lowest plane imaginable. His Saturday's references to "glut¬
tons of privilege," who naturally enough inhabit the canons
of /Wall Street, and to pitchforks in the backs of farmers
could hardly have been more unworthy of a Chief Executive
of a great nation.
That such statements are without the
shadow of substance is obvious enough, as is the further
fact that Mr. Truman made

had

tactics

out the

campaign, if

no

effort whatever to support

as

direction in' recent
the supervision of the

general

years

over

banks of the national banking sys¬
tem. On the other hand, I have
the

receiving side of
supervision during the time

bank

Meeting of Sav¬ I
ings Banks Association of Massa¬ /
chusetts, Swampscott, Mass., Sept.
18/1948.

served

No

on

as

a

bank officer.

*An address
der

before

the

the nation's

L,

by Secretary Sny¬
National

tion of Supervisors

Associa¬

moreover,

such

judge from previous utterances
all that comes less formally from

one may

of the President and from

i:

30) 2

on page

allegations. Unfortunately,

this appear to have been deliberately chosen by
the Democratic high command for continuous use through¬

knows better than bank

one

(Continued

.

I New York Central

f

these outrageous

also been
the

of

the purpose of enabling banks to
reestablish themselves; and I have

v

,

lasted/

nl

I have
an active

many govern¬
ment loans-

John W. Snyder

The

war.

of

participant,
vboth as prin¬
cipal and as
supervisor, in
the making of

Three

is long¬
er
than most;
booms have/

insol¬

serious

been

:

capital.

.

By comparison, what the Republican candidates and

None

the

of
t *

be¬
1918'

1 929

and

(1918 - 1920,
1921-23, 192426,
1927-29)

'

♦'

'f- •

1 >

'

•

*1 *'.* '

2l/i% Equipment Trust:

.

'

\

Funds,

v

-

,

Certificates

,

lasted fis long
three years.

Prof. S. H. Slichter,

as

The

rise

in

production, employment, and
prices during the last three years
has been larger than most persons
predicted. «
*
Many people believe that a re¬
cession is overdue.

As

matter of

a

throughout the last three
years predictions of an early re¬
cession (usually about six months
after the date of, prediction) have

fact,

(Continued

their spokesmen have had to say so far has been, we are
glad to say, dignified and in tone at least worthy of the
occasions upon which they have been uttered. Governor
:
y"
(Continued on page 26)
v '

on page

24)

*

of State Banks,

Franklin Custodian

1948
*

■

tween

Slate and

y

Louisville, Ky., Sept. 22, 1948.

Equipment Trust

V'\

v, ;■

four;

occurred

Municipal

'

Third

y
,

periods of ey--r
pansion which

Railroad

V

lowest
I/';'/:;."-;'" ■

pe-

years

vency;

,

Except for three

A/;;;/, ;y.;/ $point for the

had
become
involved - in

management deci¬
and by
control measures
of the
the.

of

162.

low of

a

months when large strikes affected the index t^'s has been the

which

banks

mined by debt
sions

ye a r.s

years old—if one dates
index of industrial pro¬

its beginning from October, 1945, when the

adjusting; the

ar?

.

University

Reviewing business prospects, prominent Harvard economist, on
analysis, maintains that postwar boom is leveling off,
and though no recession is in sight, important changes in pattern
of boom are occurring^
Contends price rises have almost restored

V

:

\

with v/idespread prosperity
unbalanced condition is not allowed
to develop. Treasury Secretary points out as potential dangerous
factors: (1) excessive speculation; (2) inflationary pressures; and
(3) end of budget surpluses. Reveals Treasury program to tighten
interest rates and shift government bonds from banks to private
investors as moves against further inflation. Says business is in
can

present conditions

By HON. JOHN W. SNYDER*

t

Asserting present high-level

artificiality of U. S.
bond market, Mr. Casazza traces
its history since end of war.
Stressing

«

,

■/;//.' -v-yy Secretary of the Treasury-

City

York

New

Company,

-

By SUMNER H.

y

STATE

and

MUNICIPAL

.nc.

Bonds

y

i/

BONDS

1

Maturing serially_ 1949—1954 V
COMMON STOCK FUND

/

Yielding 1.70%

—

2.50%

,

v;"

BOND FUND

White,Weld&Co.
40 Wall

THE NATIONAL CITY BANK HART SMITH & CO.

UTILITIES FUND

INCOME (BALANCED) FUND

Exchange

Prospectus on-request

Street, New York 5

Chicago

London

Philadelphia

Amsterdam

Providence

~>2 WILLIAM ST., N. T. 5

|§y OF NEW YORK

V,

FRANKLIN DISTRIBUTORS, Inc.
64 Wall

Buenos Aires

VV

Bond Dept. Teletype: NY 1-708

For Banks,

;

•

■

' j.

'

i

:

:

THE CHASE

Bell Teletype NY 1-395

.

NATIONAL BANK

r

;/Private Wires Connect,::;.,

New York

Brokers and Dealers

Montreal

OF

Toronto

CANADIAN

THE

CITY OF NEW YORK

; New

and

Municipal
■ ■

i

England

Public Service Co.

bonds & stocks

securities

1? Underwriters and
......;v

•'

Bond Department

HAnovar 2-0980

belgian internal
Distributors of

Bought-—Sold—Quoted

/;

Street, New York 5 : ;

PANCOASTAL
OIL COMPANY

'

^

.•

Boston

•

:

.

Members New York Slock

•

PREFERRED STOCK FUND

Bou grht—Sold—Quoted

Analysis

■

upon

request

Corporate Securities

Dominion Securities
Gordon Graves & Co.

OTIS & CO.
Established

INSTITUTIONAL INVESTMENTS
.

30 Broad Street, New York 4, N. Y.
Tel. WHitehatll 3-2840

Tele. NY 1-809




1899-

(Incorporated)

u

-

sutro bros. & co.
-'J
^

CLEVELAND
New York

Cincinnati

Chicago
Denver
Columbus Toledo Buffalo

-

Est.

Grporatkwj

1896

and other

Members Hew York Stock Exchange

40 Exchange Place,

New York 5,N.Y,

120 Broadway, New York 5
Telephone

REctor 2-73(0:

IRA HAUPT & CO.
Members• New

WOrth 4-6000
-

„

York Stock Exchange
Principal Exchanges

-

'

;

Bell System Teletype NY

1-702-3

,

_

...

Ill Broadway, N, Y.
-

Beaton

I

Teletype NY 1-2708

Telephone: Enterprise 1820

2

THE

(1198)

Queens Borough Gas & Electric
Preferred

-

&

FINANCIAL

CHRONICLE

Gold Standard No Panacea

i

By PAUL D. BORDWELL

BOUGHT—SOLD—QUOTED

,

By

General American Investors Company

Corp.

Professor of Economics,

Executive

Mr. Bordwell maintains gold standard's propo¬

>

Alabama &.

Misconceptions About Gold

,

Commonwealth & Southern

Thursday, September 23, 1948

Conflicting Views Regarding the Gold Standard

Texas Gas Transmissicn

6%

COMMERCIAL

WALTER

Louisiana Securities

SPAIIR

New York University

Vice-President, Economists' National

Committee

,\

E.

>

Monetary Policy

on

Bought—Sold—Quoted

nents

erroneously conceive of gold as means^
rather than result, of sound public finance.

New York Hanseatic
120 Broadway, New

alleged impossibility of gold standard
resumption in Europe. Declares people's control
of public finances is really exercisable through
their legislative representatives rather than gold

York 5

Teletype NY 1-583

withdrawal.
national

Lonsdale Company

Request

on

.

group

be

na¬

Points

volved

in

States

Members

out

25 Broad

Members

120

who

remember

Tel.

REctor

worked;

War

the

lor

—

properly

that—shobld feel that

>

^

^

Fund.

present

Perhaps

a

2-7815

the chaos

in

it

the

j

;

debates

current

should

of

inflated

the

end

pa¬

"Gold

whether

on

provide such

>

,

New York Stock

New York Curb

ects such

Exchange

Exchange

suffering.

The

a

ing

*

f

'

*

•

.

Over-Emphasis

on

is

Mining Stocks
-

*'*

V'P.''.

■■■

to

Oil Stocks

more

be

not

do

have

(b)
of

-

until

production

balanced

and

stored.

To

budgets

Low Priced Industrials

has

revived,

try

to

confidence

gold

resume

Stein)

Members Nat'l Ass'nof Securities Dealers, Inc.
27
1

William

St., N.

Y. C. 5,

N. Y.

Montgomery St., Jersey City 2, N. J.

Tel. DI 4-2IOO

:

Teletype NY 1-1055

confidence
than
edict

Common

Stock

Bought and

*

leave it in
cannot

a

be

worse

of

past experience, it will probably
to

ten

years

to

A

recover.

government

give gold in exchange for its
believe, through their
judgments, that it is as good as gold.
the people

can

there

stable

currency?
circumstances in

be

Standard Oil Ky.

sort

revival without a
has been under similar
past. After the Napoleonic

poor

of

it is

Sold

a

faith in private
enterprise to believe that
tender hot-house plant which can
flourish
only the most ideal conditions.
The essen¬
tial policies for those
governments
in countries
which are now
suffering from inflation are to cut
expenses, collect all taxes which are due and levy
under

™I BANKERS BOND ^

new

Incorporated
1st

Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY

Long Distance 238-9

Bell Tele. LS 186

where necessary and as much as
pos¬
sible eliminate
public inefficiency and corruption.
Once these have been
done, the long-term sound¬
ness of public
finances rests on
ones

an

tional

income, which

efforts of private

must

come

enterprise.

adequate

na¬

Chiefly from the

And in

spite of ad¬

verse

Established

conditions, production is rising throughout
western Europe.
1947 was ahead of 1946, and 1948

1856

(Continued

H. Hentz & Co.
York

Stock

York

Curb

Exchange

New

York

Cotton

Commodity
Chicago

Exchange,

Board

of

-T

Inc.

Y. Cotton
NEW

CHICAGO

from

gold supply while

our

Silver Creek Precision

seem

What

Data

we

on

request

HEIMERDINGER & STRAUS
Members

New

York

Security

Dealers

Assn.

50 Broad St., New York 4, N.Y.
Tel.: DIgby 8-046O

Tele.: NT 14872

open

BUY

whereas the fact is that

panacea

defenders do

not

so

regard it.

piiSlllII |1

U.

The

S.

SAVINGS

standard
never

BONDS

|

Bordwell states that the international
"as

it

worked

here is

before

was

the

first World

whether it

gold
War"

One question

properly after that.

not forces other than the

was

gold standard that did not work properly.
The United States after World W£r J and " up to
March, 1933, was on a gold standard and there¬
fore it was working. in so far as we were con¬
cerned.
It :Wasj; the:overissuedi and depreciating
paper
so

currencies that

far

as

currencies

were
were

causal

NATIONAL BANK
of INDIA, LIMITED
Bankers

the trouble-makers in

factors.

Even

reveal this fact.
:

<

One

can

chooses
first

v*

onlyspeculate

to

World

the

use

War,"

to

of

as

what

he

tedeemability.

operating internationally in
cerned.

5

A

so

gold

the Government

in

n

Office:

26, Bishopsgate,
London, E. C.

in

India.
:

Ceylon, Kenya
and Aden

Burma,

Colony, Kericho,

to why Mr. Bordwell
"as it was before the

as

by
them. This seems to be another instance of setting
up a false issue since the gold standard as if oper¬
ates in foreign exchanges doubtless reveals differ¬
ences from period to
period. The chief monetary
question at issue in the United States is that of
resumption

Head

Branches

words

and

to

;ft£ps;>:)ICenyii:: Colony and Uganda

today gold is the international monetary standard,
although Mr. BordwelT's article does not seem to

Kenya,

and Zanzibar

'

.

standard

far as w&

:. Subscribed

Capital-.

£4,000,000 :>

Paid-Up Capital
Reserve Fnnd_.

-

The '

Bank

conducts

£2,000,000

_____£2>500,000
description

every

banking and exchange business

is

Trusteeships and Executorships

are con¬

also, undertaken

on page

37)

Pacific Coast Securities

Mining

LISTED AND UNLISTED

Banks

British

Securities

South

and

African

:

"

v

N.

Direct Private Wire to San Francisco and Los

Securities

Goodbody & Co.

Y.

PITTSBURGH

SWITZERLAND




Telephone BArclay 7-0100
-41 *4 4 » fc. *4

...

T.4

Teletype NY 1-672
-8

!».•

'4

<4

Angeles

Kaiser fi. Co.
MEMBERS

Members N. Y. Stock
Exchange and Other Principal Exchanges
115 BROADWAY
NEW YORK 6, N. Y.

•.« f.» «»-.»■« -f .t

:0

PINE

NEW
TEL.

STREET

YORK
WH

5

3-9015

*

means

*

*

DETROIT

would

justify denying to our own

one

to

(Continued

; Canadian

>

Exchange

4,

what

/■

Trade

Exchange Bldg.

YORK

GENEVA,

them

Industrials

Canadian

And other Exchanges

N.

can

access

page 36)

Exchange

New Orleans CotCon
4

Canadian

Exchange

New

Common & Preferred

We Maintain American Markets
For:

Members
New

on

How

informed

Mr.

free

economic

Security Banknote

properly justify the granting
to issuing institutions and ■ at

free

time

Hydraulics

title sets up a false issue.

can¬

There
the

Greer

Federal Reserve banks when these so-called

our

its

by

currency
own

Spahr

one

ard regard it as a

take at best

not offer to

Walter E.

II

generated merely by optimistic statements
from public officials.
It is a slow growth.
In view
five

4-5879

J

The caption of Mr. Bordwell's article is unfor¬
tunate.
It suggests that defenders of a gold stand¬

state

ordered

Wars trade revived before
gold payment could be
resumed, and the same was true after our Civil
War and after the first World Wart
It is a

Sold

Bought and

would

Confidence

New York 5

it to the demands of foreign claimants?

re¬

blow to public

a

can

before

or

But

Refining Co.

which

before.

unless

Ashland Oil &

been

.:k;

.

a

(d)

would only result in the loss
thus hazarded and force a new

suspension of the gold standard,

&

has

payments

..

in 'the

basic

are

privilege

same

citizens

budgets

v.

.5

_

Broadway

WOrth

"reserves" cannot be paid out domestically?
are the true'functions of bank reserves?

are balanced

of the gold reserves

STEIN & COMPANY

in

properly the result. Gold payment can¬
restored, even where it may be desirable

so,

C""--'

120

corresponding responsibility? Does or does
not privilege carry with it a
corresponding respon¬
sibility?
' '
(c) How can one justify a system of "reserves"

present cam¬

•r.-v*'. •<*

the

of

T

v~.:• ...v

.w!v-v

important considera¬

How

such

to be

a

been

i

Frank L. Hall Co.

<nay one justify;the issuance' of promises to pay
which are irredeemable?

gold standard does not ascribe tod
much potency to the mere form of gold
redemp¬
tion.
It makes gold .payment the means to sound
public finance and economic recovery, whereas it

TRADING MARKETS IN;

•

*

Panacea."

No

desirability of
the resumption of redeemability of Vour; dopies^^
(a) On what valid grounds

Form

It may also be asked whether the

paign 'for

Goulet

contentions

be

which

question

D. Bordwell

Proj¬

currency.

four

the

Tele. NY 1-1610

to

Standard

might

tions
Paul

the Buffett Bill

as

world situation.

39 Broadway, New York 6

(successors

Securities m

has not dealt with the follow¬

a

suitability of the gold standard in the current

or

...

ques-

major

f

(H.H. 5031) have been
put forward accordingly to establish a new gold
standard.
It may be asked, however, whether these
give enough consideration as to the practicality

Chicago Stock Exchange

Over the Counter

of

helpfulto the
reader if .it were pointed out,
first of all, that Mr. Bordwell

satisfactory in¬
ternational currency, The gold
standard, if it could be revived
as
it was before 1914, would

Joseph McManus & Co.

branch offices

our

the

irredeemability

'

It

price controls from which
are

now

to

V

-

advanced by Mr. Paul D. Bord¬
well in his adjoining article on

import quotas

money,

needs

wires

observa¬

both

the

and

some

some

regarding'

omissions

con¬

we

DIgby 4 3122

to raise

were

tions

revived

and

world

NY 1-1557

of the most important issues in¬

some

trols, multiple exchange rates,
blocked accounts, black mar¬
kets

Members

if one

after

currencies, exchange

per

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

Mobile, Ala.
Direct

tions and make

first* World

than

BROADWAY, NEW YORK 5

Exchange

no

gold standard would be better

York Curb Exchange

New

Stock

New Orleans. La.- Birmingham, Ala.

the

New York Stock Exchange

York

HAmvar 2-0700

-

its currency would be brought into sharper focus

never

New

'

operation of the international
gold standard as it was before

McP0NNELL&r0.

Co!

Stein er, Rouse &

impossible, and advocates International Clearing
House clearing transactions in gold, in lieu of

United

those

absence of gold.

in

power

denying that the present mone¬
tary situation ol the world is bad, and it is natural
that all men of public spirit should ask what
policies would best correct it.
It is also natural
can

-

monetary unit should record, not change; prices.
Maintains international monetary management

tional currencies.
There

adjoining article. Accuses Mr. Bord-

well of confusing paper money with other basic
functions performed by gold.- Stresses pressure-

that

Bought—-Sold—Quoted

Prospectus

C

Pleads for greater power for Inter¬

Monetary Fund to limit issue of

Spahr rebuts in detail the anti-gold thesis

advanced in

Points to

Corporation
BArclay 7-5660

Dr.

SAN

FRANCISCO STOCK

LOS ANGELES

STOCK

EXCHANGE

EXCHANGE

1500

RUSS

SAN

BUILDING

FRANCISCO

TEL.

DO 2 0773

4

-

of

Volume

'

'

Number 4736

168

TIIE COMMERCIAL & FINANCIAL CHRONICLE

_

:

Kaiser-Frazer Melee
and

Articles

Business Outlook—-Sumner

•The

Our Current

H

News

—Hon. John W. Snyder

.__

_;

v--

^

Bonds—Alfred J.

: The Outlook for Treasury

Enjoining of NASD in repudiated Otis & Co/underwriting, extended.

Sl.ichter__l^_^--___--Cover.;i.
<,

-Cover

- --- -

/

|
j

/

SEC also restrained.

.

*

,

matter of

compelling necessity.; Improper use of
|; by both bodies cited.
Administrative partners at

Spahr:.

Misconceptions About Gold—Walter E.

r;

>

•"

,v

2
:
2 -|•

—_

___

The Economic Situation—Its Strength

^

"

Roberts."4 ^
and Weakness'
V «.

Fiscal Policies and Inflation—George B.
:

AMD COMPANY

by these bodies,

except to

./ appeallr must await decision of Judge Morris. Argued that findings
of Judge Letts indicate membership in NASD not
voluntary but' a

Casazza-^l.^Coyei^

Conflicting Views on the 'Gold Standard—
•>
'
Gold Standard No Panacea—Paul D. Bordwell—

s

Further action

"THE LOVED ONE"

•x

.

-

claimed

powers

That pet

security of yours is
probably dead enough for
Evelyn Waugh's "Whispering
Glades" Cemetery. Why not
let us arrange for a dignified

cross purposes.

The relief which Otis &• Co. has obtained in the United

States .District Court for the District of
Columbia, via the

funeral?

action instituted

by the Securities and Exchange Commission
repudiation of the Kaiser-Frazer underwriting,
has been made more sweeping.
Raymond Rodgers'
".All of this arises out of the combined
Is This Prosperity Fictitious?--William A. Irwin.J-——^7 : ^
attempts by the
Securities and Exchange Commission and the National Asso¬
The Outlook for Utility Stocks—-Harold H. Young_S_____—
8 .i
ciation of Securities Dealers to
Real Estate Prices and Mortgage Practices—^allace W. True
compel the disclosure of con¬
9 X
fidential communications exchanged between attorney and
The International Bank in World Reconstruction
;
;
Beckhart_; 3'4*'|f
based
"=iV;

—B. H.

LicHTcnsicin

-

P»*f

High-Lcvel Economy Can Be Maintained

(1100) : 3

:

u

Business Outlook and Credit Control Policy

the

on

Obsolete Securities Dept.

WALL

99

STREET, NEW YORK
Telephone: WHitehall 4-6551

>

U.

client.

10

—Eugene R. Black..

■'

.

i-'-vYs

•Bankin5;-Respoiisibditiek4«:TuternatidnaI;-Crtsis;^/:!vJ-:'*^'rv,>^^''-'*v'-^ J i ;/Three distinct forums have been chosen for that
^PrestQir-Dfiljanq^L^L..^

The SEC instituted

.Plywood—A Cinderella Industry—Thomas B. Malar key

X It I Were

'*11;

so-*

Court for the District of Columbia.

-12 '

Retail Salesman—J. K ;B ru mel 1

a

Where Are Building

Construction Costs Going?? *

i:

^

!

-

ceeding in progress.

:.

a

of that order.

Com.

U. S.

&

Pfd.

Finishing Com. & Pfd,

/

;

Morris. Here the NASD

r^u^h? A^Bing?:?^ ^ ® '
JBritaiiv Hits 'Target-^Sir^ Staffprd .Cjripps—-I-.l.:.17 \

Corp*

United Piece Dye Works

disciplinary pro¬

Campaign to Unit? America—Gov. Thomas E; Dewey, 14

XXj.

Insurance

Texas Gas Trans.

District

y. :Y\f '. Last week we called attention to -an order of the Federal
Truman Attacks Republicans as Gluttons *of Privilege: A Al: 15 ■,}1 ■ |District Court which enjoined the NASD from proceeding
further against Otis & Co. pending the decision of
Wrill Canada Ease Her U. S. Import Restrictions?
Judge
A

Fire

Federal Water & Gas Corp.

It also conducted its-in¬

dependent inquiry, and the NASD had

"

-

purpose.

action in the United States

an

■

S.

Phoenix Fire insurance

■

Was

J.K.Rlce,Jr.&Cn.

,

'

.

^

.

Established

.

1908

:

Members N. Y. Security Dealers Assn.

restrained only for the puippse

"REdtor 2-4500—-120
Bell System Teletype

.

*

Broadway

N.'Y. 1-714

;

4

Peace-^-Rdger Wv. Babson._..u.

Prices and

Fiduciaries and Safe Deposit

XXXXX;^

..19

^
Melee

Kaiser-Frazer

"'v'^

Wall Street Teams Compete

or

8

Jarvi&_:

Charles Hayden Memorial
Propaganda

John Foster Dulles Warns Against Soviet
Offensive

:

3
-4 4 V ./

Standard Return..

Adverse Stock Market Discounted, Says N. Leonard

Philippines

IV->V

.

Sy stem.^i. :i-

JJ*

X

—--

?

Harry L. Erlicher Predicts Good Business for Long Time.... 19

In Advanced Finance:..^
J
Secretary Snyder Defends Increase in Reserve Requirements 22 J
SEC Seeks Views on Market Stabilization Practices..—22:

Tax and Debt

Institute of Life Insurance Reveals a

World

Ridden

proceed

>

Exchange Stabilization

Vr

'

\

J

■*

•

'*'

..

,

? • V An ^ ^ i's:

Canadian Securities

In resume,

Indic^ionsof ;Busine^<:ActiyRyy:^*:;:^:^^^i^i:t^
:

dum has the

"13

NSTA Notes

_____

News About Banks and Bankers—*—

20

.____

PuMic PJtility Securities.:J

i,

1
—,35.
:—1.1:^....... 11'.V..-4---r-—- -25

London, E. C.,
c/o Edwards 3^ Smith; "►?*•

and:

COMMERCIAL

The

FINANCIAL

and

Copyright

f

REctor

v

2-9570

to 9576 "

.

N.

8, 1879.

Ydrk 8, N* TJ

"25 Park Place, New
■

York,

DANA COMPANY, Publishers

B.

*

Company'
1942,

25,

-

at

Y.,

the
•

Subscription
in

-

Act

,

v-*;

The
i

(' ;c..

WILLIAM

DANA

SEIBERT,

RIGGS,

President

Business

;•

Manager

,

on

•' •' "*

1;'-:

Thursday, September 23,1948

Union

i Every

vertising

Thursday

issue)

fgeneral news and ad¬
and-every 'Monday icom-

plete statistical dssue —. market quptation
records, corporation news, bank clearings,*
state, and city"news, etcJ;
^" :

$25.00

and '

per

Monthly
$25.00

•'*

k

'•

i

-

States,

and

$35.00

-

'

>

,

40

per

<

,

.

!

Note—On

We

are

:.

.

,

.

":

^ -

, -




Tele.

4.■.'•»

Publications

on page

40)

^

.

-

.

GRODY & CO.
*Metoiberf Natl.'Assri. ef Securities Dealers, Inc.

40 Exchange

Place, New York $
Tele. NY 1-2690

DIgby 4-3280

•

OFFERINGS

—

■ •

'

;r,.">;v

MonT^ly,

(Foreign postage rextra.f

account

of

the

»

Central States Electric

PREFERRED STOCKS

Corp.
-

;

~

/

S»/2'%

*

^

Record-—Monthly
tForeign postage extra.)

Earnings" Record

WANTED

due 1954

year

"•_

fluctuations

:

in

5%

Spencer Trask & Co. ||

Members

Exchange

Member's ftew York Curb Exchange

Street,'New York 4

135 S. La Salle St., Chicago 3

New

25 Broad

York Stock

Tel.: HAnover 2-4300

yX'^ X. ' '
Albany.

-

'VY'- ''",

Boston

-

v

.

,

kj

Teletype—NY 1-5
Glens Falls

4-

Tel.: FINancial 2330

;

-

Worcester

due 1948

C. E.

Unterberg & Co.

Members

N.

Y.

Security

Dealers * As»'n

61 Broadway, New York 6, N. Y.

■'/'X/XX-X.

;Y"V 'V
Schenectady

-

*

{

Telephone BOwling Green 9-3565 '
.Teletype .N.Y, 1-1666, .
„•.
.

,

,

_

NYT-1404'?;

-:

interested in offerings of

ir

the rate Of exchange,, remittances fdr for¬
Offices:
135 sT La
Salle St,., eign subscriptions and- advertisements must
be made; ih New York- funds.
; V
Chicago: 3; ill.:(Telephoner State:0613r;
^

'X Other

4-8957

appealed from this order.

(Continued

.

•

o.'

year:

4

ye^tr.

Exchange Place, New York/'5

WHitehall

6

Quotation

year,

'

r

High Grade Public Utility and Industrial

'

U.

Members
per

••

Other

'Bank

request

the foregoing Memoran¬

March

Dominion
of ' Canada. ^$38:00
per
Other Countries, $42.00 per
year.,;
«:.•'

on

George Birkins Company

r.

■

WILLIAM D.

Circular

XX-X;

New

at

of

Rates

United

Territories

Pan-American

]

v;:t:V
office

post

.

>-

Possessions,

HERBEET D. SEIBERT. Editor & Publisher

the

under

Subscriptions

•

^

earnings.

enjoined from proceeding until the matters

Eng-

Reentered bs second-class matter Febru¬

ary

times

2^2

10 -year dividend record.

Ijy William B. Dana >

J948

?/■■■

CHRONICLE

Beg, tJ. S. Patent Office
WILLIAM

Gardens.

Selling

Findings of Fact and Conclusions of Law made
by Judge Letts "The Chronicle'- has confirmation of more
than one of its points of view,. For example, we have always
ridiculed the contention that membership in the NASD was

Not available this week.
Drapers'

this order based

Ihe SEC has

•Washington and;'Vou.-^£:..:r^i:^Lt^^i:4u^:^^^::i--:-;48.

1

Capital Stock

review

;'.In the

Tomorrow''Sv<Markets .(Waiter' Whyte Says).'. 1 i.'.:':4-.3.'.

J;; Published Twice Weekly

Refineries, Inc.

'^determined.

£'. 4 .44i;I4
' • 14
Registration.l444--'-4.....-.-:.'-4yr444v:./44
''vTKe^State! of :Trade:>and-i ndustry^4|:i^444444i4l^^^
Seoiirities - Salesman's' ••Corner_'_".^4l-L^

*

N.YV'
1-1434.\

arid issues under consideration ,by JudgeMortis JYwliich
are common to the case and to the SEC
inquiry, are first

-Securities Now^ in

;•

a

following effect:

B. The. SEC was

.ilTdspectiVev-'Security^Offerings^^^^.J^y^-^i^S-^i'^^^
Railroad Securities

York

Leonard

It

Memoran^mimd^^ on;;Sept; 20,
Findings^of, J&cfyCpflcIusid^

^before Judge Morris.' v 4

Report....—...—...^——
4S
Dur Reporter ^on GoVertiments-l^l.-JT:

Gur Reporter's

New

;

joinder of NASD as a party so that hepceforth.it will
-bje possible to give.full relief, in the prqeeeding pending

J-\, 5--

!:;Gbseryitions-!-A.:-Wilfred

2-4930

A. The

13

__

REctor

their

point is not well taken.

-

—«.J. 17 •

•

OrvisBrothersg©

not

may

exhausted

not

of the injunction; against SEC.

1948, the Court signed

iFrom fWashington^Ahead -of theiNews-rCarlisle Bargeron:^
Mutual Funds

The

have

vSmce the making of ^the

f

Gomiiig Rvertts in 'the Investment Field_ _: .
48.
Dealer-Broker—Investment Recommendations—.8

Russia!'-^-*.-J.:.

they

./

granted."/

Business

ItEinzig—^'fBfitain's Trade .With

QUOTED

-

isxsustained and the injuuetimjuske^ against lit will he

TO1

'.B^rik'aud Insurance

>

Motion of defendants and intervenors to make NASD u party

——Cover

(Editorial)

since

available in view

not

SOLD

-

14 Wall St., New York 5,

py/SEQ when JNASD has actedx Administrative remedies,

/

■

against it,

BOUGHT

-

An essential step in the administrative remedies is

..

,

35
•'

'\'y,

,

Regular Features
As We See It

23

r

,

Debentures..—_—_________

Place

Banks
.

*

tvill be impossible for defendants and intervenors to exhaust
their administrative remedies so long as the SEC is
enjoined.

International Monetary Fund Approves Peru's Proposals for
FIC

-

administrative remedies.

23

•

________

•

U///X\'NASD/ukges that defendants and ihtervenprs

23
;•'? -'.r :: l ^Af

And, So It Is! (Boxed).._

•

•

Drilling

prayed<

''Whereas

Rule 19 (b).

Rat-Rrpellant Wood Developed by U. S. Plywood Corp.___.__ 19

;

Utah Southern Oil

Judge Morris, in order that complete relief may he accorded
between the parties to that suit within the
meaning of

IDAC Preparing Course

Equity Oil r.7

Mackinnie Oil &

duty and author¬
ity to review the action taken by NASD, it is deemed appro¬
priate that NASD be joined in case No. 2617-48 how before

1

Future Is.Bright, Says T. M. Girdler__l_.__118

§X:M 'Building; Industry
•:

as

XXX-

the SEC and since SEC will have
statutory

18

Organization, UN Agency, Warns of Depression

Labor

Empire State Oil

seems

proceedings for the revocation and suspension
Jo/ the registration of Otis & Company have been ordered by

Seek.:World,J5ank;I/oan._L?rv:i.«-^

Steel Industry

;

"it

should be sustained, and the Commission enjoined

15

George A. Searight Is Commander of Wall Street Legion Post

Int'l

.

?

•

_______

;.w'v jBasing^oint.

an

certain that the matters and issues now under
consideration; by Judge Morris in/Security and, Exchange
Commission vs. Harrison et at, No. 2617-48, will arise in the
proceedings ordered by SEC in its order of Aug. 11,1948.
It
follows that the motion of the defendants and intervenors

Sawyer, Secretary of Commerce, Urges Study of

Charles

Sept, 15, 1948, Judge F. Dickinson
illuminating "Memorandum" which

on

■

(Editorial)....—^—.—

R. J. Proffitt Outlines Program for Gold

Since then and

/

y* iLetts handed down

Business—Thomas 3R* Cooganai, ?0

^

'

?

«

4

THE

(1200)

COMMERCIAL

V,

;'i

/

Vice-President, The National City Bank of New York

*.

'

V'/

By GEORGE B. ROBERTS*

Prominent bank economist,

ascribing inflationary

CHRONICLE

FINANCIAL

Outlines Program for
Gold Standard Return

Fiscal Policies and Inflation
.

&

New

pressures to vast

expansion of credit and money supply, says problem is not merely
increased production, but a national budget and credit policy at
tuned to an an i-inflationary program.
Holds Federal budget is

Edward

Dr.

^

of

,

York
to

move

action

J.

W.

Board

The Economic Situation—

Trade

Its

I

Proffitt tells

of

Strength and Weakness

of

By B. II. BECKHART*

Congresssional

get

Thursday, September 23, 1948

through -cooperation

Professor of Banking, Columbia
University "

of

Dr. Beckhart reviews conditions and factors in present economic

>:

local boards of trade and cham¬

on

situation, and, though noting inherent strength of American economy, stresses weaknesses of present boom.
Says chief problem is
I to check inflation, and warns of danger of further inflation because
of defense expenditures.
Ventures belief, however, inflation may
fall by own weight.
Outlines measures for checking inflation in

History teaches that all great wars have resulted in great infla¬ Sept. 16 urged Congress to restore
by deflation. This was true of the four great wars of to the people the right to own
this country p.icr to World War II. It was true of the Revolutionary gold, taken from them in 1933. The
War, the War of 1812, tne Civil War, and the World War I. World New York Board of Trade, early

fiscal, monetary and credit policy, and advocates consideration of
repeal of laws prohibiting gold holding as well as restoration of
complete interchangeability of paper money with gold.

padded w.lh "rills and gravy": and low pattern of interest rates
makes credit consols ineffective. Decries move to raise bank reserve

J

requirements

an J

urges

modification of farm price and mortgage
credit supports.

commerce.

•

Dr. Edward J: W. Proffitt, for¬
merly with the Treasury Depart¬
in

ment

I

-

bers of

to

the

Washington,

Assistant

as

Director of the Budget,

tion followed

II

War

has

proved no
C e p t ion

this

ex-

■

it

as

controls and rationing;

price

doubtful

is

that

the

but

Anicnta*.

regards inflaVtion.:'Prices

i

j

control,

j

have
t o;

<

d i

peaks;

>

more

t

up

y

Once

We

z

'

levels of pre-:
vious wartime

look

• -

is

have
home

To

.

Gtorge B. Roberts

and

into

balance.

better

the

John

V i

,

Dr.

E. J. W. Prof fit t

*

(1) With the diminishing pur-'round wage increases next year,
chasing power of the dollar, they:
However, we cant atford to
wonder how they are going to pay rely. on production alone.
Protheir monthly bills to the butcher duction itself generates purchasand the grocer. They see the value
power.
But more than that,
of their
savings—life insurance,1 no matter how much goods we
savings bonds, savings deposits— produce we can always pour out
steadily dwindling.
,
| purchasing power taste? if the
1 (2) They fear that the further budget and credit policies ' are

:

the inflation

the more cer- following an inflationary pattern,
tain and difficult is likely to be Hence, in
tackling the problem
the day of reckoning.
j of inflation we must work also
i Now there is no great secret as from the second angle of money
io the source of these inflation- supply and do something about
ary

vast

Basically, it is in

pressures.

the

goes

expansion

of credit

and

the excess quantity of dollars that
ai'e rolling around, creating exag-

merce

had

been

where

consulted.

he

talked

In

last

the

Drp
who

holds

(

,

_

x

In fact, no group comes to
1

_

_

_

me

not to worry.

The

money market Is being well man¬

they

The Problem Today

j
The

problem

today is, what to
do about it?
How stop spiralling
prices without leaping from the
frying pan of inflation into the
fire of a bust, which is just what
Russia hopes we will do. The Pres¬
ident has proposed

the wartime policy of expanding ings,
national rtaht unH Iltlll7incf fnP

utilizing the
present period of prosperity and

restoration of

*An address by Mr. Roberts be¬

fore the 31st

Annual

billion

Meeting of billion

Massachusetts, Swampscott, Mass.,

built

,

over

To

months.

the

high levels. Civ¬
employment which totaled

of 7.3 millions has occurred

crease

We

say.

more1

have

a

be

of this

period

sure,

of

some

28
$20

on

his

any,

with

the

bonds,

likewise,

of

excess

cash

by the Victory Loan in

up

(Continued

;

on page

26)'

soon

is

if

not

procession.

has]

he

keeping

tion from

sent

to

us

a

war

to

&

FOUNDED 1898
new york

BOSTON

.

'

its

administrator

Government

S.

made

problems.
Many
business
concerns

careful

change and

plans

for

expansion.

indi-

nations.

mand from these

First

in

tures.

postwar

Through

The sustained high level of eco¬

to

in

as

the

activity came as a distinct
surprise to many who foresaw an

eco¬

of

Mili¬

the

Germany.
of the out¬

*An

of the

before

slump following the end

war.

Never

in

peacetime

various

of

are

expendi¬

consumption

In

sources.

magnitude

these amounted to

1947

billion, as contrasted with
$111 billion in 1944. The increase
in

personal consumption expend¬

itures of $54 billion in this three-

period went far to offset the

year

the purchases of goods

decline in

services

and

by

governmental

units, which fell from $97 to $28
billion,

Newburger, Loeb
15

pectation

prices would

con¬

The very large dollar increase
in

personal consumption expend-

tures since the end of the

war

was

made possible not only by an in¬
in

disposable income - but
in individ¬
savings. In 1944 individuals

crease

also by a huge decline

ual

saved

estimated $34 billion; in

an

1947, they

billion.
saving
less; many are drawing upon past
savings; and many others are go¬
ing into debt. It is estimated that
at
the present time more
than
saved only $9

Individuals

one-fourth

ilies

are

as

a

of

whole

all

spending

are

American
more

fam¬

than they

earn.

Since the close of the
consumer

war

total

debt has increased

rap¬

idly.
Although instalment
charge
account /sales
are

and
still

smaller

than in the prewar period, never¬
theless such sales have been ris¬

by Dr. Beckhart
Pennsylvania ^Electric

percentages of total sales

ing sharply and, in a period such
as
the
present, absolute rather
relative

has joined

our

Analyst
staff

increases

significance.

increase

in;

of

are

Moreover,

total

consumer

credit has been accompanied by a
recent trend toward slower col¬

lections
account

and
of

The rise

rise

a

bad

in

losses

ori

debts.

in instalment credit is

due not

BROAD STREET, N.Y. 5, N.Y.

BRANCH

EAST

OFFICES

V

WEST

mm INVESTMENT

,

SERVICE SINCE

28th STREET

525 SEVENTH AVENUE,
57

co.

that

tinue to rise and that certain

only to the desire of the
American people to purchase dur¬

«

4

only

address

noted Market

&

not

of the tax reduc¬

consequence

the

Association, Pittsburgh, Pa., Sept.
21, 1948.

on

j Mr. John E. Miller

BANGOR

order

$165

the

PORTLAND

local

governments, and
Hence " future
changes in business activity will
depend upon variations in de¬

had

the Committee for Economic De¬

up

AT 38th ST.

57th STREET, AT 6th

AVE.

BROADWAY, BETWEEN 72nd & 73rd ST.

1948




and

the impending defense program.;

vidual

international

enlightened us further
(Continued on page 47)

2091

September 20,

state

foreign

greater

^

intense

an

the part

of consumers,
the business community. Federal,

than

BURR

to

response
on

postwar

UNDER MANAGEMENT OF

Incorporated

in

demand

p

activity/ has

goods
might be less available because q£

SOUTH LASALLE STREET

hartford

been

high-level

tion but also by reason of the ex¬

peace econ¬

CHICAGO OFFICE

.

Consumer Demand
"v This

a

nomic

U.

COFFIN

high
V

in

The widows

thereafter, one
standing monetary experts

CLARK, JR.

the

level attained in 1929.

facilitated in part by the
prior
consideration
which
the
business community had given to

economic

Soon

MR. ROBERT W.

50%

of the transi¬

ease

omy was

authority on finance, the man
who reorganized the currencies of

tary

S31

durable- goods
*

revived,

The relative

our
versatile George Bauer, war on the economy and to the
postwar readjustments which
usual, sprang into action.
would be required.
"The
Federal
Reserve
Board

nomic

WE ANNOUNCE THE OPENING OF A

by

almost

and
as

represented merely

application

and

exceeded

tural

Belgium and later served

,

envisaged dur¬
Productive activity

war.

pro-

Over the

large.

so

non-durable

personal

less difficult than

ing the

been

past two years the production of
has

—

the Savings Banks Association of

Sept, 16, 1948.

possibility of
important

velopment, the business commu¬
high revenues to retire debt.
and children, the old and
helpless, nity as a whole joined forces In
We must give the government
dependent upon annuit.es,
allow-1 evolving constructive employment
credit for
having made a good ances
are
in
sorry
plight, in policies.
In this very important
beginning in this direction. From many
instances, -because of the respect the period of World War
the wartime peak of $279 billion
falling value of the paper dollar. II. differs from that of the first
in February, 1946, the debt has
"So, if you will recall, we began World War, when little thought
been cut to its present total of
the matter here,1 was given to the impact of the
around $252 billion, a reduction of thinking about
$27

|

Beckhart

physical volume of

riuction

entirely in non-agriculj
During the first six months of
employment and particularly
1948, consumer expenditures have
money than ever before. That is. m trade, service and construction. 1 been at the annual rate of about
true, of course, with some. But The returning veterans and
young $174 billion. In the first quarter
that money will not do the Work
people leaving school were ab- consumer
purchases
lagged.
It
which it did a while ago. It will sorbed
readily and quickly by the was a period of consumer hesita¬
not buy as much.
expanding needs of trade, produc¬ tion. In the second
quarter, con¬
"The farmer, the laborer, the tion and finance.
sumer
demand
aged,

f

the national debt and

the table with clean hands.

H.

money," Dr. Prof¬ 54.0 million persons in
1944, the
dollar daily last full year of the
war, now to¬
less. My financial tals 61.3 million persons. This in-

buys less and

iho

i

•i.t.

B.

"The

.

ii.

promise

continued

a

high level of
activity or the

problem ilian

•

cism.

of

future

has remained at

supply during the war. gerated notions of scarcities and
Aiding and abetting this culprit bidding up prices,
have
been
the
continued
huge
In short, we must see to it that
spending - lending - guaranteeing budget and debt management pol- skilled
workman, in his pay en¬
by the Federal Government, big icy, together with credit policy, velope, is getting more, in some
foreign relief shipments, exces- are attuned to an anti-inflationary cases,
but
he
is
begininng to
sively easy mortgage credit poli- program. f
realize .that somehow his .larger
cries, price pegging of farm prod-; '
pay is not Catching/up with the!
Rnde-ei and Debt Retirement
ucts, and repeated rounds of wage ^^ag^ a a
,+•
increases in•; the cost of food,
j
increases.
Nor
have
business
First, we Can all agree, I m sure,
clothing, housing, and other ne¬
pricing policies been above criti- that we ought now to be rCversmg cessities.
Interest
on
his
sav¬
money

question

may fairly be
asked whether

is this matter of

declared.

j has the

At

In some respects the
Albany,
problems
week,
a of the postwar period have been

York Board of Trade.
"A most troublesome

friends tell

met.

the

committee is in process of organi¬
zation to cooperate with the New

fitt

for

Trade, who, economic readjustments.

Boards of

and

has

this juncture

-

-

•

durable

and

ing

p President / o f
Remington!
Rand,
Proffitt,

for<8>~

war
-

met

Jby

c e

little over three years have elapsed
approaching the end of the "catchingconsumer demand accumulated during

iurable goods,
is rapidly be¬

A. ' Zel-

lars,

A

now

largely been

pre¬
over

particularly opportune time to take stock

goods

New

sided

tending to bring supply

demand

tne
non

York Board of

Trade,

a

situation.

up" period." The backlog of

The best news of all is this year's
>was.appointed!
alization that we are experiencing wonderful crops which give hopes Chairman of the
Committee on
one of the biggest booms and inof topping off the living cost rise Cooperat.on in National
Monetary
Rations on
record.
People are and cutting much of the ground Matters, reported keen
interest
deeply worried lor two reasons: from under pressure for fourth- also in other Chambers of Com¬
re-

seems

the "gold

'of

bang-up job.
In industry aftei
industry production is breaking
ail records and filling the pipeLnes and

to

driven
the

angles—(1)

two

present

economic

since V-J Day and we are

ing fall session

a

the

at

chart

;

from

the

At the openr

\

tackle this

suggest,

of

standard.

.

of increasing the
supply of goods, and certainly we
ought to be working hard at that.
as a matter of fact, we are doing

tne

.

•of

"solu-

v

I

ably

the angle

from

stratospheric

highs

can,

this

accept

"

problem

they are

to and even

above

?

z

will

'

; tion."

favor-

upon the
restorati o n

people, with their memories of
the peacetime workings of price

climbed.

v

The

year,

; voted

*

Members New York Stock

Exchange and Other Exchanges

1899s

able

goods,
now
available
in
larger: amounts, but also to a
tendency
to
reduce
down-pay¬
ments

and

to lengthen payment
The rapid increase which
has taken place, along with the
prospect
of
further
sharp
in¬

periods.

creases,

caused

Congress at its

(Continued

on

page 39)

re%

/

Volume

Number 4736

168

&

COMMERCIAL

THE

FINANCIAL

(1201)

CHRONICLE

John A.
)

^

j.

tSteel Production

The

'

Electric Output

*

Carloadings

Herbert

By A. WILFRED MAY

Index

Price

Auto Production

and

Industry

THE ATTORNEY GENERAL AND STOCK

Business Failures

Shall Economics, Statistics,
•'

v

«

,

industrial

Overall

production

maintained

was

at

a

relatively

high level last week notwithstanding the effects of continued strikes
in some localities which hindered output.
Manufacturing activity
was slightly above the high point of the corresponding 1947 week.
Curtailed production in some of the New England textile mills, it
noted,

was

reflected in shorter hours of work and

was

remained

at

this

in

unemployment

high

a

some

customers'

broker's frank,

such

it caused him to be fired

increased

region.
However, employment generally
the past week with payrolls steady and

Co.,
York

Inc.,
City,

association

the
of

with

John

Vice-President.

and

A.

Mr.

Doody as
Doody was

formerly with J. G. White & Co.,
Inc., and Ranson-Davidson Co.

'

on

the instant.

Now

we

have another cause

Bond Club of Cleveland

significant implications

throughout the market place as well as the halls
of legal justice, in the New York State Attorney
General's action against Mr. Frederick N. Gold¬
smith.
The Attorney General has sought and

peak

CLEVELAND,
OHIO — The
Bond Club of Cleveland will hold
its

annual

Fall

Party

1

Oct.

on

obtained an injunction, at the Kirtland Club, located on
the
Willoughby-Kirtland
Ro^d,
putting out of business the venerable proprietor
of the Goldsmith Financial Service, who for the about 1 xk miles south of Route 20.
Members and guests will par¬
past 32 years has been distributing a market
letter
on
securities and commodities to from ticipate in golf, tennis and a din¬
ner, following which
there will
200-400 brokerage houses and other clients, who
.
have deemed such service worth $8-$20 monthly. be a short business meeting.
; Harry
Kraus,
Bali, Burge &
Goldsmith is being charged with fraud on
Kraus, is in charge of Golf and
the basis of representing that his advices are
actually based on supposed secret information George Blauvelt, National City
Bank of Cleveland in charge of
; from' "Headquarters"
and all-powerful "Big In¬
sider" in Wall Street (the latter also a Truman Tennis.
concept). The Attorney General complains that
while the forecaster # implied that buying and Jas.
Cunningham Joins
this

the nation's economy appears not too distant and
top-heavy.; However, in the present instance, there
is a wiae divergence of opinion on the part of many competent
businessmen and economists as to just what the future holds in store
for us in the face of a growing inflation, t/v.
~
-J .: With respect to these inventories, the Department of Commerce
reports in its figures for July 31 an increase of $392,000,000 above
readjustment in
are

"

total of

*

.

firm

&

New

if not diplomatic,

celebre, with even more

Inventories are always of interest to the businessman and at
of much concern, especially in a period when a downward

the June 30

*

the

Sims

"a gambling business" some months ago

of his profession as

times

such stocks

Charts—or the Ouija Board

characterization
incited
puritanic indignation in the Stock Exchange's officialdom that

A

1

J.

Street,

announces

MARKET PROPHECY

Spiritualism, Be the Forecasting Key?

high.
.

Wall

52

Commodity Price Index
Food

Doody V.-P.

of Herbert J. Sims Co.

Retail Trade

Stave of Trade

5

$51,308,000,000.

week

temporarily

The Department pointed out
A. Wilfred May
Con¬
r
cerning these figures, it should be noted that while the pace of
Supply and demand has been matched in some goods, there are selling recommendations were based on "regular, usual, and generally
Trading Staff of Kobbe
,
many others thai continue to trail behind demand in meeting the acceptable" [government's doubtful terminology ! "sources of statistical
Kobbe
&
Company, Incorpo¬
needs of the consumer.
This condition is prevalent in the capital information," actually "the defendant fraudulently concealed from
Liberty
Street,
Newhis market-letter subscribers that the recommendations, suggestions, rated,. 55
goods industry with the prospects of it continuing so for some
and advice were based on false, untrue and valueless information York City, announces that James
time.
that manufacturers' inventories accounted for all of the gain.

,

an article appearing in the current issue of the magazine.
"Factory Management and Maintenance," it has this to say of present

In

which

of

was

no

worth." This "valueless data" was acquired

through

"spirit medium," his sister, with
conditions: "the present boom is so different from past booms and such late-lamented big-shot market powers as J. P. Morgan. James
the chances of new increases in productivity are so great, an opti¬ R. Keene. and the Rockefellers (in lieu of living!chart-readers);
mistic: view of things is warranted."
Further, upon the basis of a as well as through astrology; and that he operated on the theory that
the market is moved by powers who use a secret code through which
survey recently completed by the magazine, its editors predicted
a 5.5% increase for
manufacturing during the coming year. Bolster¬ they manipulate the market in concert, Mr. Goldsmith years ago
ing its contention, it pointed out that from an overall standpoint,
economists foresee a productivity increase of 5 to 10% in the year,
ahead.'v/\^";'''?;v;' '::^/W.v,b?
; Cautiously explaining that "the business outlook may turn around
overnight on the swing of international politics," the magazine gave
the following outline of the forces that will shape the final answer,

v

v

-

fv!

1. In contrast to earlier periods of prosperity, farmers today are
fabulously well-off; the average industrial worker can buy a third
than in prewar days with his take-home pay and the' stock
price index is the only price index that no one thinks is inflated.

more

There is

2.

ilies.

tremendous

a

backlog of savings held by U. S. fam¬

35,000^000 families, out of 48,400,000 in'the country,

About

have bank accounts

or

securities.

3. Industry is reaching hew horizons in its drive to purchase

;

buildings and equipment

Slew

rate Of almost $20,000,000,000 a

These purchases

year!

„

currently at a

are

/

,

*

„•,

.

4. The influence of the U. S. Government on the economy now

Is-of major importance.'

:

«

<•

The favorable effect 'of' clear weather

boosted

conversations carried on through a

H.

Cunningham is

with

the

firm

Cunningham
Street for
continue

Mr.

trader.

a

has

Wall

in

been

will

20 years and

over

to

associated

now

as

natural

specialize in

securities.

gas

that this code was conveniently and
thriftily disseminated to the inner sanctum through popular comic
strips. Thus one of the cartoons in "Bringing Up Father," containing
the wisecrack "the intermissions are the only good thing about this
the

made

discovery

startling

shpw," of course referred to bullish doings in Mission Oil stock—
and, of course, the company raised its dividend within a few days.
And, obviously to him, one of the cartooned funny-men taking two
puffs on a cigar signified a strong second hour on that days' stock
exchange trading.
*
5
Terrible Abuses

Dominion of Canada

Another horrible practice of this forecaster which has aroused
the Attorney General's ire and complaining action is that his letters
have often reversed previously-made prophesies; also that he pats
himself on the back for .having predicted a preceding development
in the trend of the securities market. The Attorney General also is
V

and; shocked

surprised

his

"when

that

letters

to have
covering

found

"double-talk," complaining

considerable period of time are

a

Government Bonds

■.!>».

HART SMITH A GO.
52

simultaneously, they make the reader dizzy."
!t • • •
1
;
The crux of the State's moving into action in this particular case,
seems to be the non-disclosure to his clients and prospects of the real
read

WILLIAM

ST., N. Y. 5

Bell

.'
;

Teletype

Private

Vew Tor*

H lnover 2-0980

NY

Wires

1-395

Connect

Montreal

v

Toronto

;

proceedings indi¬
retail sales volume moderately during the past week.
Dollar volume cates that there would have been no prosecution if the defendant
remained slightly above the corresponding 1947 level.
Promotional bad been using charts and statistics, in lieu of the ouija board and
sales of Fall merchandise were well attended with continued con- the comic strip; without disclosing them as the sources of his wisdom.
.

in

areas

many

quality goods in the medium price range.
^
rose slightly in the week/' Dollar
volume was somewhat higher than in ' the comparable week a year
ago and current buyer demand for Fall apparel moderately exceeded
•vthe high level of the preceding week.
Although trading volume ir
textiles remained limited, there were some new orders for spot deinterest in

-sumer

Total wholesale order volume

; ;

:

livery,

made from steel may be easier to get than they
but no general conclusions can be drawn from this
-condition.; Appliance sales have been used to show that the steel
Some' items

-

a

so

the conclusion

be changing.

■

It isn't.

is

warranted

that the Attorney

General,

LAMBORN & CO..Inc,

as

believe that forecasting based on spir¬
itualism and the comic strips is inferior to that based on all the other
well

as

much of the public,

:

f

^The growth—if any—in steel

is negligible and steel shortages from an overall

' #9

stand¬

WALL

;

.

-

..

SUGAR

The Attorney General finally complains that, "The public gen¬

quate remedy"at law."s

STREET

NEW YORK 5. N. Y.

Raw—Refined—Liquid

'"l",,.;''

Significance of the Charges

Exports-r-lmports—Futures

Z These above-mentioned bases for the legal action reflect broadlyheld misconceptions of the social functions of speculation as well as
?

DIgby

4-2727

of the "hard-boiled"

practices in the market place. . - i - r
:
«
<
example, the blast last mentioned reveals a typical American
s/point will not ease as long as the demand from manufacturers con¬
tinues as it is this week, states "The Iron Age,'* national metalworking basic confusion regarding speculation and investment.? In all other
countries, speculative behavior is engaged in sophistically/ with no
weekly, in its summary of the steel-trade}#*$
expectation of government protection and guarantees.. In any event,
5 ' Four reliable indicators prove at present that steel inventories
Goldsmith's clients, reaching for tops and bottoms of the market and
are not heavy, states the magazine.
These yardsticks are: (1) Nerveof individual stocks, certainly did have an "adequate remedy," by
wracking pressure on steel salesmen by consumers;- (2) -heavy and
/■/,;^:"w::.v-v>.".r-/"
unsatisfied demand for ingot molds for conversion dealers, (3) strong simply refraining from their gambling.
i
An important question is whether the Goldsmith clients actually
gray market in pipe and flat rolled steel products and (4) no sig¬
nificant drop in employment in industrial circles. / Add to this— }' ' \ :' (Continued on page 42) V . '•
> .
inventories

•

:

popularly used techniques (although minority disagreement tnerewith is indicated by the recorded testimony of some of his clients
that "the comic strip forecasts are as good, if not better than, those
contained in similar market letters").

year ago,

picture may

But inquiry into the legal

erally has been and is being irreparably damaged and has no ade¬

PREVIOUS HIGH LEVELv

were

And

j

STEEL OPERATIONS UNCHANGED FOR WEEK FROM

of his forecasts.

sources

i

;

For

.

Texas Union

.

(Continued

r

;

33)

Ashland Oil &

-

•

•

'

Refining

.

$1.20 Convertible Preferred

v.:'

Illliv;. Kingan & Co.

/

American Maize Products Co.

Roosevelt Oil & Refining Corp. (Common)

•

Roosevelt Oil &
Convertible

I

Refining Corp.

6%

Preferred

~

Price 37Vi4

-

■-

■■/!

-

•;

-

;

-

FREDERIC H. HATCH;8 CO. INC.
•,":'-v

Natl Association nf Securities Dealers, Jnc»

1

STREET, NEW YORK 5, N. Y.
'j

IIin/.'

Telephones. DIgby 4-5700




r.'i

ii_.

i.

«.r

.

.

[ f-/

f'

"•

|

share H !

"

| I

.

'

;i

by

i*:: '/,•

Established 1888

STEWART J. LEE & CO.
60 Wall Street, New York 5
i.

■

•'

HAnover 2-0036
■

.

per

Orders will be executed

MERCER HICKS & CO.
72 WALL

•'

Bought—Sold—Quoted-:

-

Members

i1

■■

1 '

;T'r.'0

|

"
>

"
.

•

Kerr McGee Oil Industries, Inc.
f

'■

Common Stock

■

.

I

CORPORATION

Inc. /

::

(I

Oil

V ,v

'

TRADING: MARKETSMALNTAINED

,

-

on page

■V/i/;:

*n»

Teletype: NY lr2813

63

(Wall

■

MEMBERS N..Y. SECURITY DEALERS ASSOCIATION"

Street, Nw^ York 5. N. Yi

J

i

'

! Rell teletype NYJ-897

'

1 J
t

;

r
'

■

*

.

y ;

6

THE

(1202)

&

COMMERCIAL

Business Outlook and Credit Control
i

Thursday, September 23, 1948, V

FINANCIAL CHRONICLE

By RAYMOND RODGERS*

Professor of Banking:, New

Stock

Adverse

Policy

Discounted:'Jar vis

:

York University

Market

Maintaining monetary authorities are attempting to "carry water on both shoulders," Professor Rodger*,/, > ^Retiring President of Association of Customers'" Brokers sees no
asserts price situation has become so serious there is danger of buyers'strike:
Holds dilemma exists ^ U* ground for ultra conservatism, and holds substantial part of adin attempting to restrict credits and prices while pegjing government bond market.: Foresees end of up- A ? ?verse possibilities have already been taken into account by stock
! 1
price declines.
j
*» *A
ward swing in prices and business activity, and con dudes it may be necessary to lower peg of. govern-

A

>.

^

bonds

ment

increase discount rate,

below par, to

and to raise further bank reserve requirements. 4

authorities of the United States are engaged inlthe most stupendous
"balancing act" of all time. The economic destiny of this country, and to a lesser extent,
of the entire world, hangs on this balance. Oar monetary authorities continually have to
The monetary

-

re¬

sponsibility of
credit

The

war-born shortages of goods.

from

control

imposed

increase in the cost

constant

living, the "even higher prices
of commodities, particularly food

law

caused

great uncer¬

against the

items,

diametrically

tainty.
Prices have now reached
the point where even the people
in
the
high-income groups are

opposed
ket

for

„

a

of

quarter

a

trillion

dollar

public

debt

•the inflation.

on

them

the

an

sense

of

by
war.

economic
F

the., montary
; AA A'

Rodgers

Raymond

literally have to "carry water

the

In

farmer.

farmers accuse

turn

bear

ket

low¬

?

that, drastic

credit

action

might

Treasury?

text
:

that

IT he

of

:r ment follows-:

ing

shoulders"

and

—

on

Customers'
.

have taken much ol' the sting out;

Brokers,

*

!

of unfavorable events,

should like ta discuss

one

should they
transpire.- On the other hand/a*

I

consid¬

both industry

favorable turn of events could af-

indeed

.

of

labor

and

isn't

it

feet

sad

a

r

dent of the matic,, nothing is -dramatic. Pessi¬
I Association of mism is- so,; rampant today as to

N. Leonard Jarvis

precipitate a severe business re¬ eration that I do not believe is ber
profiteering.
It is action. Nonetheless, the present ihg properly weighed by; most of
situation, because policies will nave to be modified
easy!
'
'
;
us^A A-:' .•A III/AA H - (A A ■ \
'?•*=
This dual responsibility is the Jhey
are all
justified in their even more if the face between
"I refer " to the atmosphere' of
A,,.;/
key to Federal Reserve policy. As complaints!
prices and-,-wages " continues" 'uh?
qltra conservatism with respect to
The, price situation has become abated. Of course, if prices and
you will recall; the Federal Re¬
common, stocks! that is prevalent,
is a great business
serve .Systems during
the
war so serious that there
activity tend to stabilize! not
only in Wall Street, but on
made
a
public commitment to deal of buyers' resistance in the the present policy "will be con¬
Main Street.
In 1946, the market
support the 2lk% rate on long- higher-income groups and a grow¬ tinued. On the other hand, when
discounted^very .substantial de¬
term government
bonds in
the ing and widespread inability to business activity really starts to
cline
in
business
and
earnings.
foreseeable future.
Since then, buy on the > part of.. all groups. decline, we may expect to see a
Subsequently, it has lent a full, if
the commitment has been con- Food, for example, for three aver- direct reversal of the
present pol¬
not inviting, ear to alleged lack of
firmed.on several occasions, the-lage consumers cost $705 on an
icy of tightening the money mar¬
working capital for the financing
last time being on Aug.
2, 1948, annual basis on July 15, as com¬ ket and in creasing interest rates.
qf industry, to possible collapse i-.i
when
Mr.
McCabe,
the
new pared with $695 in January, and—
Any subsequential drop in busi-, thecommodity - price structure,
Chairman of the Board of Gov¬ mark this—with $615 a year at
ness
activity will cause'.an- infand to the possibility of an atomic
ernors, reiterated it to the House ,levels shortly after World War I..
mediate lowering of reserve I re*T
war with Russia.
Banking and Currency Commit¬ Put another way, food prices are
quirpmehts; also, money rates wilt
tee.
I believe they mean what 12.3%'higher than a year ago and
"These contingencies of course,
be reduced to lower levels 'than,
118.8% higher .than- prewar. More
have'not yet occurred. Instead, we
they say.
i
now prevail. "• *
'.
It follows that their methods of specifically, meat prices are nearly
have! had a level of business not
troth

*•

"There is an old and trusted}
rule that when everything is dra- r

my

term as Presi¬

T

Committee proposes,
individual and cor¬

1949

in

duced?

rouni-

out

the present

as

porate taxes are lowered, the capi¬
tal
gains and double taxation
modified and improved?
Suppose
that margins on- securities are re-

Mr.

Jarvis' ..state-

A;"In

as

Suppose,

Finance

ate

largely-- dis¬
counted.

cur¬

Winthrop
Secretary of the
as

Republican Chairman of the Sen¬

already

are

mitled that their anti-inflation ef¬

Aldrich

W.

wmmSi} developments

of

:
of the caliber being

men

rently discussed, such

troughs,"

future adverse

captive

bond

by

mar¬

is

Federal Reserve System

.

teering of the

they

one oi:

est

are^>

"we

ings,

y:

fortuitous

In

\

the government
market; and it must be ad-!

The

the

.

*
.j
'
the idea that the credit-control
Industry complains about the gun isn't loaded just because it
high wages and the high cost of hasn't gone off—yet! This is an
raw materials.
Labor accuses in¬ election year and- the monetary
dustry of profiteering.
Industry authorities
possibly
have
been
and labor join to assail the profi¬
unduly concerned with the dangei

imposed

fate

•

forts have not been very effective;
But do not get the idea that they
complaining.
Moreover,' people, are impotent just because they
in general, are becoming
bittei have not waded into the inflation
and
blaming various groups foi battle with a meat-ax. Don't get

mar¬

responsi¬

bility

have

of

the dilemma
authorities.
v

is

of

on

by

condemning the atmosphere of ultra conservatism with reference to
common stocks and pointing out, since, in contrast to corporate earnin

weigh the

them

Leonard Jarvis, of Hayden, Stone & Co., in retiring as Presi¬
dent of the Association of Customers' Brokers, read a brief statement

market like

all

"To

-

the

A. C. B„ a

be

;

and calm moving

sun

out^of a-hurricane cloud bank.

;

■

psychology and transform the

members

v

•

)i

-the

of

challenge—that' 1948-49

4

watchful year and that new

a

goals! may be achieved!'

•

I Business
Man's ||

Bookshelf

....

credit control must be fitted to the

two

and

a

half times the prewar

Chances of Business Turning

Downward*
A,.
necessity of market support of the level. The terrific economic pres¬
government
issues; and by the sure on the consumer is reflected
Well; what are the chances that
same token, their methods of
sup¬ in the $40,000,000 excess of Series business activity will turn down¬
porting the market are deter¬ E bond cash-ins over sales in the ward before it is too Tate? Even
mined
by prevailing
economic second quarter of this year and the optimists agree that a business
conditions.
To arrive at any esti¬ I
'lie
m increase in life insur¬ readjustment is considerably over¬

far from twice the prewar

Dollar

earnings,

normal.
Expenses and Profits of Limited

reflected by
the Dow-Jones*average of 30 lead¬
as

of

what

the

monetary

au¬

thorities will do, it is first neces¬
sary to ascertain the current state

; Well, where are
A Like the
daring

a

we?

young

the $119,050,000 total of 1947 to the $146,321,000
ance

man

on

the flying

trapeze, we are flying
through the air with the greatest

cash-ins from

decline—withdrawals

net

interest

ceeded

credits

by

ex¬

$11,-

While this is only

108,000.

one-

expenditures, the rear¬
private credit

recovery

mament

program,

expansion

(particularly^ mortgage

1947-JUni¬

double the 1937 figure during the

versity Graduate School of Busi¬
ness Administration,
So 1 d i e r s

current year,
ord

year,

and to equal the rec¬

$2.00.

v

-

of

Power
crease

the

Advertising

South

208

La

on

Morgan,
Chi¬

H.

Salle

Street,

Ill—details

4,
Morgan

cago

In¬

to

Capital Value of Your

Enterprise—Stanley

these two groups.

Mr.

from

request.

Regulations Relating to Foreign
Control in the United

"Qf war, I shall hazard no. guess.
Were' the; members of :the Cbmi;

tenth of'1% of total deposits, it is
and consumer credit), and the terii as .open to accurate news in¬
By practically all quan¬ & big; straw in. the wind!third round of postwar wage in¬ formation as are the leaders of the
titative
It is also reflected; in 'thei great
standards, America has
creases have added much fuel to
pemocrafic Sthtes, X ani sure war
never
been so prosperous. ! Em¬ postwar
increase
in
consumer
the fires of inflation. To "get; an ^ould. not develop.
This is be¬
ployment is greater than even dfibtvs
During the three" years
idea of the economic pressure in- cause the Democracies do not want
Henry Wallace could imagine— since. V-J: Day, our people have
volved,
consider the wage in¬ it, ; and. because the: other side
that is, imagine a few years ago! gone into debt faster than ever
creases alone. Do you realize that
would know that its defeat would
Jobs are not only easy to
Specifically,, p r i v.a t e
get, the before.
according to government estimates
be as inevitable as was Hitler's
wage ' rates
paid are extremely mortgage debt has jumped $10
more than 10 million members of
against the potential of American
high. Profits of industry, in gen¬ billion in the last three years to
labor unions received the third
Resources and productivity and
eral, are not only adequate; they a total of more than $32 billion:
round of wage increases? This was .Anglo-Saxon courage and tenacity:
are
in
many
cases
downright in the same period, retail buyers' more than
three-quarters of; all
handsome!
But the - Communist autoerata are
Industrial production credit has expanded some $8 bil¬
American labor union members.
going to be told only what tickles
is
at
record-breaking
rates all lion to a total of more than $14
Or, looking at factory labor - as- a their-ego .byAheir; various .subor¬
along the line.
Crop estimates billion.
whole, do you realize Ithat the dinates;, This
lack of a free press,
place farm production also at rec¬
On an over-all basis,; the Fed¬
Bureau of Labor Statistics reports
ord levels—and there is a
and of free speech in Russia be¬
good eral Reserve Board reports that
show that the earnings of 13,000,clouds the facts of the situation
chance that the harvest will be
by the end- of1948 40,000,000 000
productionAworkers A, oi'; the
even higher than the official fore¬ American
families will owe more
^ that country and constitutes the
country reached an all-time high unknown quantity, in the picture,casts.
We- actually
have
that than $50,000,000,000 on mortgages
of $52.81 per iveek on June 15"high-level"
economy
the
eco¬ and consumer debt obligations!
I'^^yertheies^thAstodc market,:
a figure which was $1 higher than
nomic theorists dream about.
in * contrast; tb' corporate / earnings
that of tne previous-month; ;AA!
The Recent Policy Changes
is at - the bottom: of ;one; of the
A False Prosperity
A The
Despite the forces of inflation, lowest bear market troughs it has
pressure of these inflation¬
If
we
really : have economic ary forces and the disappearance which are deep-seated, and pert ever witnessed.; Let us recognize
"heaven
on
meate our economic structure,
earth,"
what
are
of the huge Treasury cash sur¬
therefore, that a substantial part
feel that we are at, or very near,
thinking people worrying about?
pluses
of
the
last ; two
of the adverse possibilities in- the;
years
the end of the long upward swing current situation
They are worried because they forced the
is being taken
monetary * -authorities
know that this is to a large extent to
in prices
and business activity
into account.
This renders stocks
request new legislation and tc
a false
prosperity based on huge make important changes in their The cumulative effect of rising less vulnerable to the eventuation
wartime government credit ex¬ policies.
Short-term money rates wages on prices and business ac¬ of any adverse developments than
pansion and large peacetime pri¬ have been
permitted to rise. The tivity is tapering off because pur¬ if the market were at its crest. Let

P.

Field; Boston 63,; Mass.—paper—

1929.

In fact: most economists be-

due.

in

Brown—Harvard

ing industrial I stocks, promise to

Milton

Corporations are
Continuing their capital expansion
at peak level out of war savings
lieyc that the "sinking spell" • of
total for'thC first'four' months of
and retained income.
Commodity
April a year ago would have de¬
of
business health and, on the 1948;
It is also reflected in the
veloped' into the long awaited re¬ prices are moving of Fib .the agrb|
basis of that, to determine, as l'ar withdrawal of savings deposits
adjustment if it had not been for cultural. ;categorywhile: remai ning
as
humanly possible, the probable In New York State, for example the
widespread crop failure in firm in the capital goods: thereby
business trends for the near fu¬ in July, for the first time in 72
Europe and our Own short corn Correcting the major distortion
ture.
months, savings deposits showed
crop.
Since then, the European that has been existing between
mate

Stores

Priced Variety

Funds

States—Supplement 2—Bank for
Settlements, Mone-

International

of ease!

taryyahd Economics Department^
Basle,: Switzerland — paper— 3
Swiss francs.,

.

,

vate

credit

imposed

on

an

expansion,
economy

super¬

page

suffering have
credit

*An address by Professor
Rodgers at the 55th Annual Meet¬

,

under
been

the

lowered.

controls

established.

long-term

issues chasing

Consumer

as

power

has

been

out-run

I indicated earlier. Even though

re¬




necessarily

continued.

just

what

dollars, it has decreased
power since the end of

,

And

this

;

Likewise, personal savings
sharply dowm from wartime
(Continued

on

page 27)

Retail

Credit

of

1947—'

Survey

Fed- ;

Governors of the

era! Reserve System; Washington;

*

;Di

*

C.—paper---cppies

request.

on

.Security !Dea.lers

North;

of

America Mid-Year 1948

Edition-—-1

^^mpletelyA
stock and A
States A
and Canada—Herbert p. Seibert A
&:£ GdJ Inc., 25' Park Place,- New ]
York 7, N. Y.—fabrikoid—$9.00.1" A
leading

.

.

directory

of

$01 IlKJohw
FT.:

:

WAYNE,

.

Ira

IND.

W.

Johnston is engaging .in a securi¬
ties business from? offices at 1027
East Wayne Street.

'v-r

•>,_

I Joins G;. Bl Hanlon Staff:
'

.

(Special
.

to

BOSTON,

The

J. -i'- 1

Financial

Co r-

lO

»%.'*•/ -J

'

MASS. —David.

Newell is with Gordon
Si

.

Chronicle)

Post

|

B. \

B. Hanlon

Office

Square, ;

members of the Boston Stock Ex-

change. ^

'

happen if it develops that none

of

are

But the policy of
supporting the
Springs, government
bond
market
has

Me., Sept. 20, 1948.

ourselves

market is discounting come to pass

ing of the Savings Banks Associa¬
Poland

will

ask

personal income has continued to

require¬
in buying
ments have been increased twice

tion

Maine,

also

increase in

havebeen

Reserve

1945.

of

us

-

Board

,

v

<

.

the

adverse

that

factors

the
-

oyer

the next

12

months and

a

benign situation exists. - Suppose,
instance! that the coming na¬

for

tional

Administration

is

headed

Joseph Levitt Opens

Joseph Levitt is engaging in the
securities business'from offices at
135 West Tenth

City| 'AAA; Ay'f

Street, New York

|
[

Volume

168

Number 4736

Is This

THE

COMMERCIAL

&> FINANCIAL

CHRONICLE

$2,500 million and last year (1947)
they skyrocketed to over $3,600

Prosperity Fictitious?
By WILLIAM A. IRWIN*

"7Economist,"American

Bankers Association 77-

'•

the

'

Pointing out both here and abroad
7

l

governments

interfering with economic

and private.
enterprise is inextricably tied with political administrations, Dr. Irwib, though noting present favorable
business indices, lists as "elements of doubt" in situation:
(1) continued inflation; (2) developing
buyers' resistance; (3) rising burden of armament expenditure; and (4) tense international situation.
."prosperity will still last a while." '
,:;-v77.7;
are

joying at the present time.
is accustomed to look,
of

deep
t

un-

the

outlook

•" 7: ' ■" 7'".V

like?

Let

ainty

in

an

of

indexes, and also at

industrialists,
of

7 ":7'7,
the

is

minds

c e r

busi

ness-

at

few

a

j

factors

influence

our

im¬

with

are en¬

'

■.

'

7

well.
;
(3) National (Personal) Income
—Another of the important and

of

That

come.

JPrpsperity

>

economist

is in

the

looking

all

of

watched

the income of

means

lumped

us,

It

together.,

is it soundly

./based?'^ng^ to^taper off,ui?waS $M;235,%;
ta^ontinueffbr^aimore br Jess4iir?^f^that^anie'averaged
f43ui^&
definite
could hardly expect to keep that

ithese^days^$67end;? gratfually7ra te *> up7when^ we
.

Istopped^rcn

4>sudden crash^^nat^Aviir:^Udng'shfps;^ahd^gudS; andtanks,
disaster for-millions of our «nH nianps nnd nmmiiVilttdfi,T an/4
and planes; and ammunition,' and

Gan> we,- in; Americg, rer Kifiyjt^vanq
tain .all: fhe elements/ipf economic ious quantities for

people?

wellbeing while most of the out-

our

wage

1947

room ever

would live to

we

imagined that
such

see

a

And' with
national income at such a level,
it is hard to believe that any im-

jfiediate

and

Nevertheless,,

'*

possibility of bad times
well to A*emeniber

prosperity
lines, need we?

a world. Both here
governments are de-

liberately

interfering with economic processes. They are either
discouraging or encouraging the
production of goods, even when,
the discouragement means higherprices for the consumer and when

along - industrial

our

-

living in such
and abroad

j

member

the

the

aoout

siorf

doleful

early postwar depreswould have? about the

we

millions

of

unemployed

Would

wpo

you reforecasts of

and labor economists

government

streets?

be

workers

walking

our

about

avoiding
"apple
selling" by the returning veterans

production must be subsidized out
of the taxpayers' pockets.
They of the Second World War? Do you
are buying up
great supplies of »remember the" urge to put a floor
goods and holding them off the under
wages
by
writing new
in

order

that

the

minimums under them? Well, the
best-hailed
depression
in
the
country's history hasn't happened
yet, and there should be some red

pros-

perity for which they claim credit
may
not dissolve into adversity
for

their

supporters.

They

licensing both exports and im¬
ports, are rationing exchange, are
borrowing from, and lending to
each other in

a

effort to restore

.

■

doned
and

the

turned

Just

we

in

as a

Washington
matter of

that.

over

record, let it be

stated from the government's own

figures

thatr between

have ob¬

war

year)

the first full

great extent, aban^
system of enterprise

it

to

and

a

controlled

econ¬

government
referee

and

MERE

the

role

the

regulator,

we

and

become

18th
a

centuries and have

political

economy" in

ernment

all

says,

who

even

up

inextricably tied

with the condition of business

*in the broad

you

men

and

savings banks of Maine!

sense.

the

present

at

pretty good, doesn't it? Of

this done to

it includes

us? p What do the
customary in¬
dexes of business say?
And what

'

tion, of

Maine, Poland
Me., Sept. 21, 1948.




Springs,
;-7'

men

the

;/7>*An address by Dr. Irwin be■; fore the Sayings Banks Associa¬

000

federal

also

and

more

women

than

who

are

on

payroll—a

giant bureaucracy swollen by wartime ex¬
igencies and not yet reduced to

'

proper
more

peacetime-size/
than

But, with

61,000,000 " people

at

„

1

t

f ;

-

ty : y

-

\

•"

.

r;.: -

;<

Construction

4,* -r^:

—

An

f

v-

active

building construction industry is,
almost by itself, a guarantee of
good;; business
conditions. >. The
for

reason

that

in

lies

the

building;^ workers,

rials; for

building

,

come

affect

fheA activity

other

lines

V-

of

the

of,

mate¬

from, and.
many

.so.

business.

r DENVER;

So, in

times

active

as

of dollars.

this

1947, it
as

Remember, again, that
mean
that people

does

not

bought

three
times
as
many
They
couldn't
because
prices had soared!
•

houses.

What

Well,

about

in

first

seven

built
and

current

dollar

billions

$9.5

worth

included the bad winter
So it looks

months.

if this

as

now

will again hit

all-time
high in the value of construction,
touching $16 or $17 billion. And
it will be also an all-time high in
year we

an

volume, for it will mean about a
million homes. Building construc¬
tion, then, is helping to create the
prosperity we are enjoying.
7

COLD

Sales—Another good index
prosperity is found in < sales.
actually have no good figures

We

of

the

activity of the great mass

retail

records

chain

stores,
7. 1

But

stores.

excellent

have

do

we

on

department

stores

(Continued

and

mail

<

43)

on page

Atlantic City Electric

7

r

7

Botany Mills Com. & Pfds.

CREEK

*

La.

Electric

Dayton Malleable Iron

MINES

Parker

-

L E AS E

Long-established

of

N

Creek properties, will grant longterm leases on mines -from two to

company,

....

forty

_

fi

exchanged. Engineering
if desired. Write.

Joe Dandy Mining Company
315 Colorado

Bldg.

-v.

„

with past production
ranging to $4,000,000.00.

supervision

Co.

Warner

Cripple

acres

References

Stromberg-Carlson

7

■

owners

well-located

several

■records

7

Appliance 7

Purolator Products

H

H. M.

Byllesby & Company

PHILADELPHIA

OFFICE

Stock Exchange Bldg., Phila. 2
Telephone

Teletype

RIttenhouse 6-3717

PH 73

Denver 2, Colo.

ST. LOUIS
LYNCHBURG
MllIllIIIIIIIIIIIIIIIIIIIIIIIIIIEIKIIIIIIIIil'"

Trading Markets
American Furniture Co.
Bassett Furniture Ind.

'

Dan River Mills

Lynchburg, Va. t
Tele. LY 83

:

LD

33

mmiiiiiiiiiiiiiiiiiiiiiHimiiiiitiiiim.
~

I.!?-!!

Year Ended
$0.38

? 133,336

'

"

V

sh.
sh.

per

0.51 per

214,428 ^

0.91 per

307,049

:—_

NORTHWEST MINING

Puget Sound Power & Light Co.

0.82 per sh.

238,825

.

1.17

-

sh.
sh.

per

v

,

6 Months Ended June 30

$0.20

to
•••

•''

:
■ •*

bulletin

interested
..

(Prospectus

available

dealers-*

>

•" '• •*"•••■

:

'•

or

of

Quotes call TWX Sp-43
Exchange

from

Std.

A.M.,

Pac.

other

10:45

Time:

■

■'

.*

■

•

/

1420 Walnut St.

44 Wall Street

Philadelphia 2

New York 5

PEnnypacker 5-5976

Dearborn 1501
•

Sp-82

at
.

STANDARD SECURITIES

CORPORATION

CORPORATION

».*vr:*

CHICAGO 4, ILL.
Teletype CG 955

Floor
11:30

hours.

Members Standard Stock

231 So. LaSalle St.

on

to

.

•'

•'

Inc.

Available)

BUCKLEY SECURITIES

:

::

'

.77/,v.)

Kent-Moore Organization,

/

SECURITIES
For Immediate Execution of Orders

Maryland Drydock
(Reports on Request)

quarterly.

5':;

*.

0.84 per sh.

Current dividend

Descriptive

SPOKANE, WASH.

PHILADELPHIA

Net Profit

WHitehall 3-7253

•

Private Wire System between

Philadelphia, New York and Los Angeles

r

(6)

of

r

M

H

are

Gisholt Machine

|1 FOR
H

we

months of this year we

about

that

Central

%

activity?

terms,

places;" for in the

really "going

ruiiiiiiiixinxiiiiiii

CRIPPLE

three

was

in 1944 in terms

Steel,

7

,

it hit

1947

billion.

on

of

1946 and

$4.5 billion, $9.9 billion and $12.8

fact

that, apart from the employment

In the following three

Scott, Horner &
Mason, Inc. 7

'

* A

we are

;"

..

,

approaching

was

But,
than

COMSTOCK & CO.

V

*;

it's part of our current pros¬

(5)

Common Stock

1948—220,133

course,

2,000,-

means

perity picture,.

Gas Company

1946

looks

the

But—^business is making money,
and

been

-

1945.._l._Ci. J

;;

red.

to

even"

meeting.., ,l.

1943,

million, respectively.
194$,: they were more

1944

And for

least," that

has

years

the

black

of this hotel in which

ager

will

we

ended

In

1943---—; ;v. $ 99,752

■

Now,, what, has

years

from

that , a
smaller
shrinkage of volume than for¬
merly can easily mean the differ¬
ence
between
profitable opera¬
tions and operations at a serious
loss.
If anyone? piresent
doubts
this, let him talk with the man¬

Arkansas Western

in the

women

the

$1,925

"gainfully employed,"-. It includes

ministrations

are

war

in

are

which the fortunes of political ad¬

while

So,

in

terms,

1944 and 1945, they were $1,800
million and $1,896 million,
and

The latest

those

drop in business volume
readily turn their bal¬

"low" of ap¬
billion in 1944

a

war

1945,

years,

vulnerable to

are

the

its climax.

third
place,
the
point for many a
business has soared in the past
three years which, in very simple

phase of the matter

GROWTH--

have turned back the clock to the
17th

worker.

that

phenomenal.

-

How is it at present?

of

when

can

And,

profits after taxes, but before div¬
idends, the rate of growth since

figures available, show that em¬
ployment is in excess of 61,000,000
"gainfully employed."- It includes
people. That includes, as the govr

acted in

today,

Italian

(4). Business Profits—When we
take a look at the profits
of business, generally, the picture
again seems bright, on the sur¬
face at least.
Indeed, considering

1945

Instead of relying on the
operation of an economy in which

omy.

which

turn to

postwar year of 1946

/

small

a

Depression, 1929-1939, was
very low building ac-

period of

doing?
We hit
proximately $4

our

or

for later comment.

1944

.000

met,

.

reserve

jumped almost 2,500,000, and in
jumped better than 2,250,more.

world
and

American

1947 it

a

countries

prosperous

working man,
by the same measure, should be
infinitely better off than
the

(the
(the
year the war ended) employment
fell only about
1,100,000; while in

last full

-

And her© M home

viously, to

faces

badly-coordinated
a balance in in¬

ternational trade.

•in "the

,,

are

most

French

(2) Employment—Do

the encouragement means that the

markets

the

of

NOT

are

fact

So, let us look for a moment at
construction. How have we been

con-

ditipn,butit's .here!

;iexists^i;,.

ourselves

wartime allies.

.

in this

us

-

we

a

more

"break

industrialist, the

that these are figures of income
side world either tries to struggle we are well past the postwar de^
only. They carry no indication of
'< back to its economic feet or 4an~i dine of 1945 and
1946, and are
what that huge volume of money
guishes ^in\ distress?;
^,; 7,77 currently operating ■ atya; rate pf;
Will buy in the form of goods and
The answer is not easy to find. around 190% of the* prewar, pro-'
'.services: And, to keep -our think¬
If we, and the rest of the world,
duction. That is'nt bad, is it? And ing:
straight, we cannot allow our¬
were/liying in;economic treed;©^ t'cmrmt^r*that'it's; the^VOlJUME
selves
to forget
that, if mere
without innumerable interferences ;we ' are
measuring; * NOT. the
money
income measured pros¬
with supply and demand, a gen- VALUE.
If we can keep that up,
perity, then China should be one
eral forecast would not be too dif-r. the# we peed have tittle fear of

But

than did the existing
That cost will have to be

vastly
plant.

the

:f

ficult to make.

the

affects pros¬

much it

partly be judged from
that the period of the

can

tivity.

who are
criticizing business. In the first
place, existing plants and ma¬
chinery will have to be replaced,
and when the time for replace¬
ment
comes
it is likely to cost

ance-sheets

—

in

Just how

perity

be remembered by those

all personal income, that of
the business and professional man,

means

.

mean

directly for the builder.

Great

businesses

indicators

sensitive

,

or

-vengeance,

most

future

and the
salary earner, the man on commis¬
at the rate at which all types of
sion, the bondholder, the old age
with c o n f i - »
! industry 7 are 7 operating.. " This
pensioner and all the rest.
d e n c e.
For ;
means
the coal mines,* the steel
Naturally, it went to what we
some
time
mills, the automobile factories, the
thought
were
fantastic
heights
William
now there has.
airplane factories, the machineduring the war, rising from about
been fear and
tool plants, c the packing
houses,
$100 billion, when we entered the
talk of $n impending set-back, 1 the sho,e
manufacturing shops,ihh
Some
people have talked of a • clothing factories, the textile mills conflict, to $171 billion in the last
wartime year,
1945. ? But if we
ipere "correction" of the balance
m snort, ail tne varied activities
between
farm
prices
and
the that carry on the work of indus- thought that was good, we had not
yet seen anything. f For, by -1946,
prices of the things*, the farmer- trM production.
i
J 7
it was over $177 billion; by 1947
has to buy. Others have gone so
Well, it's doing fine! Vp^ cpurse^ it had jumped to more than .$196
far as to predict, solemnly, a crash
it e vjct.ee a nn tooxovv thedremenbillion,- and "this year it promises
that would involve unemployment
aA„s p^ks it reached during the"
to exceed $200 billion by a goodly
fpr 6, 8 or. even 10 million work- war.. For-example,
in-1943. it sum. Actually, in July of this year,
ere,. Yet .the. giddy-w^rl of eco- j
was .239% of the prewar
.average
the raite
nomic. activity goes on.
for the years
1935-1939; and m; of more Ahan $210 .billion a fyear."
Is this prosperity fictitious?—or .1944, with wartime demand
begin- That's •' income, is'nt. -it?: Few ,of

of

a

prosperity
doesn't it?

must

on

for one of the
important indicators of prosperity

one

business

like

by

duction—The

period?—or is it apt,

year,

But, there's another side to that
story too, and it is one that should

to be doing pretty

we seem

the

of

wellbeing.77/ yipMytMy- the economist is the national in¬

(1) The Rate of Industrial Pro¬

nabit

work,

months

six

they

7

lumber,
cement,
brick;
stone,
hardware, furniture, all kinds of
house
furnishings, the electric,
gas and telephone utilities,
and
other lines are affected,
to say
nothing of coal mining, the man¬
ufacture of coke, metal working
and many more that produce in¬

productive facilities
decline. In the second place,

Some Indexes of

thinking,
working men.
Nobody seems
tp be viewing
theduture"

these

of

some

a very

business

ers, and of in-,
t e 1 1 i g e n t

look

take

us

likely to have

are

portant

of bank¬

men,

honest

that

-

prosperity than they

first

that

looks

every one

",•';■ :■"; <$•'

con¬

and

cern

not

were

will probably be $2
billion higher than
last year, or about four times as
high as they were in 1939. That

'•

known greater

if that

as

billion to $2.5

of the indicators, at which the economist
But, in spite of this fact, there is an undercurrent

points this out.

■

never

Practically

is

processes,,

if;'SIntroduction
The United States of America have

And,

enough, the latest estimate
for 1948, based on the showing of

good

/'V/,

■

million.

..7.7

,•

(1203)

7 7

Exchange

of Spokane
Brokers

-

Peyton

Dealers

-

Underwriters

Building, Spokane
Branches

at

Kellogg. Idaho and Yakima, Wn.

4

T

8

COMMERCIAL

THE

(1204)

The Outlook for

CHRONICLE

Utility Stocks

Public Utility Specialist for Eastman,

Recommendations and Literature

Dillon & Co.

Members, New York Stock Exchange

It is understood that the firms mentioned will be
to send interested
parties the

^

Ascribing utility stocks sales resistance to large amount of new equity financing, to holding company
stock divestments, and to squeeze between inflexible rate structures and rising prices, Mr. Young an¬
alyzes factors offsetting this situation. Holds utility stocks are comparatively cheap, and well selected
stocks should appeal to investors.

^atomooiie

recognize that a group of investment men, such as make up this organization, is al¬
ways in search for ideas involving possibilities of capital gain.
At the outset of the speech
I would like to explain that I cannot undertake to build a case for utility stocks for any
uddition

time.

this

present an ex¬
of

set

reasons

for in¬

me¬

as

dia for obtain¬

ing

on

to

rising

allegedly in¬
flexible rates have been unduly
magnified.
The
companies
are
alert to the problem and much is
being done to increase efficiency
hold

and

Southwestern Public Service Com¬

To

pany

and Dayton Power & Light
As these subscription rights

have

of

tinuance

which

Co.

along they give privileges to
stockholders to put new money to
work on a very attractive basis as

seems

come

assured

well
under

present

cond itions.

are usually made at less
prevailing market price.
of time
the
Also, some of the more favorably
price-earnings ratios should im- situated companies are showing
prove so I feel that in the long
their ability, within a reasonable
run interesting
appreciation may: period, to report greater earnings
be-forthcoming.
The history of per share on the larger number
the utility stock market in the; of shares of stock than they had
past has been one of ups and j reported on the smaller number of
downs
as
the
enthusiasm
over
shares prior to the offering. Situtheir
prospects has ebbed i and ations
of
tills
sort
are
very
flowed. I see no reason why his- healthy.
tory will not repeat itself.
Bear in mind that the in vest-

offerings

>i«i

a

period

H.

old

Young

the

than

and

down

costs

far

as

as

possible.

the

con-

costs

a

certain extent, rising costs
offset
b.y increased

Furthermore,

equipment which

new

the

process

installation

of

in

now

is

or

order. New plants will save a
great deal in both fuel and labor
on

Present

plants

y in
many
in¬
being operated which
are
inefficient, and which are in
service only because of the pres¬

stances

are

of

sure

business

which

otherwise be taken

care

plants will permit
older

for

peak

standby

or

be

to

or

pur¬

poses.

Tire

A;

B.

circulars

are

and

Rubber

Commodities—Special

lar—Amott, Baker
&
Co.,
lad
Broadway, New York 7, N. Y.
available

circulars

are

on

A. M. Greenfield & Co., Mayflower

In¬

Hotel, Textile Realty Co., Wall &
Beaver Streets Corp., and 11 West
42nd Street.
^

commod¬

Dividend

Prospects

„

—

List

of

Colonial

Mills, Inc.—Memoran¬

companies with good prospects for
year-end
disbursements

dum—Auchincloss, Parker & Red-

Cohu

5, N. Y.

path,

—

&

fork

Co.,

Wall

1

5, N. Y.

Street, New

52

Wall

Street,

New York

,

Delaware Lackawanna & West¬
Florida

Bonds

—

Tabulation

—■

ern—Circular—Good body

Clyde C. Pierce Corporation, Barnett Building, Jacksonville 1, Fla.

115

Leading Banks and Trust Com¬
panies of Northern New Jersey—
Comparative tabulation — Parker
and

Weissenborn, Inc., 24 Com¬
Street, Newark 2, N. J.

merce

Market—Current leaflet—Stan¬

ley Heller & Co., 30 Pine Street;
New York 5, N. Y.

available

—

Market Notes — Leaflet — C. D.
Robbins & Co., 810 Broad Street,
Newark 2, N. J.

Memorandum

—

Co.,

Oil

leaflet

a

of

studies *of

and

Company and Lone

Star Cement.

Doehler-Jarvis
Comment

Corporation

—

and

appraisal on:
growth-type stock—Kalb, Voorhis
& Co., 25 Broad Street, New York.

4, N. Y.

■
'
Also available is

*■■

i
a

.

.

.

memorandum

American Radiator & Standard

Sanitary Corp.
Empire State Oil Co.—Circular

—Brereton, Rice & Co., First Na-tional Bank Building, Denver 2,
Colo.:'
Also available is

-

on

Railroads

is

opinion,

Houston

on

Market Notes
Leaflet
Chas.
A. Day & Co., Inc., 199 Washing¬
ton Street, Boston 8, Mass.

&

Broadway, New York 5, N. Y.

Also
market

—

ment

Also

on

extra

New

of these

units to be retired

used

of.

—

ity letter—Thomson & McKinnon,
Celanesc Corporation of Amer¬
11 Wall Street, New York
5, N. Y. ica—Detailed study—Kidder, PeaAlso available are a Stock Sur¬ body &
Co., 17 Wall Street, New
vey and Bond Survey.
*orx 5, N. Y.

cannot

some

available

and

consider¬
is

Circular

dustry.

able benefit will be obtained from

Furthermore, 1 would point out
banking fraternity is going that rate structures are : not by
big demand in recent months, to be a big help to the utility any means inflexible and that con¬
From my contacts with wide num¬ companies in selling new stock. I siderable
progress* has
already
bers of security buyers I think have heard of two cases lately in been made in the
way of getting
that I can give you some of the which offerings of equities were rate increases. The first
steps in
key reasons, and having done that, to be made and the demands of this direction were taken by tele¬
let us see what is on the horizon dealers for position in the syndi¬ phone,
manufactured
gas,
and
to change sentiment.
cates were greater than the syn¬ transit
companies.
The electric
Utility stocks have not been in

Also
Steel

been

business.

—

Co., 120 South La Salle
Street, Chicago 3, 111.

opinion, the difficulties

my

of the utility companies in respect

fine in¬

a

come,

Over

In

a

such

basis,

esting to note that a number ol
companies which used this device
wound up with subscriptions for
substantially more than 100% of
the offering.
Among these were

terest in these

stocks

allotment

rights

subscriptions to be subject to al¬
lotment, if necessary. It is inter¬

However, I can
cellent

their

to

pre-emptive

pleased
following literature:

Becker &

I

striking appreciation at

Thursday, September 23, 1948

Dealer-Broker Investment

HAROLD II. YOUNG*

By

♦

FINANCIAL

&

a memorandum:
Utah Southern OIL
•
;

in

.

dicate
Factors in Utility Stocks Sales

Resistance

,/- ?■
*

>y

manager^ Were able to take
that

suggest

I think that the most resistance
have encountered in

Certainly

of. * This

care

drug

does not

futility stocks

are

a

companies have not had to Seek
relief
are

promptly but now they
filing petitions for higher rates
as

the7 market.

on

"Fortnightly

Investment

—H.

&

Letter"

Fireman's Fund Insurance Co.—

Co., 60 Beaver
Street, New York 4, N. Y.
In the same issue are data on

Bulletin—Laird, Bissell & Meeds,
120 Broadway, New York 5, N.

Hentz

Consider; and have had some very encour- Utility preferreds with
sinking
thev demands of the; aging relief. Among the favorable fund
provisions,
Chicago,
Mil¬
the case
for
utility stocks has utility companies are not simul-! decisions received in the last few
waukee, St. Paul & Pacific, Cluett,
been built up on three
principal taneous or originating from the weeks have been those granting
Peabody Co., and Baltimore &
points, viz., the large amount of, same areas, In other words, one a rate increase to Potomac ElecOhio,
new
capital to be raised which group of bankers will be
interest-; trie Power by the District of Cowill entail a considerable amount ed
in^ a Pacific Coast offer; an- lumbia Commission, an increase
Railroad Developments
of equity
—Cur¬
financing; the numerous; other one in a Middle West offer- to Detroit Edison Co. by the
rent developments in the iftdusholding company divestments still | ing and so on. My own feeling is Michigan Commission and favor¬
try-—VHas & Hickey, 49 Wall
to be made, which will add to the that
relief
for
necessary common stocks can able
Central
Maine
Street, New York 5, N. Y.
supply
of. operating
company be
sold if the program is ap- Power Company by the; Maine
*
*
*
y.'" —V;
stocks, and lastly, the feeling that proaehed intelligently and in or¬ Commission. One thing to bear
American Buslines—Analvsis—
utility companies are being caught derly fashion.
in mind is that as far as inflation
Thomas E. King & Co., 39 South
in a squeeze between inflexible
•; •
V ' .'V. 'Y'v
};■ is concerned, the trend may be La Salle Street,,
Chicago 3, I1L
rate structures on one hand and
Holding {Company Break-ups
turning. Also, there are indica¬
rising prices on the other.
4 '
tions of weakening price struc¬
Passing now to the question of
American; Overseas Airlines-^;
The first objection is hardest to the
It
holding company break-ups, tures in a number of lines.
Analysis—Schwammr &
Co.,
50
dismiss because it is a fact that the my best
judgment is that from looks as if fuel oil might have hit
Broadway, New York 4, N, YV
utility companies have a huge this point this process is going to a peak and possibly is declining.
construction
are
indications
that
the
program
ahead
of be a rather slow one. Many of the There
Argus Research Corporation—
tbem and that a lot of new
money larger systems still to be broken seller's market in coal may be- Analysis—Collin,
Norton & Co.,
must be raised.
about
at
an
end. y Certainly,
For example, in up
have
if 508-12 Madison
complicated
problems
Avenue, Toledo 4,
the electric industry alone it is
there is any trend toward lower
which will not be solved
es¬
quickly.
Ohio.
*
.1
timated that the construction
pro¬ This is particularly true
in the prices in general, then the argu¬
I

presenting
_

also f, that

Fuller Manufacturing Company

—Study—William A. Fuller & Co.,
209 South La Salle Street, Chi¬
cago

A, 111.

Giant

Portland

cussion

--

,

Cement

Dis¬

—

of

interesting situation—
Troster, Currie & Summers, 7A
Trinity Place, New York 6, N. Y„,

,

*, Greer Hydraulics — Data—Heimerdinger & Straus, 50 Broad
Street, New York 4, N. Y.,:;
Also available

are

data

on

Se-

curity Banknote and Silver Creek

.

,

*

-

on which the companies are
present engaged will entail the

of

gram

case*

at

which

have

several.

classes

of

outstanding so
an-argument be¬

enormous

expenditure

$6^00,000,000.

of

around

The

of

some

the

big systems
different

stock

telephone in¬
dustry and the natural gas indus¬
try have large programs ahead

that;there

also

controversies

that the

so

total

amount

of

capital to be raised is large,
Obviously, a part of the
program is the sale of new com¬

is

tween different
groups as to their
share in final distributions. Such

give rise to
proceedings
before

new

longed

indeed.

SEC with further

mon

stock.

far

as

stocks

Bonds will be used

appropriate. '

Preferred
difficult to sell in the

are

present
amount

so

market.
of

A

considerable

will be gener¬
ated by the companies themselves
in the form of depreciation
funds
money

and retained

theless,

if

structures

maintained
ance,

earnings bpt

in

some

new

must, be sold.

Bear in
of

new

come

are

present

common

bal¬

stocks
;

:

mind

that all

cessful,

so

some

far have been
of

Some

so.

them

into the. courts for
" V, -J
■

gets

confirmation.
I

believe Sit

rather; far

suc¬

conspicu¬

companies

have

will -be

in

the

American Power & Light,
Electric Power & Light and some
of the rest will have been
finally
dissolved. Many of these divest¬
ments of properties will be ,made
by distribution of operating com¬
pany

stocks

dends

as

rather

distributions
market

as

address

by Mr. Young at
meeting of The Boston

Club,

Boston,

Sept. 22, 1948.




Mass.,

Of course,

pressure on the
of the recipients

some

decide to dispose of their holdings
but this process is usually a
grad¬

unmanageable

Investment

liquidating divi¬
as
offerings

than

cause

portunity to make subscriptions in

fall

time

before

tric,

ual

*An

some

future

systems like Standard Gas & Elec¬

offered their stockholders
the op¬

first

the

litigation when

offerings through underwriters.

common stocks which have

along

ously

their

never¬
to be

the plan

pro¬

one.

I do

look
one

anticipate any
flood of operating

stocks

company
company

not

from

divestments

upon

the

holding

but

prospect

as

rather

being

of gradual distribution over a

period of time.

>

V

.<

v,

ments

which

have

been

used

against the utility stocks become
arguments for them because of the
easing in the expense situation.
If there is

some

Arkansas Western Gas Company
—Detailed information for dealers

load and many

of the plants which
being run today have such
high generating * costs that the
utility companies have difficulty
in getting back a new dollar for
are

an

old

one

revenue

on

some

of their low-

To

this

butting

have

been

negative

re¬

argu¬

ments

and, after all, the thing to
positive appeal which
these stocks have.
In the first
place, I feel that when you can
get returns of 5%% to !Vz% or

stress is the

,

even

close to 8% from high qual¬

ity stocks
years
ers

a

real opportunity

I well recall that two

ists.

ago

all

Atlantic Refining Co.—Research

report

prospects—Eastman,
Co., 15 Broad Street,
New York 5, N. Y.
'

I

the

was

time

on

Dillon

or

ex¬

three

pressed by deal¬
to

find

them

Also

/

:

available

Cleveland

Co.,
and

reports

are

Electric

Mclntyre
a

on

Illuminating

Porcupine

Knox

V;

;

developments.

35)

.

Cement,
Co., / and

Stix,
Terre

Baer &
Haute

Malleable & Mfg. Co.: /
Kaiser-F

r a z e r

Corporation

Co;,

M.

—

Kidder

&

i Wall Street, New York 5,

n.

—

Leonard Refineries, Inc.—Circu¬

lar—George Birkins Company, 40
Exchange Place, New York 5, N. Y.

Memorandum

-

Maule Industries—Statistical

re¬

port—Aetna Securities Corp:; lit
Broadway, New York 6, N. Y. ; \

VC "

-

Also available is

—

Bache &.Co.. 36 Wall Street, New
York 5, N. Y.
;r

port

on

a

statistical

re¬

Douglas & Lomason Com¬

pany.'- ;

V

vK';%$Mi :'^rv3&£'; vSS

'

Also

Bulova

on

&

available

are

Watch,

memoranda

Colorado

Fuel

Iron, and National Cash Regis¬

ter.

sephthal

&

New York
is

a

Minneapolis

Gas

Company

—

Special report—A. C. Allyn & Co.,
Inc., 40 Wall Street, New York 5,

Boston & Maine—Circular—Jo-

Co.,

120

5, N. Y.

circular

on

N.

Broadway,

Also available

Y.;<"

•

^ \y;.

New England Public Service Co.

—Analysis—Ira Haupt & Co., Ill

Railroads.

Broadway, New York 6, N. Y.

•

a

Mills,

Inc.—Analysis—

utility stock which would yield
5%.
Today there is less interest kKiser, Cohn & Shumaker, Inc.,
being shown when 6% and 7% Circle Tower, Indianapolis
4, Ind.
can be found readily.
Price-earnon page

Portland

Fuller

Mines,

leaflet' of current Railroad

Botany

(Cqntinued

Also available are reports ori
Huttig Sash & Door Co., Missouri

&

Blaw

point I

certain

Refrigerator Co.—Re¬

Memorandum—A.

business.
Favorable Factors

Hussman

port—Taussig, Day & Co., Inc.*
316 North Eighth Street, St. Louis
1, Mo.

& Co., 231 South La
Street, Chicago 4, 111.

Salle

in

because they are hard pressed at
the moment to take care of their

/yy-y;,--

—Comstock

general recession

business, the utility companies
would not be altogether unhappy

r

Precision.

Bryant

Park

Building—Circu¬

Puget Sound Power & Light Co.
—Memorandum
of "Public
,

;

in

current

issue

Utility Stock Guide"—

(Continued

on page

46)

;

•

Volume 168

THE

Number 4736

-

&

COMMERCIAL

FINANCIAL

CHRONICLE

portant

V: Real Estate Prices and

:

Mortgage Practices

unmixed blessing when there

contends amortization of mortgages is not an
1

'

decline, and possibly even a
slight increase due to the war
marriages of the past six to eight
years.
The new draft may con¬
tinue to
influence these figures
for some time to come. It is, how¬

house, and

new

;;

•

.

ever,

*

assigned subject breaks down rather readily into four hatural main divisions as
Policy, Construction Trends, Overall Trends and Mortgage Practices. ; I
discuss each of these divisions briefly and then, in summation, try to tie them up,

The

follows: Mortgage

shall

<J>_

each with the

in

other,
general

the

a

of

With

date.

due

the

the

coming

of

these

items

in

amounts

payments

the amortized
mortgage, this ceased to be true.
Our
mortgage accounts, at the
present time, are live, fluid ac¬

major

counts due to the factor 6f amorti¬

meet

will not agree

zation.

policy must be clear-cut

with

it has worked

con¬

clusion.
It

is

highly
that

probable

of

many

you

what

I

in

have to say

in
particu¬

some

lars.

That

ours,

to

ment

most of the

Wallace

True

W.

lending in some one of our
opin¬

Differences of

institutions.

ion- are, to some
the life blood of

extent at least,
our portfolios.

like to discuss
overall
mortgage
policy. I am
firmly of the opinion that to at¬
tempt, at any given instant of
time, to establish a fixed mort¬
gage policy which will be good
for longer than the next 30 days
is completely fallacious from the
executive viewpoint. This is true
should

First, I

The self-amortiz¬

so.

work for

more

it
has
safety
mortgage accounts never
there
previously. Experience in
institutions, which had required
into

amortization
sion

before

1930-1937

of

reason

that

market for

our

depres¬

that,

been

re¬

years or more,

ceived for five
overall

the

showed

where amortization

the

had

foreclosure

rate

dropped

16%
country-wide

materially from about

very

about

to

of

element

an

our

5%

for

a

.

for the

invest¬

our

but

departments;

introduced

cover

field of mort¬
gage

business in

conduct of the

created

are

we

able

minor revolution

a

ing loan, with its constantly de¬
creasing
principal
balance, has

of

business

the

good thing, but

a

several directions and it will con¬

this

in

This is

tinue to do

is

the reason

why,

of

concept

average.

However, do not allow amorti¬
incubus about

an

your neck; There is a- point,rin
almost any mortgage, at which
amortization ceases to be neces¬

mortgages rests upon another, and

sary

wider market,

Most

the market for real

estate.

Any of us with much ex¬
perience in that field knows that
this market is'never a static thing
for very long. Values are con¬
stantly shifting, market emphasis

of property is a
shifting quantity. To¬
day's demand may be for the
single-family home, tomorrow's
for the investment type of prop¬

on

various types

constantly

in

erty

housing

or

commercial

property, and the following week
may change to still another group
or type of properties. We who are
engaged in policy making, therefore; must be alert to these shifts
ings and govern our policies ac¬
cordingly.
In response to these changing
conditions, our mortgage pattern
,

fluid and
changing one. At the present time,
when many sales are taking place
where the sales price includes a

must

necessarily

be

a

premium
for immediate
occu¬
pancy, the appraiser and the lend¬
ing officer are faced with an en¬
tirely different set of conditions
those

than

which

existed

in

the

period 1936-1941, when value for
both lending and sales purposes
Was determined
by a radically
•different set of economic condi¬
tions

Many of our troubles in the past
the mortgage business have
stemmed from mistakes in, and
In

the
Our

rigidity of, executive policy;.
policies have been too in¬
there was too great

flexible and

for at least a period of time.
lending officers tend to be
exacting in their requirements
in this direction. In so doing, they

too

create a very real problem for
themselves,
particularly
where
the
mortgage has been written
on a constant payment plan with
all
payments credited first to

interest and the balance to amor¬
tization of

principal. For example,
of the 15-year selfamortizing mortgage written at
41/2% amortization begins at 3.9%
per month, at the fifth year it is
4.9% per month and at the tenth
year it has reached 6.1%. If such
high amortization is necessary, for
the
safety of the principal, the
the

in

case

loan should not have been written
in the first instance. At the pres¬

ent

time, in our bank, we are
finding that many of our perfectly
good loans are being refinanced
elsewhere in much larger amount*
than our present balances. Much
of this stems from sales but some
of it

is

indicated

any

row^

99.5% of
tized

our

basis,

makers are, it seems to me, over¬

looking

a

pay-offs, includ¬

policy-making stand¬

amortization
a

which

havoc with

unless

our

monster

curbed,

play

mortgage accounts

in the very near future. A
this

have

We

payments.

Frankenstein

will,

of

have taken place
the business in the past decade

will

be

a

little

implies,
our

V

more.

We used to regard

mortgage as just what its name

once

"a

conditions.

new

insistence

due.

We

small

take

can

operations
loan

rigid

borrowei

it

as

comes

leaf from the

a

manual

The

and

the

on

meeting his obligation
of

any

of trie

companies in this

re¬

the

.n

from

desire

bad

a

to

situation

point

of

temporize with

many, many more
from

the real

view¬

dead pledge,"

which,

put in
vaults and forget about until
executed,

we

could

'-An address by Mr. True before
Savings Bank Association of

the

duly

borrowers

re¬

a constantly reducing
principal sum, and the oractice of
many

Sept, 17, 1948.

taxes




our

payments,

Massachu*°tts, Swampscott, Mass.,
-;

large;

institutions of collecting for
and insurance as well*, the

trying to say is that I do not be¬
lieve the so-called modern houses
will have as great an appeal to
the buying public
tional
types
we
known
From
years

the

conven¬

have

always

as

appreciated.

and

background of many
in close connection with the
a

mortgage and building industry,
I would like, at this point, to do
"Drew

a

Pearson"

venture

and

a

prediction. That prediction is that
—in spite of all the modern plan¬
Then,/too, there has been a ning-/in spite of all the talk of
gradual increase in the median prefabrieation, in spite of all the
homes, I am
age of the population and this has factory-assembled
already had, and will continue to firmly of the opinion that we will
have, an influence on the real es- be living in pretty much the same
tate purchasing habits of our pop¬
type of home 01* apartment 10 to
15 years from now that we are
ulation.
In
1930, approximately
17 % of our population were over living in today, except for minor
50 years of age; in 1940 this fig¬
refinements.
y;.;-V"• '/ /
-

ure

is

had

increased

to

20%

and it

estimated

that by 1950 it will
approximately 23% or more
other words, the life span o
man
is increasing and the birtl
be

In

If
I

am

history

anything, and

means

conservative

enough

to

be¬

lieve that it does, I do not bejieve
that we will see a series of over¬

business.- Do

estate

population

naturally

are

conservative.

mor(

Therefore,

officer

any

watch

should

architecture

properties
t

,

-

and

were

(Continued

of

some

built.
on

these

However,

page

42)

no.

forget that the' moment your
bank; made; its first real estate
loan, it went into the real estate
business.
No savings banker or
Other lender 6n mortgage security
cap know too much about the real

•estate business and about the fun¬
damentals of value, land econom¬
ics, land utilization, and the eco¬
nomic forces which create

or

de¬

stroy values in real property.
One of the first

sign posts of a
mortgage depart¬
ment, therefore, is a reasoned
strict, logical service policy. This
well conducted

policy,

inaugurated, must be

once

rigidly enforced.
Variations of
that policy should be made only
the

on

written

authority

of

one

the

of

major executive officers.
If your bank is large enough, I
would

the

recommend

this

of

form

reduction

policy to writing in the
a
servicing manual oi

of

You will find it in¬

procedure.
valuable

time goes on.

as

Another

of policy which
constantly carried in the
forefront of the minds of top man¬
agement is the necessity of know¬
ing what your investment cosh
must

the

in

are

part

be

is

There

of

matter

mortgages

constant

necessity tc
review procedures in all depart*
a

ments of the business,

eliminating

unnecessary steps and ,dupl'cate
records, watching letters written
to be sure that printed forms can¬
be

not

used as well, and, above
being sure that all records
kept are worth what they cost to
keep. ^ In our own bank, we have
just eliminated the returning of

all,

receipts

mortgage

for

substituting
for

a

their

that

ers

resulted

has

$4,000

in

This

one

item

postage saving

a

without

year,

per

checks

canceled

their receipts.

were

of

payments,

vearly statement
them and telling our borrow¬

con¬

sideration of clerical time neces¬

complete the operation.

sary to

Trends in Construction

making.

garded them for the most part as
a land rent payment and thought
little of them. Now, with larger

of
am

•ever

So much for policy and policy¬

the payments were not un¬

What I

knowledge oi

discusused

interest-only type of mort¬

gage,

types

today.

relations; but mortgage
of them have

lack of

a

the

from

public

.

,1

.

Now, I shall turn to

all the
probable trends in construc¬
has created another tion with
emphasis on the one*
problem, the necessity for alert¬
family home.
ness
in servicing policy. In the
Old

of us oldsters knew it, is
exception rather than the rule

many
an

radical

any

accepted

past

a

solu¬

amortization policy in

true that the big family, as

from

night changes in the living habits
through a lack of a rate, until very recently, has beer, and desires of the great bulk of
declining and families are becom¬ our population.
Particularly in
vigorous
collection1 policy
ana
through the attitudes of executive ing smaller. With smaller fami¬ the field of housing, changes are
management toward delinquency lies, " there w ill be fewer large never made quickly.
I can re¬
homes
but
more
small homes memberin
the
back, about
25 years,
mortgage account than
generally built to,{- operate effi¬ when the so - called
"modern"
through any other'cause in the
ciently without servants for the house was first introduced. A cer¬
savings bank field. Some of these
tain
element
of
our
losses have stemmed from inter¬ smaller family unit.
population
These
older
elements of
the was attracted to this; style of
nal inertia in management and
More money has been losi

gard.

■

or a

its

in

later.
The

these

fundamental mortgages

some

changes which
in

loans on an amor¬

our

point, it is about time that we re¬
examined this whole question of

tion

policy

present, /with

proximate 12% per annum, with
the prospect that this will ulti¬
mately increase to the point where
the average life of the portfolio
will be about 7V2 years. I believe

created

Some of our institutional

is

ing satisfactions, assignments and
contract principal reductions, ap¬

regardless of constant and quick
changes in economic conditions.

Overlooked

moment there

At

money.

that, from

Fundamental Changes

the

for the owner to bor¬

reason

tendency on the part of man¬
aging officers and trustees to es¬
tablish policies and then hold on
to them over long periods of time,
a

from the fact, that the

comes

remaining loans, with respect to
value, are so small that refinancing

servicing
policies
must,
be entirely revised to

therefore,

come

zation to become

art

borower*t

the

budget.
Our

almost the whole

of

prewar

not enough good mort-

are

Stresses sound, competent mortgage appraisals.

gages.

with

over

past 50 years. True, there
has been some change in the rate

40% above

on

housing construction.

of the

Y,:';y

Asserting, because of changing conditions, mortgage pattern must necessarily be fluid, savings bank
mortgage officer maintains real estate prices are at peak and will level off about
level.
Denies lending institutions or government are obligated to provide everyone

carefully his loans
changes

Statistics show that the
of.the family unit has been

decreasing

By WALLACE W. TRUE*

Vice-President and Mortgage Officer; Lincoln Savings Bank, Brooklyn, N.

economic unit in the

as an

family.
size

I believe that the home of the

future

will

smaller,

more

continue

true

being built ir

now

communities.
for

many

This

which I shall mention

We
about

are

50

in

an

years

which the child

will

reasons,;

era

or

is

be

among

only

a

few

which
more

no

but we're
the line.

began
ago,
in

longer im¬

about two
are

delays,

handling nine out of ten calls while you hold
,

'

4

*

w

circuits and switchboards and
coming along. Our operators know their job.

We've added many new
more

are

the

be

efficient house, sim¬

ilar to what is
many

to

Today, Long Distance calls go through in
minutes on the average. Now and then there

Our aim is to put your

than

ever

out-of-town calls through faster

before. And we're working hard to do it.

•

10

jl'HE

(1206>

COMMERCIAL

&

FINANCIAL

CHRONICLEThursday, September 23, 1948

The International Bank in World Reconstruction

Bank and Insurance Stocks

By EUGENE R. BLACK*
Executive Director for United States, ;

By ii. e.

Johnson

;

;

Asserting World Bank is well under

This Week—Insurance Stocks
In

a

recent

presented.

.

Says Bank's

purpose

is to prepare

ground for private equity investment, and its most important activity is supervision of expenditure of

Shelby Cullom Davis, of Shelby Cullom
Davis & Co., New York ahd former Deputy Superintendent Insur¬
ance
Department, State of .New York, several interesting ideas on
insurance stocks are

,

in obtaining objectives, Mr. Black stresses its work in extend¬

way

ing financial counsel and technical assistance to devastated nations.

article entitled "Fire Insurance Stocks Are Invest¬

Insurance" written by

ment

'

International Bank for Reconstruction and Development

;

'

proceeds of loans. Outlines sound policy of international borrowing.
I would like to tell you

something about the operations of the World Bank, particu-:;
larly the character of loans we make, their purposes and the careful control exercised dur¬
possible to insure oneself ing and after disbursement of the money. I would like also to tell you something about the
«

,

,

Mr. Davis in the article points out that while many hazards of
every day living can be insured, it is not
against an investment loss.
However, "almost the same objectives
can be achieved through the ownership of insurance stocks."

Support for such statements is derived from the fact that insur¬
ance stocks have long records of dividend payments.
Part of the rea¬
son for this is that dividends are paid from the investment earnings

the dividends on their stock from
the interest received on their bond holdings alone.
Almost regardless
of business conditions the dividend of such companies should be
maintained,
/
*
.,
Today

some

companies cOuld

pay

,

,

There are of course many companies which derive a substantial
portion of their investment income from a wide range of common
stock holdings.
However, Mr. Davis points out that—"the verv diver¬
sity of stock ownership is a factor of safety for the investor."
Thus
if a particular industrial company or industry bad to Cut dividends

because of business

benefits
these

<£-

from

loans

and

other

ities

the

It is

point in

Considering insurance stocks as "investment
insurance" is that in periods of declining markets, insurance stocks
as a group perforin much better than other industrial shares.
Be¬
cause of the fact the insurance companies usually improve their
underwriting results in periods of declining prices, the stocks do not
decline as much as those industrial companies whose earnings are
more severely effected.

A1S0, while important economic changes may effect in varying
degrees the industrial companies within our economy, the established
place of insurance assures it a continuity of life.
No new industry
avill supersede it.
At a time when "blue chips*' of a few years ago
iiave lost their investment Status because of change conditions within
the economy and Wftert the

existing
could

be

ultimate effects Of atomic energy on the
ecotlpmiC structure is ndt predictable, insurance stocks
Considered "investment insurance."
For the future—"in¬

surance'Will be

The Dutch Shipping Loan

v

Bank.

\

Although
people

.

It

While

totaling

agreements

Bank

was

Bretton Woods

recent f

re^nt

most

Eugene

R.

Black

12

loan

and institutional support.
The

Bank

$525 000 000.
t
subject of LA."L

jn

represents

1 .f ,"

that

one

the;

being

de-

a

linanc

international

the

on

,

draws capital and support

t would like to refer to the

lnan<?

in

are

we

born, so to
speak, at the
Monetary

into

entered

has

Bank

most

over

evident, therefore, that the
Bank is well worth public

World

generally known that the

is

know that the

Conference

limitation the Bank still has

$200,000,000 immediately available
for loans.

Bank.

activ¬

of

conditions, the Overall effect on the investment
1 9 44,
income of the insurance company would be minor.
Only in'case the July,
have
dividend cuts become very severe would insurance companies be many
forgotten
the
faced With the consideration of lowering dividend payments.
Another

national commerce as can
direct
loans made
by
the

.

the

some

,

*rom 47 member nations, but it

t0gfouri™«

$12,000,000

loan
Dutch shipping companies for the
purchase of six vessels which had
been used by the U. S. Government as baby flat-tops during the
war, and
had since been recon-

Inn hJLntocir,
fn
Bank

c()ntributi()n

iWo

makes

the

to

borrowing
and to the de¬
ship loan established velopment of international trade,
most simply described as a bridge a possible pattern for the future
and yet it does not dispense funds
from war to peace, and was in¬ and was in accordance with the
with an open hand or shirk its retended as a vehicle for reviving Bank's
purpose
of
encouraging
sp0nsibiiities and obligations after
international
capital
investment private foreign investment.
The a loan is made. It is required to
needed
to
reconstruct
countries notes taken by the Bank were of
make loans that are to be used for
devastated by the war and to de¬ one to 10 year serial maturities,
productive purposes and those af¬
velop the regions • of the world carrying .2V2% interest, a 1%
fording
reasonable
prospect of
where eveh before the war men commission for our special reserve
repayment. It can not make loans
were unable to attain a sustaining
arid a 1/16% service charge.
A for relief or for
poltical purposes.
standard of living simply because group of 10 commercial banks and
It is furthet* ertjoined by its at4-*
there were not enough industries savings banks purchased $8,100,tides, to make arrangements "to
to utilize the available labor; and 000 of these notes. The notes were
insure that the proceeds of any
resources.
111
secured
by a first mortgage on loan are used
only for purposes;
In my opinion the kttairimeftt of the six ships; they were obliga¬
for which the loan was granted."
these
objectives is well- under tions of four leading ,Dutch ship¬

original

verted into cargo

need

for it arid its purposes.

It has beeh

vessels.

country's

The Dutch

economy

^

,

as necessary as in the past."
There is a positive Side which Mr. Davis presents. In addition way. The Bank has made urgent¬ ping companies, were guaranteed
Loans for Productive Purposes
to being insurance against certain fiskSj "they are insurance for" ly needed loans, perhaps not !aa
by the Netherlands government
Only
certain things.
Dividends should be fncreasedv' At present around many or as rapidly as some ideal¬ and finally those sold by the In¬
i*'
In order to meet this latter ad~
75% of investment income is paid out as dividends.
The remainder ists' and theorists desired,
but ternational Bank were guaranteed
mdiiitibh the Hank established &
of such income and all underwriting profits are retained in the busi¬ loans which represent an impor¬
by the World Bank.

and added to investments.

ness

As investments increase, investment

Income increases and provides the basis for a larger dividend.
"The
hiStorv of insurance company dividends is a long history of upward

growth."
Mr. Davis goes on to say that while they may be considered at
any time, because of conditions existing within the insurance indus¬
try, now—"happens to be a particularly good time to invest in insur¬
ance stocks."
During the past two years they have done little mar-

contribution

tant

nations

the

of

the economy

to

will
make more.
Equally important,
as loans, are the counsel and tech¬
nical assistance which the Bank
involved;

it

extends to member OoUntHes,
Technical

>

y

Assistance

In many areas throughout; the
kctwise ahd should, therefore, not be subject to any severe
adjust¬
world there is as great a need for
ment "such as we have witnessed in the
luxury and airplane stocks
and merchandising shares.''
Also> insurance shares can be purchased technical assistance as there is for
capital.
Such
technical
today at substantial discounts from liquidating values. In periods of foreign
assistance is necessary to define
favorable underwriting results, stocks generally sell sloser to
liqui¬
dating values than at the present. For the past several years under¬ the shape of a sound oVer-all de¬
program,
to
assign
writing results have not been profitable and this has undoubtedly velopment
acted as a depressant oh the market prices.
priorities of projects, prepare spe¬

L
;

cifications

This situation is being

tuate

•foihe to improve

-

within

the

program,

corrected, higher rates in a number of
and to formulate and help effec¬
states and a slowing dowh in the increases in fire losses should comthe

economic

and

vestment income of

have remained at

five companies has almost

doubled. Yet, dividends

approximately the same let-el

This improvement should eventually
insurance company dividends.'

permit

a

as

before

the

war.

substantial increase of

can

and

role by

tries

does

play

a

constructive

helping the member coun¬

to

secure

technical

such

the

was

instance

first

of

the

Dutch

such

using

the

In

marine.

merchant

manner

Bank

can

con¬

lendable

capital
stimulating participation in
international lending by the large
its

serve

own

while

institutions

financial

accumulations

stantial

funds.

ment

having sub¬
of

invest¬

,

Bank's Sound Financial Position
Duririg its 26 months of opera¬
tions the Bank has built a sound
financial position.

tions

the

in

are

Current opera¬
black and they

have been for some months.

Dur¬

assistance from other sources and

up

be

.

Williams & Co. Opens
&

Co.

fices

has been formed with of¬

in

the Investment

Buildihg

to engage in a securities business.

With

Herriek, Waddell Co.

(Special

to

The

.BEVERLY

Financial

CttabkifcLfe)

>;

CALtir. ^

HILLS,

Thomas C Hargis has been
added
to the staff of Herrick
Waddell &

Reed, Inc., 8943 Wilshire
vard.

*••

V;

Boule¬

a- .';r

BANK
C. £. Abbett Co. Adds

and

(Special

INSURANCE

LOS
niel

STOCKS
Laird, Sissell & Meeds
Members

ltO

New York Stock Exchanfe

BltOADWAY, NEW
Telephone:
Bell

YORK S, N. Y.

BArclay

7-3500

Teletype—BY 1-1248-49

tL, A. Glbbs, Manager Trading Dept.)




to

The

Financial

Chronicle)

ANGEL1S, Calif.—Da¬

A. Donovan

has

been

added

t. E. Abbett
3217.Wilshire Boulevard.

& Co.,

to the staff of

Hill, Richards & :Co. Adds
(Special

LOS

to

The

Financial

Chronicle)

ANGELES, CALIF.

—

Charles C.- Mahannah is with
Hill,
Richards & Co., 621 South Spring
Street.

with

no

selfish

interest to

serve,

its

approach is strictly objective,
recognized as such.
In fur¬
nishing this sort of help* the Bank

and

$3,000,000.
This

sum

is

in

addition to

the

special reserve now amounting to
5p"

slightly

over

$3,000,000 which is

no
desire to, or intention of, accumulated through a 1% com¬
mission charged by the Bank on
interfering with internal affairs or
the outstanding portion of all its
of dictating policy to its members,
but merely to place at their dis¬ loans, and which, in accordance
with the Articles of Agreement,
posal the facilities, experience and
must be kept in liquid form and
collective
knowledge
which
is
can
only be used in case of de¬
available when needed.
fault oh loans participated in or
We in the Bank feel that such
guaranteed by the Bank.
assistance will prove invaluable
In addition to its net income
to many countries, enabling them

has

books

its

on

name

a

credit in the-

of the borrower,

drawn

only

upon

which may
proof

upon

satisfactory to the Bank that theamount

withdrawn will be1

be

to

applied only to the purposes foi*
which the loan was granted. In ef¬
fect the loan agreement is an ex¬
tension

of

line

a

specific amount

in

credit

at.

either by"

is disbursed

loan

A

of

for specific goods?

reimbursing the borrower for ex¬

penditures made for goods on thelist, or by giving advances in con¬
nection
with the purchase of
on the list. ;<In either in¬
payments are made only oi*
presentation of documents^
International Bank knows the-

goods

stance

the

■

WASHINGTON, D.C.—Williams

proce¬

of

its

ing the fiscal year ended June 30
by advising with them concerhing
last, there was a net income of
the general pattern of their pro¬
Mr. Davis concludes by again
over
recommending insurance stocks for
$4,000,000 after all charges
grams
and
the
economic
and and .^investment insurance."
deductions, including bond
; "No prediction as to the future of the stock financial problems which confront
registration and issuance cost. As
market is intended but for those who wish to be conservative
It is right and proper that
and them.
a
result* the deficit accumulated
conservatism has always untimately
paid off—insurance stocks should the Bank should undertake such
during its initial year was elim¬
foe logical holdings at this lime."
responsible assistance, because as inated and there remained a bal¬
;
one
of the principal sources of
ance of net income in excess of
international financing, and one

&

protective

The earmarking

dure.

a loam
guarantee for definite productive purposes is*
powers.
It is worth noting that in itself a healthy departure in.
under its Articles or Charter the international financing. The loart
Bank may sell at any time with its
agreements provide clearly for the:
guarantee, securities held in its purchase of specific commodities,,
portfolio. By this transaction only vitally needed to get production
$3,900,000 of the Bank's funds going—a point which I will, later*
were required to finance the pur¬
illustrate by example.
Once the*
chase of $12,000,000 in ships for contract is made the Bank set£

Bank

financial

Underwriting results for insurance companies. Un¬
policies necessary for its success.
derwriting profits are expected for this year.
The
Bank,
obviously,
cannot
Also investment income has been increasing. Since 1941 the in¬ always do the entire job but it

unusual

most

This

the

The

identity

of

which were

the particular

goods;

purchased out of

the

proceeds of the loan, the extent to
Which
the
goods
have
becri.
-

the borrower's coun¬
try, the ship on which they were
shipped

to

carried and the date of

sailing.

:

But this does not end the Bank's

watchfulness.

When the money is

spent, end-use supervision begins,
and in my
vital

opinion this is a most

this whole
new
international lend¬
ing.
When the loan is disbursed
the Bank opens an office in the
borrowing country and its own
representatives,
with
full
in¬
formation on shipments, checks to
determine the exact disposition
to Work out their own economic and reserve the Bank has in the
which is made of the goods and
till about $470,000,000 in lendable
solvation and to attract private
whether it is in accordance with
funds, mostly invested in U. S.
equity investment as well as debt
tKC purposes for which the loah
Government 90-day bills and cer¬
capital.
Such activities can have
was
granted.
Thus, the projects
tificates of indebtedness.
As a
as great an effect in the promotion
financed are completed and the
practical matter we feel that un¬
*An

address

by Mr. Black be¬
Savings Banks Associa¬
tion of Massachusetts, Swampscott,
Mass., Sept. 16, 1948.
; yy;
fore

the

.

step

in

machinery of

Bank is informed at all times of
present circumstances $250,000,000 should be maintained in all internal factors that might af¬

der

cash

or

liquid

form,

not loaned,

bUf jeven with, this precautionary

fect
_

the

status of

(Continued

its

loan.

on page

43)

Such

?"

r

?

r4

Volume 168

Number 4736

'tt-

.

7'>

;

J

,

•

;'v 'V K:

Commercial

the

,'k

&

financial

chronicle

(1207)

u

:j

: iV

By THOMAS B» MALARKEY*
Vice-President, The M and M Wood Working Company
.

7

By PRESTON

DELANO*'?

-

'

I

,

Comptroller of the

7;

Currency

Stressing need of combating cold

war and preservation of
national bank supervisor points to value of keep-H
house in order and making private banking work

petitive

ing

com-[j*

economy,

our

Holds bankers
well

as

Mr^Malafkey

^-/(j1

*

credit

power over

to maintain

stable economy jl

leaving the National Capital I have often remarked a
quota¬
Spanish, cut in stone on the facade of the Union Station.
particular legend has always interested me for its colorful

But,

This

never

a

jt-^1

i

travel

v d
'i

e

ay

o

whether

7f be |
\:

.

^

to

r,

they

noticed

,.

Lmany/activi-:,
ties

;

of the

of

reads:

the

the

Preston Delano

of

.

the

of

::W

Olympia

Indies

with

and

the

1

It
•

properly

him."

.

».

j

f »

from

rude

a

fifes.

In

the

anesthesia

realm

of

medicirid,

oWri.

our

arid

It requires nomic
1 study and reflection to understand struck

.

plague to

us.

'

^

'

a

first fir

arn

Thomas

B.

Malarkey

an

Northern

California,

First, business activity, in¬
cluding bank debits, sales tax col¬
lections, Department of Commerce
surveys of independent business
activities) and Federal Reserve

ply wood'plant in thb West

established in

average of

18% per year.

Bank reports

residential

f

or

that

t

>;y.th(e;,yasti:4irterence- which exists
■f$$$//beriribir?the<Airieikica7'of '■-eVgriM

shingles.
cover

V *Patt of kn

wb/attempt/ah

feeti

p6PiodSij^i|
100

was

gross

last

of

year

1,600,000,000

000 feet and

the maximum

2,820,-

000.000 feet.

«v

Applying the same formula to
1948, we find a maximum demand
potential of 3,826,000,000 feet > a
minimum demand of 2,800,000,000
feet. ■
7,
'•
V ; '
7 ) Actual shipments the first six
■„

months

But plywood end uSeS
a \Vide range in the in¬
housing, furniture, con¬

..

indicate

1948

of

ariftUal

production of 2,000*000,000 feet, a I
confidently predict demand) Will
hold

address by

for

up

possible

1949 and

;;lt4s

1950.

factors

production

new

may have some effect,: but I (Can-

_

in vain for any

this

In a word, then, the mini¬
1947 demand was 1,946*000,-

mum

Mr. Ma¬ tainer, military and agricultural
larkey before the New York So¬ fields that there would have to be
organization We :are?l
ciety of Security Analysts, New a general depression of "low priced
by the wide gulf betweeri York- City/ Sept. 13, 19487' "
competitive products" -of-< equal

thceeiwo

index,\ it

duction

such

dustrial,
Wheh

poten¬

necessary to
demand poten¬
proportionately. This down¬
ward adjustment brought the 1947
demand potential down to 1,946,9C0,000 feet as against actual pro¬

house construction. No houses—no

/

.

pro¬

tial

Compare this with
other- lumber' products.
Shingles have one end use, for

adjustment" / period, * has

maximum demand

a

reduce

rent end uses/

distribution.,

/

formula

of

price

many

/-This

this

2,820,000,000 feet.
Since
plywood prices increased substan¬
tially more ' than the wholesale

nianufacturin

'an, arihtial payroll bf $56,000,000; technology had not been advanced
a grps^ gales volume Df $200,000,- to a point that induced wide ac-f
000, and* a plaht investment and ceptance of. the prbduct. .In the
itimbpr resources factor of ap-, middle thirties, however, the in4
p.rbxjniately $110 000,000 are—like dustry set housing up as its sales

a severe problem of
materials, has been faced
with the compelling necessity bf
achieving stability. in prices and

construction.

1947,

duced

tial

truth is

department store-

Second, new general con¬
struction, and third, new private

employing
The

on

sales.

Originally,
fir
plywood
was
strictly an industrial product: and

rohgliiy i 6,000 men, representing

en¬

tors.

Portland, Ore-f
gon,
in 1905.
Plywood was a
minor factor for the following two
decades.
But, in 1924, the indus¬
try began to grow and from that
year to 1942 production increased

you'll

are

dustry saleS in 1940. We have ap¬
plied aginst this base three fac¬

the

was

trends

far in excess of production.
•
The basis of this formula is in¬

The

raw

the

ism .which is today both our boast
-•

a

on

product and

unknown and Pas-

was

with his discoveries, In: alTother
lines of the applied arts aftd
an. sciences, quite as great a discrc
'

frontier,

*

to

■

by

agricultural/ qommririity/

factors

birth

suddenly thrust itself

come

the banks of
this country to our civilization
while that civilization was devel¬

oping

other

given

mahy. others — iri the prohess bf
putting their industry house in or¬ potential for housing alone has
until - today
it ;r has
der, and are confidently looking increased
!
jjorwaid to a bright'antL prosper¬ reached astronomical figures.
Until shortly before the Civil
ousfuture. The past three years
You have before you a
miniaf
War man traveled 'only' on horse¬
have been a period of transition ture tir plywood panel. This
prod*
back or by
s(tkge coach. Hb Trans*
uct has been rightly named The
mitted
messfage^ only by fcbufibr a growing industry with apparent Wobd of 1,000 Uses.
Actually,
or by such crude devices as
-signbl unlimited demand for a versatile there are in excess bf 1.200 curi

it Jhas given richly in return. It is
difficult to overestimate the con¬

made

and

effect

market

couraging. The most conservative
formula, applied against 1947 and
1948, shows a demand potential

disapr

Indies, but it also has carried the
wealth of the Indies with it ahd

tribution

in

'

.

peared. changed, grown and
into being.

banking
requirement of. this old Spanish
proverb... Since its inception it has
brdtfght hdm'e: trie MVbalth • of the

s

has

e

that

Future Market Trends

Future

and basic

face of the nation's economy/

I

c o m

quality and huge volume, to de¬
a
body blow to this industry.

liver

industry. /
.7
j
First, let me tell you something
of 'this Cinderella industry that

country

mills.w

be said that
has met the

can

American

■

1

el

be-i

-

peddle fiction.

.'suit

: It Was at this
goes on to explain
period, when baff
that it is thus with travel, a man ter was still an accepted .means
if;
must. carry knowledge with, him trade
-in aprpgressive4 growing
if he would Wring home kribwLcommunity/: that- the v'N^tipnal
edge. To my mind; this principle Banking System' wag
born//Let7bs..
look for a mbWCnt-at .WhatAswt
is certainly true in our chosen of a
country ours was at that timb,'
field of Ranking.
and notice how much has

;

,,

new

species

have

3,000 miles to

| The inscription

'

wood

sug¬

that "they;af6 get—-bottt iiiuustry-wise and about
now
manufacturing wagons, cari4 my own company; both negative
and affirmative,
•
:
tions
for Which wheat will bb
; Fbrty-fhree fir
plywood plants
taken in exchange delivered at
in
Washington,
Oregon
and
tHeTumwater,

of

wealth

advertisement

"Olympia Wagon. Manii* didn't

rounding

Indies

must carry

1

izens

home

wealth

the

uses,

An¬

Facts

"He

bring

i new

accentuated

technology, .multiple
end
increased sales volume, new!

new

New

I

more

the

post-war industry has
little kin to the prewar fir
ply-j
wood k industry.
New
products;

than

group

facturer" which made the
folloW-f
jn g
an nouneemcf t:. Hatuart 7 «

would

who

a

headed

civi-/

7 lized men. The
; quota t i o n

•

newspa-c

even

cause

ington Territory, which then cort-7
gest; you con¬
tained 12,000 inhabitants. On Jan.
fine
yourself
4th ,> of that year thel shbscribefsi
Self to facts."

banking';

any

peak.

at

are

an

been

a

hard-

alysts.

•

or

face

published at Olympia, Wash¬
these
ington,, ; served
as
the % official
York

j? ment,;V busi-;.;
:

four-page weekly

a

*hper

g o V e r h-/7

neSs.

\

'

ardj"

plywOod prices

present.

4>-

headed, cold¬
ly .analytical

*

<?>

en-}

human

/
„

i

i

.

but

it is

will

you

more

truth applicable in its broader,
aspects not only to

other lines of

/

you

graces.

On

.

tell

materials, but holds

raw

honor and privilege to address your distinguished organ¬
ization, Just before I
enplaned for New York, a friend in the Security Business made this
observation: "Well, .Tom, they are
pleasant people, courteous, hospitable, and have all the
social

tion from the

a

rising prices of

as

<^yj;heed hardly

as

presentation of

traces

uses.

v-*'';7l77.

welUj

can use

development of the fir plywood industry and jits contribution to industrial
and)"!
Says demand potential is in excess of production ahd prospects for new m&rkeh ard'
encouraging^ Points oub however, industry faces problem of limber Reserves and grey markets, as well'
housing

/(Continued

on page

28)'

--faijggi;

years

of hikk

tory
!<1943. Students of social and stibri-

which even remotely com*
in this respect. *•"'7^7/;v/W
'When the National Banking SyS*

'

pares
7

tern

was

This announcement is

not an

offer to sill oi

a

solicitation of

inaugurated in1863, thefb

7}:7

Mpof'^Siibbrvisor&^of

'

?7^ 7 '^Louisville; ky;,

■

,

Wall
ft

;

;

.."

I v.
;>•/ i;..- -."./y

,

•

$75/000,000:

32,000,000;.Of this total,

srime .27,000000' lived on farms jf
in small towns of less than
8,00fb

State/Banks, Thrisfbbm
;
^
22,1948^'
(Continued

.

sent.

on page

T

47)

// f A, /r

StreetTeamsCompete for Hharliic HavrfAn
Memorial Trophy
.7.

/-•71

■

&&

•/ /«

■

34 states in the Union" and

Was some

o$ef to bu% these securities.'

•

'

.were

(in

Thioffetfhi^iffindi bkty fry'^h^PffdSptitu^C-'C-.

s,

'

77

• ■

:

®

v.-."•••

'

i %

?

/Raciftg||Me|)hone:afl(||®eIeg)Kiph'S|:
\V

•

'h<7^ IT f*'-

77) "'A**'*

•

S :•' V7'» A

7*

1

'r'"v

f v"7

f' i "A

'

"

H.

i

'

Dated

.•■■■■■

September-1Jf 1948'''' !
VT

y tion.

The team representing' The^

"C^-TSV'"'p4

'

■

"/-'/."j.

q'.i •••

>'V;:
!,!> i\-ryX'«•;.

■

'J&:

'FirSt Bostoil Corporation won the
tourria^rihvyFhe % vvirining 7ieam; lqri?& Co.; Estabrpofc & Co;; Fahnef
W ^4
ednipefsed bf /JarriCS ' C. Morrison Stock
Cbj The'/First Bostori
i" V( Captciilr) 'f-^•B^13ayMs6ri^6trion> Corp j
GJore;. Forgan & Co;; Gold*
%

■

'

1

,

Charles C.>Glavin and Thomas E.

"

Walsh, had
a

*

^

a scoTe bf

324.

Runner-Up in the scoring was
representing Clark, Dodge

team

,

Co.; Graham, Par¬
sons & Co.; Granbery, Marache &
Co.; HaJlgarten & Co.; Harriman,

:

;

)
The

Ripley &

Co.; Harris, Upham &
& Cd. with a score of 328.
Co.; Hayden. Stone & Co.; Hemp¬
Robert L. Holt of Blair & Co.,
hill, Noves & Co.; Kidder, PeaInc., took individual-hdnots."With body & Co.; Ladenburg, Thalmarin
low gross score of 75. A special &
Co.;*Lazard, Freres & Co.J I^eh-iprize for a"Kicker's Handicap" man
Brothers;
Carl
M. Loeb,
went to Surftner Waters of Kidder,
Rhoades & Co.; Laurence M. Marks
Peabody & Co.
& Co.; Merrill Lynch,
Pierce, FenGolf
teams
representing the tier & BeaneLF. Si Moseley &
Cdj
following firms competed for the Smith, Barney & Co.; Paine, Web¬
trophy which, is to be kept in per- ber, Jackson &
Curtis;, R. W.

"

'

"1

•'

;

7"

}•; 7

'

mail, Sachs &

7 ;

•

■

'

'

' 7'

-

1

■.

.

'7

7

1

7

'

''7;7?777-77'

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

•

.7

.

;

.

;

7:7 petual
;

:>Jl
7
;

piay

as

a

memorial

late Charles UaydCri:

•

to the

'{ !} '

A. C. Allyn & Co., Inc.; Baker,

Pressprich & Co.; Reynolds & Co.;
E. H. Rollins &

Sons, Inc.; Shields

& Co.; Spencer Trask & Co.; Stone
& .Harden:
Blair & Co.;
Inc.; Clark, Dodge & Co;; Dillon, & Webster Securities Corp.; Wert*
Read &-.Co.; Ddminick & Domiheim7& Co.; Whitei Weld & Co. }

Sg?
f

?

: ;

HALSEY, STUART & CO. INC.

BLAIR & CO., INC.

BEAR, STEARNS L CO.

EQUITABLE SECURITIES CORPORATION
;

PHELPS, FENN & CO. ' 7

L. F. ROTHSCHILD &, CO.

SCHOELLKOPF, HUTTON &, POMEROY, INC.
; v

•■'"i

7:/£

■

AMERICAN SECURITIES CORPORATION

' '

September 2*7, 1948.

*77

7

-*' 7:

'/"•77

"'7

;

.

..■

BURR &

& CO.

OTIS & CO.

• ,

(incorporated)

,

SALOMON
)

7/'

DICK & MERLE-SMITH

•

,

Weeks




:

HALLGARTEN

"

..i/

,

BROS. &, HUTZLER
'

.•,

COMPANY. INC.

GREGORY & SON
.

incorporated

'■ v

HIRSCH & CO.

-

*

Thursday, September 23; 1948

COMMERCIAL & .FINANCIAL CHRONICLE

;THE

(1208)

12

"If I Were

Retail Salesman''

a

(Last of a Series of 13
By
General Sales

Bv HENRY HUNT

"If'I Were
froipectui

upon

four investment

National
research

'ft/ft':

.

^ftftftft;

Retail Salesman"

a

dealer,

or

from

to

by Grady Clark, General Sales Manager of Investors Syndicate of
Minneapolis. However, Mr. Clark had to hit the road for a three

&

securities

concluding article in this series we had hoped to run a piece

a

corporation

Manager, Investors Syndicate of Canada, Ltd.

Until you become very well entrenched in your territory,
it is a cinch that you have to be versatile in your approach

request from
As

prospects.

new

There

'ft.'; ;ft'■

"■■■

reasons,

same

the sales approach.

enough interviews,"

or

all

the

Sales

Investing in Growth Stocks
>ew

The following is an excerpt: ^

£7ne "SeoKae

'

-

.ft

;

^ft:;ftft:'/:^ftftftftft•;

?

ft ft'Some investors favor common stocks that afford a high current
despite the fact that such stocks generally offer lim¬
ited appreciation possibilities.
A
ft
ft ^
"ft
"Other investors are interested chiefly in stocks of the so-called
appreciation type. Unfortunately, unless one's timing of purchase
and sale is right, such stocks often turn into 'depreciation' type securi

,

income return,

PUTNAM

..

| FUNDI:

ties.

1

-

,•

#

.

/■■ftft'.ft:

"A third group

of investors is interested primarily in the long-term
growth in capital value and income, with current income return bein*.
of secondary importance.
•'
'
<,f"
<
>
"It is to this tliird group that growth stocks appeal—commor
stocks of companies with above average records of growth in thi
past and. with above average prospects for continuation of growth in
the future. It is such companies as these which comprise the invest¬
ment holdings of Massachusetts Investors Second Fund,
ft-ftftftft
"The chief characteristic of these growth companies is that yeai

af //jo-iton

,

Trospectps upon request ;? • "

Putnam Fund Distributors, Inc.

50 State Stron, boston

^

after year

(

-Wwww WWWWWWWWWWW »

1

WW

they plow

substantial portion of their earnings back intc

a

the business to pay for new equipment, research, development of nev
oroducts and the expansion of their markets. It is principally through
such compounding of earnings that real growth in value over the

long; term may. be anticipated,;
' ..'ft !
ftft .\ft ft ft •> ft', ftft^xU •
ft ft ft "An outstanding example of a growth company that compounded
its earnings is the Ford Motor Co. With paid-in capital of only a few
hundred thousand dollars, it increased its net worth to well in excess
of half a billion dollars as a result of plowing back earnings."
.

Fundamental

For The Woman of

Investors Inc.

"The

i fc

4fi
■

OS

WAli
*

of today is modern and smart.

She

her home

runs

efficiently. She knows how to take the headache out of housekeeping
by using modern appliances. She has charge of spending most of the
ftamily budget for necessities and knows how to get the most value
.>ut of every dollar. In these da.ys of high prices, the way she stretcher
he family budget is a marvel to everyone.
"She accepts responsibilities and does well in those fields where
ler interest and skill predominate.
She is frank to admit that in somt
ields she is not prepared to accept responsibility. Investing is one
:)f them. She knows she is no expert on securities and. shows her
common sense in obtaining professional investment advice.
Her sav¬
ings or inheritance represent her future security, which she wapts
■

HUGH W. LONG & CO

woman

'-.ft :ftftft': f' v,?'1 ft-

-ft'.-V

•

i-'; 5-1

->-■■ *?'•

■-■■■■

i 0 B t C » A r 10

caw? n-i.-h T.I ft ft'ftftf ft .'-■cft^ftft:ftftftft

STREE*, N*W YORK 5, N;Y.

NOfll".

CHICAGO

'

*$

f '

\

f

'

,

*M

■

'
-•

Keystone

(St

American Business

flit■

v*

'

*"

»' ft-

-ft'ft

ft"

ft

.

'.V-:

.'r-.

upon request

complaint,

right

Lord, Abbett & Co.
INCORPORATED
New Orleans

getting

people to

are

see."

clear-cut in¬

a

It MUST have

of the follow¬

one or more

ing messages,

'-'ft/'ft
Does it arouse curiosity or stimulate
interest by offering to solve a problem?
J. K. Brumell
Remember, most people are* inherently
deeply concerned over their own future
security and it is our job to wring a confession from them
effect.

to this

it

Does

-

*

'

.

show

a

*

profits in his business?

rr->

-

to retain

way

Show

larger percentage

of
the businessman who isn't

me

a

interested in the subject of profits.

ft

^

"ft;,

'

.

ft; ft

Does it portray a bright horizon for the children whose
parents have taken steps to see that they receive a proper ft
education?. It is an odd couple who - won't talk about the;
future of their, children 1
;
it logical?

It

Are pertinent statements made? Are you
What about a smile. All these are vital considera¬

friendly?

*

tions.

'

*

•

,

~

t

v

.

Develop the faculty of "probing" by asking questions, ft
Frequently a problem can be found or an ambition can be ft
brought out that only money can solve or gratify. Pictures
have to be painted. We are, of course, offering an intangible
but

MUST make it very

we

tangible and graphic (person¬

:

ft,

You

buy "Salesmen" for a dime a dozen who sell
from the sample case or just take orders, but the real pay-off ft
is to the
some

who can remove a worry or offer a solution to
material problem. Your comments must be so
intelligent factual statements for use in the first
man

Los Angeleo

Certificatej of Participation in

minute
what

two of the interview that there is

or

words

embarrassing

or

we

fumbling for

no

important

"meat" of
should leave the prospect anxious to hear the

say

The

pauses.

solution. He should feel, "That fellow REALLY has some¬
thing, I'm busy but I will MAKE the time to hear him, I

can't afford not to see him,"

ftftft In the first few minutes the prospect formulates an opin¬
ion
to

regarding
that

see

Is it

you.

is.

it

a good

one? It is within your power
with enthusiasm? Does the

Do you speak

prospect, think "Gee! He» REALL^ believes in his product."
ft
How about your ft appearance?
Do you look/and feel
successful and tadiate. c6nfidence,ftpersohalities.t can be de- ft
veloped by intelligent study and thought on our part, until
they become part of us and are completely natural and
effortless. Let's have no word whiskers, no errrr's or ahhhh's
ft ft''

Did you ever go to the theater to have the cast play :
with your emotions to the point where you laugh or cry at
the mere whim of the director? Do you think that the actors
didn't

Well

their parts until they- were
it is with us; we must rehearse.

rehearse

so

letter-perfect?

.

Herewith

two examples of what I

are
.

(Naturally

.

would

one

company
Doe that he

my

mean,

'hundreds ft

but space won't permit further illustra¬

.

use

his

has performed

own

a

words.)

service for

"Mr. Pros- ft
your

friend

he wouldn't be without. Mr. Doe
claims the day he learned about our service was a red letter
says

day in his life. May I give you the same information?"
.
"Mr. Prospect, ydu have an enviable reputation in the com¬
munity, you are well known and favorably looked upon by
your neighbors and business associates.
One of the factors
back

SHARES OF CAPITAL STOCK OF

we
our

of your

success is undoubtedly your ability to make
My company likes to deal with men of your type;
have tens of thousands of similar businessmen who find
service invaluable. May I make an appointment with

you

give

to

service

BONDS

so

you

the

except to yourself.

PREFERRED STOCKS

information

as

to the nature

that you will be in a position to judge for

whether it fits into

(fieriCJ B1-B2-B3-B4)

your

No

of

1

*

ft-

Don't forget fellows, it is how you say it that counts.
I don't mean to state that any approach is a magic elixir to

COMMON STOCKS

.

guarantee an interview—we must add to it

INVESTORS

(fierie* Sl-S2-fi3-S4)"

Xke

..

.

.

demands—we must be
into

Congress Street

Boston 9, Mnssacnusette




Prospectus
your

THE

as

reasons

the occasion;

to turn his objections

see us.

having

smart enough

'-'ftft-^ftft ftftft'/ft;

trouble along these lines and if I
have captured any part of your imagination so far I suggest r
that you make a list of all the reasons why people want
money or security and all the human, easv thm«*s they will ft

ft-;-: (

Keystone Company
of Boston

to

If you are

.

local irweiUirnuU dealer or

50

>

No obligation, of course,
went wrong by being better
(

Prospering from

our

yourself

affairs.

one ever

informed."

(fieriej K1-K2)

.

.

decisions.

IN

-

*

very

of

full

can

.

—ft

INVESTMENT FUNDS

four

t

ftfftft

John

inventing tlielr capital

had

I

not

am

"I could sell them

of improper
prospecting or a
colorless approach—or both,
ftftftft' For instance, how's YOUR approach?
It MUST be good to get the appointment

pect,

Chicago

"I

those

or

hears the

one

dication

tions.

—

if

of others exist

Custodian
Funds

men

poor

](

Of INVESTMENT COMPANIES

New York

new

m

ft

■

Shares. Inc.

U'4

ft ft ^Prospectus

HMNBT

"

-

WM

among

not too successful

are

,

an

let

ft

ProifMCtui from your In voitm#nl Dealer or

Wellington Fund has issued

who

GOOD approach.

a

often

So

ally I can think of nothing more tangible than a five or ten
thousand dollar check!),j ,
-

Today

attractively illustrated new book¬
titled, "A Plan for Tomorrow for the Woman of Today."
Thi
following exderpt is typical of its easy-to-read copy:
.

they have

Comments like these

Maintaining their usual high standard of writing, Vance, Sander?
folder on Massachusetts Investors Second Fund is well wort!

•eading.

:..ft- -ftft/ftftftft ft; '-ft/.

.'ft

of course, for all the success stories
among good salesmen but one piece of ft
technique common to all is the fact that
are

weeks' trip, so we are reprinting an article, captioned "How's Your
Approach?" from "Broadcaster," written by J. K. Brumell, General
Manager of Investors Syndicate of Canada, Ltd. We believe
that any retail salesman will benefit from reading this discussion of

120 BROADWAY, NEW YORK 5. N. Y.

Articles)
''U ft"' ft. ft..ft.

BRUMELL

J. K.

may

be obtained from

local investment dealer,

PARKER

do

or

will not do to see that they don't get it.

read these and then

or

CORPORATION

ONE COURT STREET. BOSTON 8. MASS.

any

Read and

re¬

try them on your wife—she'll .cooperate.
out and try them on ten or twelve GOOD prospects
a day.
Man-o-man, you can't fail! Try it fellows and trv itv
DAY AFTER DAY. It will work. Frequently the dividing
line between SUCCESS and FAILURE is very fine.
Then go

THE

Volume

168 ; Number 4736

to protect

and increase. She also wants a

•VY;.v;

living costs./4,./4'<b> if.*:

COMMERCIAL

good income to meet rising

"Many women have found a new way to obtain these results and
take the headache out of investing, which will interest you too. This

V?

through shares cf Balanced Mutual
Funds. These shares give you in one security the kind of protection
and, dependable income you would get if you owned many different
securities. You also get the benefit of the expert advice of investment
specialists who supervise the securities in the Fund."/ - . >
1
the modern

is

way

4
,

."These
vestments

"CIO
national

Company
makes

•»'-

'■

:

the fact that labor got only 61.5% of
The inference is . . . the rest went to the

In a survey by "Fortune" some time ago, the rate Of
profits by business was guessed by most wage earners to be some¬
where between 30% and 40%. In reality, most of what the laborer
to the farmer and small businessman. . . . Net profits
taxes of corporations in 1947 were less than 9% of national

doesn't get goes

income; only 3.4%
seems

got through to stockholders as dividends. There
and remind . . . (labor) that judging

to be no one to pop up

by the criterion they urge, 1932 was labor's best year,
of national income while corporate profit took home a

sees

with 72.5%
fraction oi

1%. .b,

There

as

the

haps is to share our
take

to

-

your

.

job that cost the owner about
$500,000 would today cost $1,290,^

46 V2

years

tne

$800,000

Com¬

Turner

060,000.

has been

pany

in* business

has

than 100
4

in¬

PHILADELPHIA

elected::

President—William Raffel, Raffel& Co,
First Vice-President—Harry H. Fahrig, Reynolds & Co.

-1'

.

One of the reasons for

the pres¬

and,
the
'probability that building construc¬
tion

question "Where are

zation, transportation of all kinds
—air, bus and rail—and for in¬
dustrial output of every type to
take care of the country's needs.

will; remain high for
time to come, is the great

costs

some

building, except for war needs and
for
the, - conversion of industry
from war use to peacetime use,
in

approximately

half.

a

decaae and a

Today most of the industrial

under

plants
War

sold

the

control

or

the

of

haVe

Administration

Assets

been

isn't

leased." There

much surplus wartime floor space
backlog of V. unsatisfied building
In the
and general construction demand hanging over the market.
where
existing in this country today. larger cities and in many of the
they now are. It is probably ap¬
ones
there
have
been
"The /Engineering News-Record'' smaller
propriate also to analyze briefly
no
ohice . buildings,
in its Aug. 19 issue had approxi¬ practically
why they are where tney now are.
hotels, schools, co1 leges, threatres
The present day building costs mately this to say: ~ :',4 —4 ;
"There is a backlog of proposed or churches built since the middle
are about two and a quarter (2 V\)
construction amounting to more of the 1930s, and by common conwhat they were in 1939-1940.
In
sent a not very large dent has
than $42,000,000,000. This is equiv¬
other words, the prewar building
been made in the ; providing of
alent to approximately six year:
that cost $1,000,000 will cost about
modern, sanitary housing for our
of construction at the present higl
$2,250,000 - today. For those: who
growing population. This accumu¬

building construction costs
it is necessary to
know

Traders- Association of

many

won't

high cost of buildings
according to our belief, for

yours.
order to
the

for

ent

to

answer

,

has maintained a

Construction Backlog

dustry, which
is closely
al¬
In

and for

—

buildings for

lied

-"4'4-.'4'::■.///•:/

company

record—I

the

and

food

mous

years. For
attempt to
It should not be lorgotten that
read it
I give this index as ;;
America has done practically no
shown in the accompanying table.

for I4
packing

the

This great increase
will require enor¬
expenditures for housing

buildings ior purposes of
that cost about
cost today $2,- education, amusement, hospitali¬

would

index

cost

built

plants

Our

;.

it

-—

such persons.
in population

000, and the other

confidence

r

-

One

pens.

because in the

our

more

NSTA Notes

- v."
"
fireproof cattle

;■•

■

some

into.

industry

•:

few questions more

are

been chosen

concerns

INVESTMENT TRADERS ASSOCIATION OF

backlog of proposed construction e*ti« 4*
working hotrs, and heavy j fr
toward Socialist state and V
in large building operations.
4,4/4,

frequently asked by businessmen than that which has
title of this paper:; I wish I knew the answer. Ail that I can do perr
company's thinking on this topic with you. It is a particular pleasure

"

meat

|.
At the annual election of the Investment
Philadelphia the following new officers were

Construction Company

drop in building costs. Points to

no

;:E.z::;^yv engages

rapacious boss.

after

PERRY*

;'4 B>' <*• p-

$42 billion and ascribed high costs to high wage rates, shorter
increase in material prices.
Sees further cost increases if government veers

of

1947.

Construction executive

•

■

4

Vice-President, Turner

V mated at

Seemed Important/' published by Selected In¬
quotes as follows from "Barron's"; //./,; %

much

income in

Earnings

'

'

of investing

Labor Vs. Corporate

Things

Building Conslrnction Costs Going?

Where Ate

;;

13

(1209)

FINANCIAL CHRONICLE

&

going?"

going back still
building that today

interested in

are

further—the

would/cost ' $2,250,000 scouldi have
been built before World War I—

along about 19131914 arid 1915-i-for some $530,000

in other words,

rate of activity.

.

Commercial build¬

ings and public buildings accoun
between them for nearly. $14,000,-

000,000,
The

or some

balance

f

is

33% of; this/total
made

up

of

classified construction,

lated demand is staggering in its

immensity.;>/.4.;b/
Factors

High Building Costs "*

in

un¬

earti

4

Among other factors that have

created the present prevailing ad¬
work/; -irrigation; and drainage
streets) and roads, .sewers anc mittedly high building costs ares
35 or 40 years ago may be won¬
the
sewer disposal and water works.'
following:;/ 4 * .
4
dering whether your fire insur¬
;
It is interesting while consider¬ 4, In some
building- crafts work
ance/coverage is adequate for re¬
formerly ' done, by laborers has
ing these backlog figures to lool>;
placement' purposes. . ..
/4
been taken over /by skilled me¬
at their geographical distribution
! ./I inquired of our Cost Depart¬
chanics at high'wage raWs/44/ J,'/•
—west of the Mississippi has the
ment about two substantial jobs
The differential between factory
largest backlog total which
built in 1930 for your industry—
wages and on-site building wages
amounts to 26%; the Middle At¬
one
an
abattoir and the other
is not as great today as was the
lantic States a close second with
Some of you

who own plants built
,

,

William

Raffel

Harry Fahrig, Jr.

N.' H.

Parkcs,

Jr.

Average Building

;

;4

25%; the Far West accounts fo
1926=100 ;19% /-the- .Midwest, for .15%; the

Costs by Years*

1913=100

;

—

1916

120

62

147

75

-./b/

1917
1918

53

85

in

100

<196

'1828-———.—

.252 ;

'

Of

.

94
90

1922-^-^///- 4175

1923::^—-..-

194

1925——-.

1920—

Hi

A.H. Fenstermacher

Second Vice-President—Newton H. Parkes,

/-

Secretary—James B. McFarland, III, First Boston Corp.
Treasurer—Albert Fenstermacher, M. M. Freeman & Co.
Governors—For three year terms—R. Victor Mosley, Stroud &
Co./ Inc.; George J, Muller, Janney & Co.; Charles J. Brennan, BIyth
& Co., Inc.; Edmund J. Davis, Rambo, Close & Kerner, Inc.; Wallace
H. Runyan, Graham, Parsons & Co., and R. Conover Miller, E. W.
& R. C. Miller & Co.
For two year term—Charles L. Wallingford,
Harrison & Co.; and for one year—Joseph E. Smith, Newburger & Co.

99

;

195:

—

100

195

;

100

——

190

——*

1928

98

125

132

log

85

This

1931——-——

145

74

1932—^-

136

70

1933

141

72

1934—

160

82

162

83

The Tax and Legislation Committee of the Security Traders As¬
sociation of New York has addressed the following letter to the

membership regarding certain tax exempt transactions:

—

1936—

166

86

1937—

193

99

1938———

188

96

1939L—

182

93

1940-——-

194

99

1941——i-

'217

111

245

126

1942

132

257

1943———

received a letter from the NASD enclos¬
244
1944—
ing a copy of a communication which Mr. Phillip J. Chasin, Assistant
257
1945—
Secretary of the Trust Company of North America, received from
318
1946
Mortimer Kassell, Deputy Commissioner and Counsel of the New
380
1947
York State Department of Taxation & Finance (letter dated Aug.
1948, February 417
^25)w /Hiis letter confirms in writing the opinions to which your
427
1948, July
Committee has consistently held, that certain interstate transactions
determining
both from and to New York are tax exempt.
Our Committee feels index:
that Mortimer Kassell's letter should be explained to you in plain
"A few days ago you

—-

r

-

you

will have a full understanding of its

"Mortimer Kassell's letter actually and in

firms

our

offers stock

a

obtain New
to

an

simple language con¬

New York security dealer never buys or sells
York State tax exemption. If a seller, he
out-of-town dealer and never confirms sale. If a

opinion that

securities to

other

published
others

factors

3, 4,

as

indices
a

5 and

rule

6.

a

important
the

214

219
building

for
do

the

not

cost

reason

consider

construction

outlook

cannot

ignored—that is, the increas¬
ing birth rate in our country. Our
population is more than five years
ahead of all prewar predictions.
Prewar birth rates were at the
rate of 2,200,000 a year. This year
it is estimated that there will be
over 4,000,000 births.
There is no
relief in
are

now

sight because marriages
at the rate of nearly

2,000,000 a year against a prewar
rate
of
1,400,000.
Furthermore,

confirms purchase. This
is an important prerequisite to any actual closing of a trade because 4 *An address by Mr. Perry at a people live longer than they did.
it places the responsibility of consummation of any tirade with the meeting of the
American Meat In 1940 there were only 9,000,000
out-of-town dealer instead of with you-. We want to emphasize, how- Institute, New York City,'Sept. people in the country aged 65 or
over.
There are now 11,000,000
20, 1948., ■
44.4 —••"• -V(Continued on page 14)
buyer, then he bids for-securities and never




.weather at times, 4 ;\ =4,4 4;
Many of- the; prewar ■ practices
and tolerances permitted
in 'in¬
plants have begun to be

dustrial

accepted on construction work.
Today in the Metropolitan New
York area we have in many trades
six paid holidays or its equivalent
in a welfare fund contribution. *;

construction

When

volume

in.

frequently
is a shortage of mechanics.
In
order to properly /man
the job

an

is large there

area

a

-

contractor will resort to paying

premium overtime with a result¬
ing increase in unit cost for that
part of the work.
4
Due to cramped
living condi¬
tions, it is difficult to move labor
from one section of the country
to
another.
The
construction
worker has ceased to be .a floater

prefers to remain in a fixed

and

job.

4

-

seven-hour

The

which is

day,

fairly general in the construction
industry in the New York

Metro¬

construction, one politan area, to say nothing of the 4
six-hour day which prevails In
factor impinging on

be

Labor rates; (2) material prices;
(3) productivity of labor; (4) efficiency
of plant and management; (5) competi¬
tive
conditions;
(6)
forecast of price
trends.
The
Turner
Construction
Co.
indices
do not
necessarily conform to
that

is

195

(1)

enough language so that
•important meaning.

of

163

—

This results

war.

choosing work on; 4

log of proposed

95

165

•

SECURITY TRADERS ASSOCIATION OF NEW YORK

1948 compared to 194/
significant fact to any
one attempting to forecast build¬
ing construction costs, with par¬
ticular
emphasis
on
industrial
building costs. As most of you
will admit, the meat industry has
its own backlog consisting in part
of many plants that aire obsolete
and inefficient. Some of you will
have to build in the near future
to conform to the regulations of
the Meat Inspection Division of
the Bureau of Animal Industry of
the Federal Government.
Aside from the immediate back¬

185

1930—--—

1935

backlog of 1948 compared

greatest gain of any type of con¬
struction activity, that is, in back¬

98

190

1927

Jr., Bioren & Co. // 1929-,———

'

100

196

I924>b;i——•

the

1947, f although .the total gain?
in backlbg in 1948 were less than
in 1047/4 ;//•;-•;
•;
Z The five' classificanonS' which
are ahead of last / year;: include
public buildings, industrial build¬
ings and commercial /buildings.
Industrial buildings recorded the

130

183-

men

construction jobs—due

...

to

166

—

,1919-———

J. B. McFarland,'

•for

51

—

^915

the

before

fewer

in no small
10%
and
New
England
part to the hazards of this latter
5%.,
•
<
type of work and to the broken
\ "These backlog; figures are di¬
time generally prevailing and to
vided into nine classes' and /five
the be x p o- s u r e- tor unpleasant
of these showed gains as of Aug. 1
South

51

'

100

100
103

case

in

two

important

crafts,

has mate¬

rially increased the time it takes
to build the building, and time
is money in more senses
A

contractor's

shape

of

than one.

overhead

tals and the

wages

of job

the

in

construction plant

reci¬

super¬

personnel become an ap¬
preciable percentage of the total
cost on a job that runs 18 months
instead of the
12 or 14 months

visory

that

it

usually took to build the

piece of work in the 1920s.
not yet proved practical
mechanize building construc¬

same

It has

to

tion.
y.

We

still

lay

bricks

as

(Continued on page 28)

.

we

14

THE

(1210)

-

'

v

Securities Salesman 's Corner
You

can

advertise in the papers, you can go

,y /

into the mails, you

business so slow.
What tneir boss ought to
them and send them out to work—if they don't
believe there is any business then he should get some new salesmen
who will work.
During the last four weeks we kno\V of one sales¬
man
who opened
better than a new account a day SELLING
STRAIGHT,
HIGH-TYPE SECURITIES, v This isn't an unusual
by any means, but it does prove
that there is no business around.
it was done.

is how

Here

that there is nothing to the.
brought

information

of inquiries for more

specific security. The requests for further information were
by mail.
Within the next four, weeks this salesman
personal calls on these prospects.
Nothing new or startling
in that, is there?.;: But,'in addition, for four nignts on an average,
out of each week, he made night calls at the homes of these pros¬
pects.
He was welcomed and he enjoyed the privilege of discussing
securities in a leisurely and intimate manner with everyone upon
whom he called.
The result just had[ to be SALES.
about

all

a

followed

made

There

are a

lot of

men

new

a

era.

American
will

We

20 we will enter upon
which has faith in the
understanding of their needs and the competence to meet them.

people,

a warm

<i-

re¬

in this business who are

spoiled.

There

of

which

great. We will

begin to

move

[

[As

toward

America's

an

securities owned4by ■ their ^customers

precious few

that offer

trade-out possibilities-~ihkthis respect the cow is just about milkedi
dry.
These men are not salesmen, they are opportunists.
If they
were real salesmen they would shake the lead out of their shoes
and go to
Here

work.
is

.

something else

...

about making the calls.

your

friendships and builds confidences.
It is what you are, what you
stand for, the look in your eye and the cut of your jib—if that is
right, others can see it in a minute.
If you really believe that you
want to sell securities that will stand up and do a good job for
people;
as

if

think something of yourself, your integrity of pur¬
pride in your profession, it will show as plainly

you

and your

pose

own

if you wore a
and

man

When you sit across from a

sign on your chest.

tell him wnat he wants to know aoout an investment

that

your firm has advertised in the oapers, or through the mails, your

convincing salesman is multiplied several times
through the mails or on the telephone^ (Boiler
rooms went out of style years ago; they just don't fit in this business
today.) What we are selling is SERVICE. Helpfulness, a willingness
to do the things that will build confidence; those are the things that
stand out when you TALK WITH YOUR NEW MAN FACE TO
FAQE.
effectiveness as
over

a

what you can do

This business today is at a point where we are going to have a
return of public confidence toward investment in private enterprise.

Build up

a

new

following

And watch those sales

now.

come

See new people.

that

and

free

men

that

others

merely the result

are

lack :of

Administration's

the

of

of faith in our' peo-f
pie.
Only part are deliberately,
caused for political purposes. It is
not too important hbw these con¬

judgment,

live

can

of

Some

effectively for L. We

or

are living in sorely troubled
ditions came about. The important
[times; The: unhappy difficulties oi
fellow today;: are familiar to 'every one thing is that as Americans w^furn
citizens,
the declaration of the of us. Three years after the end our faces forward and set about
When people principles and purposes of your of the war the world has still not curing' them^wlth: stout purpose

face, and have a chance to meet you, your selling job is
half done.
It isn't so much what you say, or don't say, that makes
see

free

our

control of any government.
Any
fair-minded person would agree

we will carry
destiny with us. We

in peace.

working

nation

Dewey

£.

in

American,
a

Thomas

that all

conditions are the
result of circumstances beyond the

will also carry the hope of free¬
dom and the living promise to a
istricken world that men can be

greater^

security salesmen who did well in the bull market period of America and
They are still sitting around awaiting for another a better life
such time to come again.
Perhaps it will.
But, meanwhile, there for
every
several years ago.

to

today

Administration.

tional

advance

we

Entirely

these unhappy

is the road on which I
propose that we set out together.

to

Not

have
been
brought about by the present na¬

This

shoulder

meet them.

I will not contend

difficulties

by its works.

again

which

by

steps

we

Blame

prises of our people; an adminis¬
tration which has faith in America
and is resolved to prove its faith

forward

even

that

Administration

is dedicated

makes

shoulder

the

and

propose

enthusiasms, the energy, the enter¬

country

our

I

the

advance

to

well-being of all our people and
to the release of the

people
spir¬
strength

the

itual

enlisted

is

ber

our

and

abroad

ministration in which every mem¬

the

discover

of specific problems in later addresses.

policy Jinked to peace anj promises discussion

we enter upon a campaign to unite America.
On Jan.
We propose to install in Washington an administration

Tonight

.

are

are

••*' V-'V;

Republican Party Candidate for President

.

essential unity

A newspaper advertisement

leads consisted

These

leads.

in

-

opening campaign address,

Wants foreign

seen

do is to nut hats on

story

C

Accuses present

have ideas by the

dozen, but if you don't make the calls, all the rest is just so much
wasted effort. Today, there are quite a few salesmen sitting arounc
their offices bemoaning their fate and telling each other that

record

y

Gov. Dewey calls for a united America to maintain peace and justice. Administration of bad judgment and pledges the biggest "unraveling, unsnarling, un¬
tangling operation" in the nation's history. Urges restoration of faith in national ideals and teamwork
in national Administration without -"loose talk, fac'Jonal quarreling and appeals to group prejudice."
In

in

never

Thomas e. dewey*

DUTTON

write the best kind of sales letters, you can

they have

by hon.

Governor of State of New York
.

can

,

Campaign to Unite America

A
By JOHN

Thursday, September 23,. 1948

CHRONICLE

FINANCIAL

COMMERCIAL &

Make those calls.

in!

the peace of the world.
This is my pledge to my

next administration:.

-

•

-

- •

:

r-

*

-

a

"

gnd^if ^uljk

pledge to you that as President peace, we face problems as mo¬ -the opportunities of all our people;
act of mine will be deter A mentous as any which have ever and move toward [peace with ail
mined by one principle above all
the world.
confronted any nation in history
,v *
' - */*-! \
t
others: Js this good for; our coiin-? 'in peace or
war..y
■ ■ ;
/>Ahd^to all> those lb: this countryfl
try?
' "i
f: Our sons arid daughters {the or abroad who hate, freedom .'as;
I pledge to you that my ad¬
young people in our grade schools, well as to all our friends eyery*/
ministration will be madp up of
our high schools and colleges have
where whb love freedom arid look \
men and: women devoted 4tp that,
I|ved .their • whole lives dri a to us for aid and leadership let me [
same principle—of men and women
troubled world. Their plans for make this very clear:
So far as:
whose love of their country comes,
education, for getting married— t am concerned—so far as the
ahead of every other consideray for
getting ahead, are delayed and Republican party is concerned,;
tiori.
They will know how to disrupted. Against the dangers of this campaign will not create
translate- iHeir^ devotion toour a;
sorely troubled world they are divisions among j our people. Incountry into constructive action.
unite
us
as - we
being called upon to keep America itead it will
i
i pledge to you a foreign policy strong.
F ■ \
have
never
been ^united,
be-:
based upon the firm belief that
fore;
to
build
our
naUon
so
Difficulties That Confront Us /•/ •trohgly that- no force will again"
we
can
have peace. That policy
will be made effective by men and
1 The housewife who has been attack us and to labor unceasingly
women who really'understand the
to find common grounds of firm
iout shopping tpday to buy mea
natureof the threat to peace, and
for her family and clothes for her and peaceful agreement with all
who have the vigor, the knowl¬ children has been
v •••'
•'5
*'
" )
up against the nations.
I

every

.

.

'

edge and -the experience required

hard

Sto- wage peace

married veteran living in a quon-

successfully.

fact

of

prices.

high

Every

||||;NSTA|Noteslv.

up with his
:
Pledges Team Work
family; is dp; against the cruel fac'
pledge to you a government of that we do not have enough good
(teamwork. The executive heads Of
homes for our

out-of-town dealer who
accepts same, strict conformance must be made in subsequently ship¬
ping securities by draft and not registered mail, otherwise the inter¬

As

we

chart

for the

our course

ahead, we must find the
stars by which to sail.
We must
look to the fundamentals of our
years

'your

hut

set

or

doubled

.....

I

13)

country.
They are easy to find.
people. Every fam¬ Our America is not the lucky
government will be really ily living in a crowded unsanitary,
product of a rich continent dis¬
qualified for their positions and
pold-jyater tenement has the same
they will be given full responsi¬ urgent needs. Hard-working, fru¬ covered by a^seafaripg;^adventurer
looking for a pot of gold.
The
state aspect of this transaction is changed to an intrastate transaction. bility to do their job without loose
gal Americans find they do not roots of
pur country are not-pla¬
On any securities that we bid for and the out-of-town dealer confirms jtalk, factional quarreling or ap[make enough to lay anything by
ter ial. They aye mora 1 and spirit-sale to us, such out-of-town firm not being located within the con¬
I peals bo group prejudiceiyThey; [for a rainy day or sickness or un¬ ual.t Of course we
arp deeply con-:
fines of the State of New York, ,is thereby not subject to the New [will know how to[work together
employment or old age;
cerhed about thin^s to live with.
York State Tax Department's jurisdiction and, regardless of whether i as a team and one of the .most
But we are also concerned about
Millions of Americans, too,, face
the securities are shipped to a New York dealer by draft or registered (important members of thatXteam j
.mail, such above-mentioned confirmed transaction is exempt from [will be the distinguished Gov¬ [the intolerable fact that because the; values by which we live. You
and' 1. know that we taia surmouht
ernor of California, the next Vice- $>f Ftheir race or their color or • the
New York State Tax.

(Continued from

that where

ever,

we

page

offer securities to

an

-

"Our Committee,

ceived

pioneering for the last 10 years, now has re¬
complete substantiation of. the opinions that they have given

to the STANY members

President
Earl
I

pertaining to the elimination of New York

the

of

i'Wajfljkh^y: choose*to worship:;-Godi qur unhappy/Jimes: by 9 restbrai!
j they aro denied rights which are tiq?Vof :Qur^ Ideals knd;faith inFbur [
itheir birthright
and which, by
country.\ /.)
administra¬
^American,

United ^States,

[Warren.

pledge to

.

you an

State tax stamps. We trust that you and your cashiers will read this

tion which will know how to work

letter

with V the; elected; representatives
of the people in the -Congress, an
administration that wants to work
with! them and will- -do - so.- -The

carefully
given above.

and

follow

strictly

the

instructions

that>

we

have

,

"As always, your committee is prepared .to
at any time by its

cooperate with you
questions you might
because a clear and intelli*

availability in answering

any

propound. Don't hesitate to call upon us,
gent interpretation of Mr. Kassel's letter will be money saving to you
and

your

organization."

'

.Members of the Committee are: P. Fred
Fox, P;F. Fox & Co.,
Chairman; Murray L. Barysh, Ernst & Co.; Charles King, Charles
King & Co.; Earl E. Land. Green, Ellis & Anderson, and John F.
Sammon, J. F. Sammon & Co.
y.'..;. 4, 4y';'; F';4 r./Fyy-iv':/ /4,4,

MARKETS

!

practiced ; in

capjitpl.

*,

Promises

I

:

'f.

MACKINNIE OIL & DRILLING COMPANY

the

•

I: pledge to you

t'-V-' >

in

"j '

Simpson & Company




,

.

.

anadmimstra A

its

heart

that

every.

tq think: that I believe it

.

is

-

we

cooperation of every one of us
and the highest order of devotion
your govern*
menty fBut"it is part, of my faith

all go for*

ward together.

rektpratibn of faith~in ourselves>
of competence in pur government,
of

unjty

there

is

Of purpose aniong u$
nothing as a people we

cannpudo.

what

you

Every four years under our Con¬
stitution it is our right as Ameri¬

may

shall
*

An

Des

address by Gov; Dewey at

Moines, Iowa, Sept. 31/1948,.

result of the deep convictions of a

every-,

faith in their God1
and the liberty^ ahd precious har
thing

else to

portance of every human being. ;
Believes: in World Freedom
believe in freedom

We

neighbors
across
we

for otir

the; street

across

the seas—the

same

expect for ourselves.

or

freedom

We be¬

concern

for

our

neighbors, the

in-J

achieve;
these convictions, arched over by
nate

Pur

ability

faith

in

of

men

God,

to

are

the inner

meaning of the American way of
life.

That is why the eyes of free¬

dom-loving people everywhere in
this

troubled

world

with hope to us.
ica

for which

not fail.

are

That is

we

our

turned
Amer¬

cannot and

4;

4

will

4 4;

But we are in a world and-in a
place before you my views
of the, time. when these convictions are

concerning, every ..aspect
grave

problems

r

^4

lieve in honesty, loyalty, fair play,

J deeply believe that an Admin¬
istration which can unite our peo¬

expect cans to hear a full and thoughtful
from your next, your Republican, discussion of the issues before us.
this
administration; It will be an ad- As
campaign
progresses
I
is

jxoOccident $aip

Americfiris/F It

Jji; America- to believe that with

-

must

We know that because we are;

easyFThe^ times-require great people deyoted above

the

other

'

Bell Teletype DN 151

no-one

ple wiU have taken the greatest
dependent
upon
American; that nq single step toward solving these
segment of our people can pros-s problems. This is our most urgent
per without the prosperity, of.all; nec<L-F; /■;
^

American
'

This

Building, Denver 2, Colorado

you that;-Oh?

biggest

that in truth

California

,;

;

are some of the difficult our country stands, like a beacon
|ies that confront us. It will not Of hope to: alL the: [world,
be easy to meet them, and I want magniflcept
'America; .Is the end;

44 end intense labor by
,

...

in Wash¬
unraveling,
unsnarling, untangling operation
in our, nation's jiigtory. - - - - -\- -

every

KUTZ CANON OIL & GAS CO.

T«Mmm KEyitone 3101

W

•

Unraveling and

an

pledge to

nation's

Jan. 20 there will begin

believes

KINNEY-COASTAL OIL COMPANY

B. E.

-

Unsnarling

.

Established IQ29

the

tion which knows in its mind and

CRESSON CONS. GOLD M. & M. CO.

fiThese*

unity we need fox the nation will vriU
be

ington.

PRIMARY TRADING

principle and law, are
theh just due.

at

home

>

and!

;

(Continued on page 29)"'

Volume 163

Number 4733

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1211)

Dulles Warns

Against Soviet
Propaganda Offensive

As American official and Republican
representative

g proval and support of Mr. Dewey,John Foster Dulles
UN

Assembly meeting, asserts Organization will

if ambitious rulers

can

not

at

as
.

to extend their power

of

■ >

.

i

/ At

s m.

in

ence

a

New

;he

ately
before
his departure
Sept. i7, Mr.
Dulles

in close contact with the

Soviet

leadership
peace

F.

John

as

Dulles

They may try tq launch another
propaganda offensive along
these lines. It is to he hoped that

big

will
will

they
they
ences

pew

this,

dq

not

hut

that

calmly discuss differ-?
their

on
•

merits.

approach

Such

would

a

facilitate

agreement and enable the Assent

bly to make a real contribution tp

and do much to lift the

; peace

present pall of gloom an<| feaf•;; *
"The iXlnitpd; Nations will / not
sefre mankind if .apabitious riileri
'

/

the

accused the

That is what happened in the
1920's under the big business rule
of the Republicans.
Those were

Republicans
of

standing
other

among

the

things for
"low prices to
farmers, cheap
for

wages

bor

and

President

high

Truman

-

the

communism.

world

Communism

from

thrives

collapse of the atomic energy- on human
misery. And the crops
pro^ianv adopted: in Upqdon iwo" :you are
producing are driving
and ;One?half^^ years'^ ^go^vlt will: back
the tide of misery in many
:havo; to .consider thq r^o^npiejir
ldhds;CYoup farms ape a vital eledations of. the "Pittle ,Assepnbly- hieht •
ih' America's; foreign
.

Jjehind^

^

poweri-py
*?The" iS&urity rCounpil
sure

gives np
protection ^gainst such LOPis
it

because

veto.

be

halted

by the
Under-: these conditions pub4
can

lie opinion is

dqubly important

as

safeguard against war.
The
General Assembly is the principal
opinion-forming h o d y of the

policy;

Nations

meeting affords

nity tG develop

its

and
a

a

great

informed,

alert

aggressors

r

,

United

opportu¬

public opinion

would-be

tate."

coming

and

so

strong that
will
hesn

-Vrr.;;

i

an

Mr.

he

Dulles

would

be

made

it

clear

serving at

thai

the

im-f

mental freedoms.
few

a

will

its

of

total

These

agenda

nearly

are

tasks,

that

hundred..

one

The Assembly's greatest contribu¬

I should like
every American to
realize that this country is making

every possibly effort to' preserve
the peace.
T; , _
.

tion

to

and

peace

justice

could,'

however, be its over-all impact

opinion.

meeting

of

is

It

the

the

world'

on

'town

where

58

In

this

critical,

ernational conduct to public dis¬
and

straightforward

it is the policy of this

we

Secretary Sawyer says business should make careful
study of effects of Supreme Court decision outlawing basing point
system of price making.
Sept. 21

economic

Charles

of

the

recent

point pricing for presentation
r

j

Sawyer, in

urged American business to make

effects

studying

>.r

Supreme

to

n

e

s

busim

s

every

iy,

every

affected

by

situation

should
lose

decision

Congressional

lions

which

know

that many

on

basing

committee

now

I

received, I
firms, large and

upon

with

a

own

pricing practices.

serious

which

matter

and

one

the

Department of
Commerce is vitally concerned.
"Whether

not

or

not

the

Supreme

the

the

Secretary
Sawyer's

Sawyer

plete

com¬

state-

ready being made and that the ef¬
fect both on the producer and/fhe
purchaser has been unsettling.:,
"It is too soon to tell what the

/ ::V-ment,'fbllows}
Court decision! ultimate

-"The; Supreme

result of ' the Supreme
out-? Court decision will be. It is obvi¬
lawing the multiple basing point ous, however, that any extensive
pricing system as practiced in that revision of pricing practices by
industry, has aroused widespread industry will affect existing pat¬
in the Cement Institute
case,

concern

in

the world of business.

terns

of

distribution, particularly

From discussions I have held with

in

the

portation represents

sory

Department's

Business

Advi¬

Council and from communica-




1

those

industries

(Continued

on

where
a

trans¬

significant

page 47)

time

same

have been rapidly building up

strength.

The

But that

is not the main point;

r wish to cbver

today. In addition

the issue of peace there is an¬
other important reason why this
to

a

am

critical period for America.

talking

about

I

economic

our

this

keeping

its

preserve its

nation

succeed

1 know of only

after,

to get
by co¬
operation among agriculture, la¬
bor and business, large and small.
one way

assured prosperity.

saw

it

can

That

the

cause

creased

By

war.

its1 income.

from

despair
living standards in
So long as the
and

to¬
this

We

saw

common

years,

every

the nation steadily

in

group

er

work

achieve miracles. We

effort/ in the last 15

rose

is

that during the war.

before

the

to

Our

in¬
people

the

our

highest
history.

farmer, the work¬

businessman

pull

to¬

gether in the national interest this
policy has everything to hope for.
But

it

let any

is
one

farm

price

policy.

other hand,

the Republi¬
telling farmers that the

are

high cost of manufactured

goods

the farm is due to this govern¬
ment's labor policy.

:on

That's plain hokum. It's an old
political trick. "If you can't convince them, confuse them."
But

this time it won't work,

terribly dangerous to
group

get

too

past 50

You

remember

the

crops.

lifted

icy.

Wall Street Republican pol¬
You remember the big boom

and

the great crash in

They

that

remember that

in

1929.

1932

You

the

You remember that in¬

companies and banks took
over/ much of the land of sfoali

surance

independent farmers,
Th?-t was, a pafnfuj lesson,
'

should not be forgotten for

a

It

mo¬

ment.

Since then the farmer has

long

a

come

The agricultural

way.

pro¬

much

minute—they

a

gave you a

did once.
farm board. That

their great contribution.

-was

How

so

desperate that there was actual
violence in many farming com¬
munities.

finger to help the fanner.

a

Wait

posi¬

tion of the farmer had become

have the Wall

years

Street Republican Administrations

of

results

well

must remember

you

the depression of the 1930's.

Republicans

gave yqu that

The

great¬

est of all

depressions—when hogs
down tp three cents, and
ckeap you were burn¬
ing it for fuej.

,wept

corn was so

All
through this century the
American farmer and worker have
Jheen the victims of bpomrandbust cycles — with the accent on
;bust. And they have suffered alike

gram of the Uemopratiq Adminis¬ •in these misfortunes.
tration in 16 years has enabled I
How many times do you have
farmers to attain decent standards to be hit on the head before
you
of

living,

Interest rates

credit have

down.

has

ness

indebted¬

mortgage

been

"than- 50%;

farm

on

heen sharply brought

Farm

reduced by

more

Farm mortgage fore¬

closures have almost disappeared.
Ail- this was done under and by
Democratic Administrations.

find

what's hitting you? It's
time-that the people of

out

<about

America realized what the Repub¬

licans have been doing to them.
Why is it that the farmer and
the worker and the small business
man suffer under

Republican Ad-^

,ministrations and
gain
under
Today thevwqrld needs more Democratic
Administrations?
food than ever before. There is
I'll tell you why. It is a result
every

for

reason

.

the

American

of a,basic difference in attitude
farmer to expect a long period of
.'between the Democratic and the
good priees-r-U he continues to get
a
fair deal.
His great danger is Republican parties.
that fie. may be voted out of a
Says Democratic Party Represents
fair deal a nd into a' Republican
;
People
deal.

Wall Street Reactionaries Are

■'Gluttons cf Privilege"
The

Wall

Street

reactionaries

Are not satisfied with bemg rich.
They want to increase their power

The Democratic party
repre¬
sents the people.
It is pledged to
work for agriculture. It is
pledged
to work for labor.

work

It is

for the small

pledged to

business

man

and the white-collar worker.

The

Democratic

attitude

puts
and fheir privileges, regardless of
human rights and human welfare
what happens to the other fellow.
first. /'//://
They are gluttons of privilege.
But the attitude of the Republi¬
These gluttons of privilege are
now
put ling up fabulous sums of can gluttons of privilege is very

to elect

a

Republican Ad¬ different.

The big-money Repub-r

lican looks on agriculture and la¬
bor merely as expense items in a

ministration.
in

prosperity?
Will it
high standards of liv¬

ing next year, and the year
and the year after that?

country

the

were

receiving low prices for his

money

futurer-rvour ecpnomic future.
Will

are

/
IThe
farmer
and
the
worker
the days of Repub- know that their troubles have been
lican high tariffs—-tariffs that
pen- coming from another source,
alized the American farmer
by t/• They remember one plain fact,
making him pay high prices for Never once
during the great crisis
manufactured goods while he was of the

Those

the:

of

peace

op¬ Cpurt decision
actually requires
portunity to the drastic pricing changes which
some
members ot industry" feel
give Congress
/ When these groups
the facts," the that it does require, .the faeUregether in a common
Secretary said; mains that many changes are al¬

Charles

govern¬

working for
instrument at

world
and
the prestige oi .the
United States require that the n3t ion be strong and vigilant.

are

their

continue

every
command.
At

our,

is

have

worried about the im¬
pact Which; the decision may have
small,

nity; This is

c o m m u

this

a

con¬

sumer,

statement issued

a

careful study of the

the*—

problem.

"Every

the

a

Court

to

with

cur

Commerce

all

at

times.

public judgment."

Urges Study of Basing Point Ruling

my

"Keep your tem¬
per and stand
firm,"
We have
kept our tempers. We have stood
iirrru And we have been reason-?

annually submit their in- able and

cussion

situation

motto has been:

peace

on

talk which

war

disturbing international, situation

only

ment

Secretary of Commerce

that subject

on

is prevalent today is
causing all
to make a momentous declara¬
of you deep concern.
It is plain
on human rights arid ffrnda?
enouglkthat we are facing a very

nations

Front Enhanced

while I .am

tion'

world

.

Bi-Partisan American

And

moderating, the Vptq in/tfre

Security Council." It will be,' called —I know that the

a

United

to

as

will
hand,
telling in¬
they

one

big business called the tune.

dres£follpw$; 1
~
3
with it.
The govern¬
It does my heart good to see
has courteously arranged the grain fields of the nation
teletype facilities so that i shall again: They are a wonderful sight.
he
able
to
inform
Governor The record-breaking harvests you
Dewey quickly of important de¬ haye been
getting in recent years
velopments and get the guidance have been a
blessing. Millions of
of his views."
Stressing the As¬ people have
been
saved
from
sembly's ' ipipoftance Mr. puiles Starvation by the food
you have
continued: "This United: Nations produced. The
whole world has
Assembly will be of great im-r reason to be
everlastingly grateful
portance,
It will deal with .the to the farms of the United States,
Italian
colonies;
K o ree
and f r In: a very real sense the
abmH
Greece.
Palestine, Trieste and dant
harvest? of this country arei
bossibly perlin, may come -on to
helping to save
the

end

On the

Republicans

cans

corporations

labor and small busiplayed second fiddle while

ness

the text of the President's ad

It will be faced with

On

riculture,

nvpfits for big

this

government's

iness
wanted
were
the .policies
that the Republicans adopted.
Ag¬

la¬

ment

its agenda.

big

the

:

of food in the cities is due to this

things their own way/.The
policies that Wall Street big bus¬

corporations.

critical

when

take

'

dustrial workers that the high cost

had

days

achieve

stop at nothing.

Re¬

joncerned

disagree with them
imperialistic and war-seeking,

and those who
as

the

and

power

■■■

To

'

■

Business Rule

nternational situation and with
:he
leading statesmen who are

loving,

-

e

of

balance

Tel.

Says Republicans Were Under Big

Administration

•hould face grave foreign issues
a united front and my presjnce
in Paris will reinforce his
vords, Also, at Paris, I shall be

oc¬

d

a

bear¬

mark. He also

from

comes

,

-

country over, lock, stock ana bar-

the nation's policies in its own in¬
terest
at
the
expense
of : the
others. <
/.'■ x-\

publican trade

yjth

casions to picu r e

ing

.

"The Soviet

delegation has
in the past

t

appointment

Democratic

a

.

aut also I go as a Republican with
the approval apd support of Goyarnor pewey,"
said Mr. Dulles.
"He has said "that our nation

said:

used these

with

disaster

American

"My

.

immedi¬

York

faced

official, but also as
\
reoresentative of the Republic
:an
Party, saying:
y

confer¬

press

power in the government. We caiir
not afford to let one
group shape

would \b e

m a n-m

an

tools of Wall

as

Dem ocratie

portant Paris meeting not only as

obstruction-

Republicans,

Street, of sabotaging the West,

Party they

;

Soviet

accuses

,,

iVln the first major address
of a campaign tour of the agricultural West, President Harry
S. /Truman on
Sept. 18 lashed out at the Republicans as "gluttons of privilege" and as
tools-of "Wall Street
dictatorship." He warned his hearers that unless they support the

leg, Governor ppwey's advise? pa foreign affairs*
and generally
regarded as his designee for Secretary of State in a
Republican Administration, before his departure for the Paris Assem¬
bly meeting, stressed the crucial problems up for UN
action, and
warned

and in Denver address

consumer,

-

,

opposition party of sticking pitchfork in farmer's back
to "Wall Street dictatorship."
Defends agricultural price sup-

accuses

5

John Foster

likely

aiding both farmer and

as

V //

of

eve

it to create smoke screens behind
which
by terrorism, coercion, and violence.

use

ports

ap-

mankind

serve

President, addressing Iowa farmers,
and of seeking to return
government

-•

"with the

15

Why do you think they are
doing it? For the love of the Re¬ business venture. He tries to push
publican candidates? Or do you their share of the national income
think it is because they expect a down as low as possible and in¬
Republican Administration to car¬ crease his own profits.
And he
looks upon the government as a
ry out their will, as it did in the
days of Harding, Coolidge and tool to accomplish that purpose. ;
Hoover?
I

-

think

I think

we

expects
elect

a

we

These
know

the

answer.

know that Wall Street

its money this year to
Republican Administration

that will listen

to the gluttons or

Republican

privilege
cunning
slant
of

to

of

States

men

privilege first and the people not

They want

at all..

Street economic

The
want

Republican
an

reactionaries

administration that

will

tion

a

the rest of the nation.

elections,

Republican

strategy

divide the farmer and the

trial

worker—to

squabbling
that

big

with

business

get

each
can

is

to

indus¬

them

to

other—so
grasp,

the

con-

a

like

return

under

the

themselves.

of the

Wall

dictatorship.

Republican Administra¬

would

years

The

are

You have already had a sample

of what

privilege for big business,
regardless of what may happen to

assure

of

They

put the government

United

control

gluttons

men.

And it is their

men.

aim

the

cold

are

ago,

mean

in

many

the

to

you.

Two

Congressional

Americans decided

that they would not bother to vote.
Others thought they would like to
have

a

change, and they brought
a Republican Congress

into power

(Continued

on page

32)

_

•

16

(1212)

THE

COMMERCIAL

Thursday, September 23, 1948

CHRONICLE

FINANCIAL

&

Will Canada Ease Her U. S.

Canadian Securities

Import Restrictions?

By RALPH A. BING
Economist, Fitch Investors Service

By WILLIAM J. McKAY

Dr.

tional

The current visit to Canda of the British financial and economic

delegation headed by Chancellor of the Exchequer, Sir Stafford
Cripps will have a marked bearing not only on British/Canadian
country and the world at<$
The
composition
of
the British attitude has not been sufBritish
delegation
demonstrates ficiently sympathetic concerning
that the discussions will be held Canada's own interests and cur¬
large.

at the

sions

highest level and that deci¬
will

be

mental and

of

made

rent

funda¬

a

position.

broad

far-reaching nature.

lines

Canadian

there

It has long been evident follow¬

both

foreign

have

been

British

a middle course between a free and a fully planned econ¬
because of postwar adjustment problems deemed too big to be entirely entrusted to
the free market mechanism. In doing so, she has been less dogmatic than either socialist

also

Britain

'"'V

thus far, has met with no dif¬ March 1948, prohibitions and se¬
ficulty in exporting all the goods vere quotas were placed on a
while operat- not needed at .home. It has been long list of items usually impor¬
ing with many the atrophy of multilateral world ted from this country; excise
avowed stop- trade that has upset the balance taxes were imposed on goods
In which contain a significant import
gap measures, of payments of that country.
the Dominion prewar
years,
Canada used to content, and pleasure travel
has followed a settle
her
traditional,
passive abroad by Canadians was limited.
When considering the favorable
long- range trade balance with the United
S.
course
States
to the
by means of convertible U.
dollar-saving effect that

f||

exchange triangle that the Domin¬

sideration. This however has been

1

ion would

dictated

foreign trade policy. The
necessity in this connection

pelled

the correction of the chronic

was

imbalance of trade with this

Largely

try.

"austerity"
last

as

"offshore"

chases, Canada is
achieve

to

way

jective.

On the
side

Britain

-

other

It

tied

of ; the

triangle presents a
prcblem which is even more com-.
plex and it will be infinitely more
difficult

arrive

to

at

to

the

be

areas.

as

result

a

of

Canada's

.

PJesent position

the

to

extent

achievement of a happy
compromise. It is now too late
turn back the clock of nor¬
e

which will be readily acceptable;
by both countries. As matters now
land Canada has already made i

ma* fcon?m}^ evolution. In , the
past decade the position of the se-

generous

assistance

also does not take into account the

important "Mutual Aid" gifts that
were made to Britain
during the
Now Canada will be called

war.

upon

hot only to unfreeze the bal-

ance

of

the British loan but will

doubt

no

also

make-further
From

be

requested

>

to
concessions,

trade

standpoint
moreover the British apathetic attitude Towards
the
boosting of
British exports to Canada further

of production Canada have not been of such rel¬
Asia, and the ative importance during our do¬
heavy dependence of these regions mestic postwar boom that their
would
have
on
American help for food and reduction
seriously
reconstruction. Thus, Canada has affected our high level of business
been deprived of a major source activity.
Therefore Canada's im¬
of U.
S. dollars just when she port restrictions have as yet not
in Europe and East

as most other countries,
thus far been confronted with

major postwar problems: in¬
and
a
shortage of U. S.
Broadly
speaking, one
might say that, during the-past
12 months, the Dominion has been
increasingly successful in halting
wo

flation

dollars.

herself

tends

to

suggest

Canadian
of

Another

that

economic

somewhat

a

cause

glo-Hussian

British/

relations

one-sided
of

are

nature.

understandable

Canadian resentment
barter

is

,

the

Any

trade

deal
which is likely to divert from the
Dominion certain British exports

that

are

backfired

them

needed

have

would

to

price

rapid

fairly

has been

going

1946

since

States

on

inflation

the
the

r.

____

'

J

Canadian

gravity of the situation.

to

1947

Fruits

38.6

Rubber and

/

During the week there was an
increased demand for the longer
term external bonds but offerings
were *n scant supply. > The internals on the other hand were
slightly easier in consequence of
diminished arbitrage demand in
connection with the Imperial Oil

offering of International

badly needed in Canada.

eiim

stock.

Stocks

after

Petrolearlier

1946

+ 295

+

+ 164

—

+240

—1,138

4-632

■:

^

613

4.3

3.5

;;y 2.6

manufactured—_
products

3.8
75.2

Cotton
Silk

and

products

Artificial silk and

every justification that the official

ffrei*Sth eased in sympathy

Canadian tourists'

+351

with
decl!n1e *n ,New York, but the &S
metals led by Quemont were
penned to run counter to the gen¬
eral trend.

There

of

was

investor

also

a

demand

for

•Western oils and the gold issues.

C.
(Special

^

,

.I

,

..

•

.v;

'*> ■:.:fh'-:

.MUNICIPAL

Christopher Adds
to

The

Financial

KANSAS. CITY,

:

PROVINCIAL

MO.—Clifford

B. Nelson has been
staff of B. C.

added

to the

Christopher & Co.,
members of the
Chicago Stock
Exchange. : He was formerly with
Herrick, Waddell & Co. '
•

Walter With
to

The

White, Weld

Financial

MINNEAPOLIS,
ert

H.

Walter

has

Chronicle)

&

Co.

In the past he was with
Halsey,
Stuart & Co. for many
years.

Joins First of Michigan

(Special

WALL

MEW VORK

^

S.

The

Financial

;

Chronicle)

BATTLE CREEK, MICH.—Geo.
Freeman

has

joined

the

staff

STRttl
%

H

v.

Two With Barret, Fitch
(Special

WORTH 4-2400

to

of First of
Michigan Corporation,
Security Bank Arcade.

tNCORPORATRr

TWO

,

MINN. — Rob¬
become asso¬

ciated with White, Weld

A. E. AMES & CO.

NV.1.1045




•„'&

$242.5

y

,__

(Millions of

On

33.0

Loans to United

10 a

-

to

The

Financial

Chronicle)

KANSAS CITY, MO.—James R.
Atwill and William A. De Vasher
are with
Barret, Fitch &

Co., Inc.,

1C04 Baltimore Avenue.

-

V

^

" (Millions ;bf

Including $20(X million provided through UNRRA and other forms
relief, total foreign aid and postwar credits extended by Canada
$2 billion mark (which,^
on the basis of comparative
popu¬ from $1,508 million at the end Of
lation, would, be the equivalent bf 1945 to $1,245 million a year later,,
$24 billion for the United States). and to ah alarming low of $462
On
an; over-all
basis,. Canada million at the end of 1947. At the
has had an active trade balance 1947 pace of the drain, with no
and a balance in her favor on relief in sight, her reserves would
aggregate current accounts of her have been totally exhausted with¬
international payments; in other in a few months, and it was there¬
words, if she had received full fore imperative that the situation
and convertible payment from all be redressed immediately.
of her customers, she would not
any

balance of
of
her

British

most

Asiatic countries.,

European

in
and

However, with

da

had

restore

to

to

severe

of
imports from the
States; thus, while her
long-range policies had been on

United

the

from

ures

United

States

reduced

her gold and U. S. dollar reserves

countries

side

trade, her
ism.

of

1

In

multilateral

new

aimed

at

world

emergency meas¬
stricter bilateral¬

November,

1847,

...—,

America

Europe
Other

.592.2
y
♦
70.3
210.2 v'^177.4 !

-656.5 \
73.3V
57.6

countries

The

^^-42.9

needed boost in

much

and

-

[

ex¬

ports to the United States has, un¬
doubtedly, been facilitated by this

country's recent tariff concessions.
As

a

result of these shifts, Ca¬

trade

nadian

with

United

the

States, as well as with the

Kingdom
closer to

,

V

v

.

has
a

tended

United ;

to

come

bilateral balance.

Excluding Gold Movements.
(Millions

re¬

strictions

credit, or through frozen European
currencies,
her
heavy
imports

_——

Balance of Trade

Under the circumstances, Cana¬

the bulk of her exports to Europe
financed either through long-term

the

Latin

Emergency Measures

payment
own,

;

Ly/

First Svven Months of
i9t7'v "1048
f "
,567.5
768-2 i

United States

of

problem
contrast to

;!

X>ollarsr '

"

Area—

exceed the

know

toward

,

Geographical Areas

$433.9

r

Europe

'

'

$1,844.5

recent Ca¬

Canadian Exports, by;

;
287.0

;

Total.

from

away

the United States.

5.0

%

other hand,

the

shift

,

3.0

1,250.0

"28.1,

exports show exactly the
inverse
tendencies,
namely ,a

6.9

15.0

Kingdom.

„

.1 17.2;

12.9

nadian

19.0/

J

*107.1

31.6 '
-

20.4
.

27.4

u. s. s; R.____________________

231.2

$44.1.

:;30.0

Netherlands Indies

886JF

160.5

countries

Europe
Other ' a.

—

^

1048

,

America-.i^i-^-^-. ; "70,1

Latin

Amts. Not Drawn

-

First6Mos.pt
1947

«

States_.^..ii-—U.-981.7

British

125.0

Czechoslovakia

'r ■ ^

.

Dollars)
-

AreaV

United

<

*T00;0

Norway

*■}.,i

by Geographical Area

.

Export Credit

-Canadian
United

the

be seen from the fol¬

Canadian

'

(8pedal

CANADIAN STOCKS

'

0.2

Canadian. Imports,

•

Loans Authorized

Netherlands
China

+

Chronicle)

":

CORPORATION

V

.

Belgium

CANADIAN BONDS

i"||

France

,

1.7

6.3

from

away

can

lowing" 'figures:

GoyeipmenfM-:/^

Countries:

2.6

purchases

The over-all; shift of

imports

(Millions of Canadian Dollars)
.

con¬

by the

1.6
3.4

,

Dominion: Bureau of Statistics.

Source;
?

States

Countries

>

2.6

,

3.8
5.5

instruments——

Musical

+399 4

-

Other

7.5
4.2

sporting goods..

and

Refrigerators and parts

a short-run viewpoint, the situation was aggravated by the
financial aid which Canada extended to Europe in a farsighted effort to facilitate the recovery of her best customers, and
to unfreeze and widen the channels of international trade.

to

32.0

Cooking and heating equip.
watches.'....

From

Advances

20.6

23.6

Clocks and

Toys

generous

J

tinuance

GOVERNMENT

products.
products

textile

Other

2.8
38.0
2.1
13.9
19.3
y
9.1
^ 3.8

4.6

Automobiles'

Dominion..'Bureau of Statistics.

and

6.0

7.0:

Leather,

.area^ 1945-1947.V Figures include mutual aid ;and
official relief for United Kingdom and other war-torn countries.

Postwar Loans

8.9

unmanufactured—

♦Other/sterling
Source:

S.l
15.8

■

Hides and skinSi.iii.^^..

+468

32

4-747
4-500

___

1947

'23.2

-

16.9

Leather,

'

These are aspects of the situation in respect to which the Canadian
authorities
can
feel
with

products...*.

products-

Vegetable

--

1948

y 16.4. ' '*

Vegetables

—

bilities.

'

First 6 Mos. "of

-

The

Cuts

Import

(Millions of Dollars)

<

Item.'.

the

indica¬

of the Canadian measures;

Some

,

m

concessions.

statistical

some

are

ness

that

added

the

tions for the short-term effective¬

in the United
has

tariff

recent

our

Here

domestic boom conditions and in¬

of securing many of
needed
products elsewhere;

to

exports

and, as a matter of
fact, some of those exports have
even further increased, due partly

high because of deferred demand,
ability

her

on

United States

most, in order to finance her own
imports from the United States;
these purchases reached a record

—

1945_

be

disruption

the

by

power.

.

Canadian

The

not

of the emergency program

has, thus far, been assured by the
fact
that
our
own
exports to

—

the

overlooked.

should

much of

ev.^ closer economic cooperation
this country. This does not resulting difficulties can be appreciated by looking at the size of the
net current account balances of the Dominion's international payments.
upcessarily imply, however, a sef.10us weakening of the economic
Canadian, Balances of International Payments
i'6®, between Canada and the
w
Net Balance on Current Account
~mte? Kingdom. On the contrary
(Millions of Canadian Dollars)
" British economic policies are
All Other
United
United
*Other Empire
^signed in accordance with this
r
Countries
Year:
States
v
Countries
Kingdom
lnescapable fact, Britain can also
77
V 4-135
+ 98 !
v<V;4- 24
share the benefits To be derived 1937.--....
149
1938_
+ 78
4-127
4- 44
l**0™
full exploitation of Can116
1939
+ 66
4- 39
4-137
tremendous economic possi-

products at prices below the world

showed in the first

1948, one important point

success

European

war

measures

half of

this multilateral flow of trade and

.

; This

United

currencies has been short-circuited

a

Canada,
las

these

active

an

the

other

After the

countries.

extraordinary
contributions
in
the drain on her U. S. dollar re¬
support of the British economy,!r5Jor*J^ri
^■^or?lm?n Vls-a-vis serves, while losing some ground
Which on a per capita basis even
e Mother Country has changed
in the fight against price inflation.
exceed those made by this coun-<
a? unmistakable fashion. Looktry. In addition to the $iy4 billion j,n2 further ahead the time can be
The Impasse
loan, $230 millions of which is foreseen when the Dominion of
The Dominion's postwar trou¬
now frozen as a
consequence of v*?P.con3?
economic bles
regarding the balance of
the Dominion's own exchange po*"e British Commonwealth,
layments have not resulted from
sition, Canada is still supplying
Canadian course is now in- domestic
inflation; the country.
Britain with wheat and other farm <evitably set in the - direction of
level.

from

with

and

Kingdom

economic

Bing
-

greater en-

a

C.

Ralph

be modi-

concerning
...

,

drawn

balance

trade

first-class

of

the

in

currencies

country lack¬
ing the weight

of

hoped consequently
attitude

that

has been prac¬
ticable Tor a

alternative

no

concentration

British

ightenment

solution!

a

had
the

current discussions will

British

the

has

than

is

ihat

■

hand

reorientation in
closer economic

of

mports in soft currency

the

on

certain

a

direction

other

pur¬

this primary ob¬

■

,

well

now

to

relations with this country, and

the

program of November

ECA

and

the

coun¬

"of"

result

a

$

large degree by eco¬
nomic necessity: in the Canadian
case
the exchange position com¬

be obliged to reorient

its basic

first

'

.

Yet,

extent

indications

S./British/Canadian

U.

cap-4^-

United

States.

'

divergence from the previous
objectives of utmost mutual con¬

honored

or

italist

and

of

breakdown of the time-

ing the

far in direction of bilateralism >

as

Canada continues to steer

policies

trade

gone

omy,

With regard to the
of

Holds Canada has

and credits operations.

payments

practicable and, with aid of ECA "offshore procurements," will be able to ease its gold and dollar
shortage. Foresees, however, no early abandonment of restrictions on U. S. imports.

as

commercial relations, but also on Canadian economic policy vis-a-vis
this

r

Bing analyzes Canada's world trade position and gives data relating to changes in its interna¬

of

,:

'V

Dollars)

First Six Months

-V- 1947

Area—

Kingdom

Moreover,
U.

S.

in

+220.9

order

dollars

(Continued

—228.3

+269.0

States

United

more

1948

—488.0

United

to

(and,

on page

obtain
at

40) V

the
<

Volume

THE

Number 4736

168

i

Britain's Trade With Russia
] ;

j^

economies

complementary, British trade with Russia is

are

Leading British official reviews further

im-

more

Stresses importance

Negotiations for a new commercial
treaty between Briiain and Soviet Russia have now been initiated
in
London.
No immediate results are expected,
partly because
ENGLAND.

LONDON,

—

it

is

not

viet

purchases.

easy

to

expansion

of

Anglo-

ing

for such

it

V

;

size

the

balances

is

not

sterling

Russian

of

it is

known,

unduly

large.

satisfactory,

political rela¬

ters

be

will

been

Indeed, fears have
expressed in some British

unless

more

that

quar¬

Government

Soviet

the

be¬

sia and the

sterling and will
then be unable to pay for the in¬
dustrial equipment when it can be
delivered. It is not expected, how¬

Western

ever,

Powers. Given

on'

tions

can

established
Rus-

between

improve¬
ment o f t h e

that Moscow would default
peace-time commercial con¬
tracts. The object of the hew ne¬
gotiations is to provide for an
increase of 1 Russian
exports to

a n

Dr.

Paul

its

spend

Einzig

political,
at- ^
mosphere, however, the prospects Britain, in order to have
of the conclusion of a trade agree¬ necessary sterling balances.

Soviet Government

ment with the

Considered to be not

are

unduly

unfavorable.

the

Many people in Britain are far
about this trade. It is

from happy

than

feared

manufacturers

pro¬

criticism ducing equipment on special Rus¬
of the government for taking this sian specifications may experience
difficulties in finding alternative
particular moment for the initia¬
tion of talks aiming, at increasing markets if, for some reason, Rus¬
British
trade with the
Soviet sia should not take delivery. It
Union. In some quarters this is is also argued in some quarters
There has been

some

gesture of appease¬
it is feared that it
might create an unfavorable im¬
pression in the United States, on
the ground that Britain is seek¬
ing to expand trade with Russia at

considered

a

and

ment,

that the

to

tend

proceeds of these exports
help Russia to import

strategic materials and equipment
which directly or indirectly help
Russian

arms

On the

industries.

other hand, Britain is in bad need

American-Russian of grains and timber—to mention
trade is deliberately reduced to only these two products—and in
vanishing point. As a matter of spite of the Marshall Plan it is
fact, the position is quite differ¬ essential to divert imports from
when

time

a

ent

as

far

Britain is concerned.

as

the

dollar

area

far

as

as

this is

possible.
Such is the position that
mies are largely complementary. this consideration has to prevail.
Britain needs Soviet grain and
timber. The United States, on the

Russian

and

British

The

econo¬

is not an importer of

other hand,

products.
While Russia needs British and
American machinery, the United
States is not in a position to pay
for the latter by means of exports.
the main Russian export

Another difference is that while
the United States can well afford
to do without Russian purchases
the same cannot be

said to be true

It is vital for
Britain to increase exports and
Soviet
Russia
is
an
important
customer. Britain could ill afford

about

Britain.

Russian market
making a political

the

sacrifice

to

for the sake of

gesture.

considered

Until recently it was

unlikely
would be

that a new trade pact
negotiated with Russia.

For, there has been much pub¬
licity given to the difficulties that

Philadelphia National Bank
Appoints Jas. H. Kennedy

the

more

; ;p/:■

ments difficulties which were re¬

flected

country
should

ment.

is

It

fraction

of

known

that

the amount

only a
received

grain could be spent so far
industrial equipment, owing

to the difficulties of British man¬

ufacturers in

agreeing to fix rela¬

tively early delivery dates.

Notwithstanding this, the Rus¬
have no ground for com¬

sians

Their sterling balances

plaining.
do

in

lie

not

idle.

It

was

stipulated

agreement that the Soviet

the

government has the right to con¬
sterling into a number of
currencies.
As far as is known
It did not make use of this right,
vert its

for

the

simple

reason

that it
im¬

needed the sterling to pay for

ports from

Sterling Area

tries. During

coun¬

recent months heavy

Russian purchases of rubber
other
one

the

raw

materials

have

and

been

of 'the prominent features of

commodity markets. Instead of

leaving in London the sterling ob¬
<# 'i

t

tained} far the grain,exports^ So¬




on

terms

in

us

experience

and

our

an en-

.stimulus

the

runner

efforts that
a r

we

JW

one

now

the

result

the

first

this

of

dar

of

half

effort

,

•••

of

fairs
Sir Stafford Crippt

so

can

begin

Now

look

back

to

be

over

measured.

the first six

months of 1948 and take stock to

is

payments

those

and

and varied measures we
meet this crisis in our af¬

took to

••

far as the bal¬
ance

the first
when the results of
to

pass

the many

calen¬

concerned

show

figures

a

very

what progress we have made
and What has still to be done, but
see

great improvement over those oi
1947 and a close approximation to

before

the

rected figure for

.hopeful target which we set
out in the economic survey,

I

do

so

I must

draw the

attention of the House to the cor¬

the deficit inl947

million, which is smaller

—£630

worth while to

is

I

exam¬

their significance.-

ine

Imports Cost 10% More
First let

take

me

imports.

£792 million.

cast was

therefore

faced.

ever

now

1948

of

economic

most severe

we

and

We

ago we

year

have

we

But

six

year

the

of

crises

e ; ha v e
available

it

actual

our

disciosed,

are

in the spent on imports in the first half
of 1948 £887 million.
The fore¬
were confronted by

a

sterling area

to make.

months'

than

more

eVca li ed

upon

think

exports and so set us back ir
overseas
balance.
So little

our

the forecast and

tween

o

couragement
in

economic

our

we

had

we

This

was

extent due

expected

We

more

spent
than

imports.
only to a very small
to a higher volume of

imports than
We

million

£95

on

had planned for.

we

actually estimated

a volume of
imports 76% of the 1938 total. In

fact

we

imported 78%.

Such

an

overall comparison may of course

misleading but with one or two
exceptions which I shall mention
later we did not in fact pay for a
be

larger volume of imports than we
had expected to.

! The difference is basically a
Any feeling of optimism engen¬ by £ 45 million than the estimate
was
published in "The consequence of the rise in import
dered by these results must, how¬ which
White Paper" on the balance of prices, a rise which has proceeded
ever, be; tempered; by qualifica¬
continually and amounted to 10%
tions.
First, that we do not let up payments in February this year.
in our efforts or in our self-re¬ It will be remembered that this during the half year. I and many
people ' have
constantly
estimate
was
labeled other
straint, for these have togethei earlier
r

drawn attention to the damaging
im¬ "Very Provisional" since .it was
effect to our economy of this rise
put together long before much of
the necessary data was available .in the prices of the food and raw
in final form. We now. of course! materials which we must import
area continue to give us the splen¬
keep our production going,
did support that they have done have very much more complete to

about

brought

our

present

proved situation. Second, that our
friends in the rest of the sterling

over

the

last

year

particularly. information about. 1947,: and the
new
figure of £*630 million is

Third, that there is no exceptional
element either in the political or

accurate.

more

| Looking ahead for

a moment, the
prospect is not perhaps quite so
| black as it was: there is a pqs-

economic
sphere to upset oui
Though there are a number of sibility of some relief so far as
achievement; and Fourth, that the detailed changes, the revision can so*11® commodities are concerned,
measures for European
coopera¬ be summed up by saying that our Good world harvests and pariicof
total
payments is fular^ bumper cr^ps in the. Westtion go forward with the same estimate

vigor and determination in the practically unaltered (it has gone ®rn Hemisphere have already afwhich
sphere/of economic action as they up by only £2 million) with ; fected the price of cereals in our
are
an important element
have
done
since a
few short smaller, payments for imports off¬
imports though we do not want
months ago. the OEEC started set by larger payments on invis¬

any
catastrophic fall in
ibles. But the estimate of total re¬
prices as that would only still
ceipts has increased: a decrease in
further upset world economy.. On
A Really Fine Effort
the figure for export income of
eric A; Potts, President
the other hand, the prices of many
The figures tell the story of £23 million has been more than
Philadelphia National Bank an¬
industrial
commodities
particu¬
what I regard as six months of offset by £221 million in larger
nounces the appointment of James
larly metals, are still rising, and
receipts from shipping and by £ 7
H.
Kennedy, Vice-President, as r$a|Jy fine effort by (he British
show few signs of falling.
They
million more from interest, prof¬
cashier of the bank, to fill the peppier Though these statistical
are being supported by the very
We also now
tables may appear dry and unin¬ its and dividends.
vacancy caused by the death of
high level of industrial activity
have a reasonable estimate of re¬
Milton
D.
Reinhold early this spiring the facts that lie behind
throughout the world and though
them are Very far from being so. ceipts from travel in the United
month.
Mr. Kennedy began his
they are a matter of vital concern
In 1946 we set out hopefully but Kingdom which was not available to us, unfortunately we can by
banking career over 40 years, ago
before and finally the figure for
with the Farmers Mechanics Na¬ with some realization of our dif¬
our
own efforts do
very little to
net receipts from various miscel¬
tional Bank which was merged ficulties to recover from the huge
influence them.
Imports, there¬
laneous
transactions
has
been
with
The Philadelphia National unbalance ,in
our
external ac¬
fore, cost us £95 million more
written
up
to plus £3 million
Bank in 1918.
counts which had been created by
than we expected largely because
from minus £20 million at which
At the beginning of 1920 he was our deliberate and necessary re¬
of the rise in prices. <,, .
4
it was put earlier.
made manager of the bank's an¬ nunciation of our export trade
Our sources of information on
Export Effort Worthy of High
alysis department and later the during all the latter period of the
all these matters are constantly
Praise
same year became manager of the
war.
Many of our most valuable

PHILADELPHIA, PA.

to

on

served
er

on

many

see

its work.

Fred¬
of the

—

American Bank¬

Association committees.

for the
for

back

gold and dollar costs. It can also
be seen how the fuel crisis early
in 1947 checked the rising tide of

provide

cf

<S>

to

transit department. In April, 1929, economic connections were
sev¬
he was made assistant cashier and ered and we had sold a large part
operation of the elected a vice-president Dec. 31, of our income-earning overseas
existing trade pact, under which 1941.
Mr. Kennedy
is known assets. With surprising speed we
Russia has
supplied substantial nationally as an expert on cor¬ rebuilt our export trade and re¬
quantities of coarse grain in re¬ respondent
banking
and
has established our commercial con -

industrial eauip-

to date information as to our present bal¬

up

glad because the information that I am able to give should be of

have risen in the

turn for British

economy

glad to be able to give the House

.

character

the

of England's

on.

payments position because it provides a good general measure

progress. ' I am
a heartening

and

-

lieved that they cannot be

trade

Russian

using

While the exact position regard¬

envisage

an

is

Russia

am

of

ance

prolonged

negotiations with Soviet officials are always difficult and
affairs, a n d
partly because

I

economy daring past half-year.
Concludes Marshall Plan will enable
and independence, and improve living standard.

of his country's

recovery

of European trade rules recently agreed

^establishment

Russian grain
.!

STAFFORD CRIPPS*

SIR

British Chancellor of the Exchequer
.

American-Russian trade. Holds British imports of
and timber would aid in easing dollar shortage.

portant than

•

g^Britain Hits Target
By

negotiations between Russia and Britain for a new
commercial treaty, Dr. Einzig points out, since British and Russian
on

17

(1213)

CHRONICLE

By PAUL EINZIG

-,

Commenting

-

& v FINANCIAL

COMMERCIAL

^irst S^rs. Co. of Chicago

To Hold Annual Outing
CHICAGO, ILL.—The First Se¬
curities Company of Chicago will
close its offices at 1.00 p.m.,

Fri¬

day, Sept. 24, at which time the
taff of 25 will leave for Tabor

improving, partly?; as aresult hf
the

detailed discussions we have

having with other countries
during
our
negotiations
with
been

This

them.

perhaps

underlines

character of the
1948.
nections so that by the end of
But I do not think that the final
1946 our total deficit for the year
version will show any markedly
was only £370 million—much less
worse
result than that disclosed
than

most. of us

provisional

of 1947 Reversed

Deficit Reduced to

Britain's

£140 Million

in 1948

The most outstanding fact as
These favorable results of 1946
reversed in 1947 and the to the first half of this year is
that pur total deficit with the
dollar crisis which swept over the
were

prices

also

rose

heavily
earned

the terms of trade moved

so

exports

Our

us.,

million, which is £26 mil¬
than we had forecast,

£731
lion

more

that to that extent the increase
the

in

of

cost

offset.

-

imports

our
v

*

This export effort

now.

Story

export

acainst

could have ex¬

pected.
Sad

the

results for the first half of

But

<

though only bv 3% and therefore

was

'

is worthy of

high praise. Between December,
1947, and June this year the vol¬
ume
of our exports rose from
120% to 138% of the volume in
end of June, 1948,
knows, it had al¬
most certainly reached our target
1938.

as

By

the

the

House

whole of the rest of the world has
figure of 140% of prewar.
This
its annual greater part of the world most
grievously affected our own posi¬ been reduced to £140 million or must be described as a very fine
tion
as
the mainspring of
the an annual rate of £280 million overall
achievement
and
one
day, Sept. 25.
:.v
sterling areas so that the drain or compared with £630 million for which reflects the greatest credit
our gold and dollar resources be¬ the year 1947—a reduction of ap¬
on all those industrial and trans¬
came almost disastrous.
The rapid proximately 55%.
Ruth & Palo Formed
port workers, managers, techni¬
rise in prices following the re¬
In the economic survey we es¬ cians, staffs and salesmen who
BUFFALO, N. Y.—Ruth & Palo
moval of price controls in the timated tentatively that our ag¬ have enabled this vast volume of
has been formed with offices in
gregate deficit might amount to British goods to be produced, sold
United States in the middle of

Farm,

Michigan,

outing

to

extend

for

through Satur¬

the Marine Trust Building to en¬
gage

in

Partners

the

securities business.

are

Leon

Sanford F. Palo.
were

associated

G.

Ruth and

In the past they
in

the

Share Corp. and in L.

Liberty

£136

1946 accentuated this dollar
and its effect upon the rest

world

was

to

create other

crisis

million in the first half of

in the world's markets and

1948.

To all intents and purposes,

ered

of the therefore,
pay-

has

been

course,

*Statement

of

Sir

Stafford When

G. Ruth & Cripps before House of Commons,

Septus,, 1913,.

h;,

how

this
not

the

look

at

reduction

complished,

the

four

deliv^

quarters of the

forecast globe., It is on this effort that our
of *covery has been based and it is
whole story.

general

fulfilled.

is
we

that

to

large

But

the

that,

details

has been

of
ac¬

upon a

the

variations be-; I

continuance and spread of

energy,

initiative

^ .(Continued

and drive

on page,

30)

18

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(1214)

Thursday, September 23, 194S

Midwest

Exchange to ; ! Warns of Depression in Building Industry
According to
statement published
Sept. 7 from Geneva,
Hold October Meetings Switzerland, by the International Labor Organization,
of

Steel Industry Future

a

on

an

Is

housing programs are described as a vast
CHICAGO, ILL.—The Midwest
regional exchanges will hold a potential boon to the private building industry in a report on housing
and employment. ', ■
<&>
preliminary meeting in Chicago
The study said that four of the tent,
on Oct. 1 and 2 to explore, through
the supply of housing to
further conversations/ the feasi¬ 59 ILO member countries alone lower-income groups has been left
need a total of nearly two million to depend on the vacating of de¬
bility of establishing a consoli¬
dated
Midwest exchange.
It is houses a year but that many of preciated houses by higher-in¬

Republic Steel Corporation, expresses view need for
despite substitutes. Foresees end of high grade
from Mesabi range and calls for better understanding of

Chairman of

steel will continue,
ores

Warns of lower scale operations.

industry's problem.

<

Association of Iron and expected that ; no concrete plan
will be developed or, voted upori
Steel Engineers in advance of the organization's annual convention
at this time. The committees rep¬
later this month, T. M. Girdler. Chairman of the Republic Steel Cor¬
resenting
Cincinnati;
Chicago,
poration, declared that, despite problem of raw materials and compeDetroit, Minneapolis
: "
tition of other^
—~——__—
—
- Cleveland,
In

a

agency

the United Nations, public

statement, issued cn Sept. 10 to the

ture of the do¬

mestic

There must be
problems
for their solution.
' >■

rials and markets.

metals, the fu¬

a

indus¬

social sympathy for its

and

and

St.

Louis

expect

confine

to

themselves to the development of
a

workable formula that could be

these
some

cannot

without

started

be

come

groups.
this policy is changed,
there is every reason to expect

kind of government action.

The ILO,

which is

a

"Unless

specialized

of the United Nations,
pointed out that even where na¬
tional
policy results in public

that,

agency

projects,

private

will

called

be

fu¬

near

excessive numbers for the

highergroups, which will result
depression in the building
industry at a time when the real
need for housing would demand a
steady expansion of the industry.
"The
building
industry
pro¬
vides, in fact, a perfect example

contractors still
to do the
efficient.

income

in

upon

work if they are

relatively

the

in

ture/houses will be produced in

a

the industry is faced used as a basis for effectingt a
It warned, however^ that build¬
with the necessity of maintaining consolidation of all their interests.
ing techniques must be modern¬
think
of
the its present capacity and expand¬ It is anticipated that other meet¬
ized and costs reduced if families
future
of an ing^it-as that may^ be necessary at ings will be planned for further
living on small incomes are to
discussion in the near fture.
* '
industry
in a time when costs of upkeep and
get new homes instead of living of both the need and the oppor¬
terms of raw replacement
Homer
P.
have reached un¬
Merrill in "hand-me-down"
Hargrave,
dwellings.
tunity for a union of public and
materials and precedented
heights — as
have Lynch, Pierce, Fenner & Beane,
private enterprise —- the sort of
Chairman of the board of gov¬ U.S. Needs 1,250,000 Homes a Year
markets,'' Mr. wages, services and materials.
union that worked so well under
Girdler stated.
"To maintain itself, the indus¬ ernors of The Chicago Stock Ex¬
The survey estimated the annual War conditions.
"As far
as
try must make profits on a scale change, has appointed the follow¬
••Here is no proposition whereby
housing
needs
of
four
major
markets go," sufficient, to pay its stockholders ing committee to represent; Chi¬ countries as: United
States, 1,250,- governments would encroach on
he continued, fair and equitable dividends and cago:
\
000 units; United Kingdom, 400,- a traditional field of private en¬
V,:;: .!, ^!!!; "the future of at the same time be able to retain
Walter J. Buhler; John R. Bur-, 000;
Sweden,
45,000; Australia, terprise.
What is*at issue is the
T. M. Girdler
the steel in¬ enough to reinvest in the prop¬
dick; Ralph W. Davis, Paul H. 80,000.
supply of houses to a section of
erties.
Unless
profits of this Davis & Co.; James E. Day; Wil¬
dustry is bright. Looking ahead it
It said millions of dwellings are people whose needs private enter¬
would appear a certainty that iron standard can be made, the indus¬ liam A.
Fuller, Wm. A. Fuller & needed in other countries "but the prise has never been able to meet.
and steel will have a broaa and try will soon cease to be an at¬
"Provided
Co.;
Jess
Halsted;
Charles R. costs, of decent houses are so high
private enterprise
Then, when
increasingly important use in our tractive investment.
that many people cannot-afford will
tender
for
contracts
with
Perrigo, Hornblower & Weeks.
modern civilization. Though other public financing is desirable, pur¬
them."
profit margins consistent with the
metals may find a wider use than chasers of stocks or bonds might
It viewed stabilization of pro¬ small
degree of risk involved,
they have in years past, this will well be few in number.
duction and employment in the there is no reason why local au¬
"So if the future of the steel
in no way interfere with the need
thorities should not take advan¬
building industry as the main
industry is to be assured, steel
hope of ending restrictive labor tage of the potential efficiency of
for steel.
companies must make adequate
practices and costly small-scale private enterprise by calling for
"In the field of raw materials
profits not only for immediate
CINCINNATI, OHIO—The Ohio handicraft techniques. It declared: competitive "tenders for the supply
the outlook is not so bright though needs,
"The extreme instability of the of materials and for the building
but for future develop¬ Valley Group of the Investment
Bankers Association of America industry is a continual threat to of houses in accordance with pub¬
by no means as dark as some peo¬ ment.
'; • ■' ' 7..
* ■
■*
the
security of employers and lic plans.
-1
-i
" "
"To do this, steel prices must Will hold its annual fall meeting
ple have imagined.
"In such circumstances, private
workers in the industry and it
in Cincinnati, Sept. 28, 1948.
"True, the end of the free ship¬ be high enough to insure fair
would be only natural that they enterprise will benefit substan¬
Luncheon for members of the
ping ores of the Mesabi Range is profits, but must not be so high Association will be held at the should
seek,
iiidividually
end tially from public housing policy.
foreseeable, but their place will as to decrease the desirability of Queen City Club and the election through their associations, to pro¬ If governments employ their own
tect themselves against the effects architects and workers, they will
be taken by the low grade ores steel as, a raw material.
of officers and executive commit¬
}
of these fluctuations in the level still buy "materials from private
"At the same time, full recog¬ tee members will follow.
of the Superior Region,
by the
of activity." '
' If T: lr
industry. If governments let con¬
In the evening of the same day
iron ore from Northern New York nition must be given to the fact
The
ILO
economists
asserted tract# for building projects,
or
a
cocktail and dinner party will
that "stabilization of the output provide credit facilities in one
State and by the large deposits that profits we are earning today
be given
at the Bankers Club, of the
building industry is really form or another, the building in¬
which have been uncovered 'in arre due in large measure to the
Gibson Hotel, at which Senator
the
key to the whole housing dustry will have opened to it an
Labrador.
I feel that the devel¬ capacity production of the past Robert A. Taft will speak.
His policy." They said:
enormous reservoir of demand.".
We must anticipate subject will be "Present Economic
opment of the processes for con¬ few years.
"The part which private enter¬
Trends."
Careful Planning Needed
centration of the low grade ores the day when our operations will
prise is to play in housing activity
The ILO analysis warned that
It is expected that several Na¬ in" the future should be deter¬
should be accelerated by all pos¬ be considerably under their pres¬
tional Association officers includ¬ mined by its ability, in co-opera¬ government programs may become
sible means.
ent level and When steel buying
ing Julien Collins, Julien Collins tion with any measure of public too rigid, may lead to houses be-,
"These substitutes will be more will again be on a much more & Co., of
Chicago, President of planning that is found necessary, ing built in numbers and accord¬
the Investment Bankers Associa¬ to produce the types and quan¬ ing to designs which do not con¬
expensive than the free shipping- competitive basis.
"Today

try is bright.
"We usually

■

•

Ohio

Valley IBA Group
Meeting l

To Hold Fall

.

.

they

but

ore,

abundance
this

in

are

insure

to

a

"Steel has demonstrated its im¬

sufficient

supply of portance in times of war and in
times

material for many, many

raw

a

to come.

years

"However,
cannot exist

upon raw

fully during

the years to

mate¬

;

come."

ers

attend

out-of-town bank¬ tities

many

investment

and

the

will

dealers

function.

Reed,

George A. Searight, Vice-President of Aetna Securities Corpora¬
tion, has been elected Commander of Wall Street Post No. 1217 of
the American Legion. He succeeds the retiring Commander, Richard
Hettler. On Friday, Sept. 24, between 12 noon and 1 p.m. (about 500

Phillipines Applies I

the

American

Herbert

com¬

memorate

the

of the en¬
of

and

Wall

Nassau

an

seminated

Streets. A spe¬

ica."

cial

colorful

is

platform
being

erected

George A.

Searight

:,;>!!!..!' ■ !:\

across

and

His

Eminence

will

receive

Street Post the

from

Wall

1948 Gold Medal

Woodruff,

Roscoe

eral

the

Band

armed forces.

represent the
County

will

will

be

tele¬

3!!!!!

0
is

Co.

For World Bank Loan

Hall

Museum.

The

purpose

American

The Queens

quate

liberties

have

following,

an

ade¬

the

!■'

nounced

on

received

a

.

Sept. 15 that it has
formal
application

the
government
of
the
Philippines for a loan to finance
the foreign exchange cost of four
hydro-electric power projects and
of a fertilizer plant in that coun¬
try. The sum required was not
stated in the application.

from

< ■

V

/




(

'

f

■

A

in¬

"If

order to

build for

much

a

do
this,
confine
themselves
to
overall
planning
and to measures designed to sta¬
bilize total housing production, to
reduce
buildjmg costs which are
beyond the control of private em¬
ployers and to supplement the
purchasing
power ' of
income
groups which could not otherwise
afford adequate housing.
can

,

"Actual-buildirig" operations
left to be

carried

on

by

private enterprise.
"Measures such
of

as

before

available to it."

never

Cuaderno.

are

that

the

past, and investigation of present
conditions, emphasizes that the

The

conversations

covering -the
program .of
Philippine Government for

the

"The

ILO

researchers

the

"all

evidence

,

declared
from

the

rehabilitation and development of
the

the

housing problem cannot be solved
Philippine economy and are by private enterprise alone." They
most
comprehensive which said: "While the building industry

the bank has yet undertaken
a
member
country.
They

with

has shown itself able to meet the

consideration

needs of the lower-income groups.

the

present

ap¬

of

con¬

become a vehicle
exploitation of the community
by the building industry in the
or

managers, or

for

of organization

ity."

and

stabil¬

.:'v!

:

-

It

urged careful planning, safe¬
guards and public discussion and
added:

"The existence of certain dan¬

must not be regarded as an
for doing nothing at all."
researchers
found
that,
since slum properties are profit¬
able, public action will be needed
if they are to be eliminated.
They offered statistics to show
gers

excuse

The

that

slums

health

are

and

a

menace

morals

of

to

the

the

com¬

The

declared that few
would want to in¬
supplying by pri¬
vate enterprise of houses to the
upper- and middle-income groups.
The study urged revision of oldreport

governments

terfere with the

fashioned
and

real

taxation

assessment

estate

policies

to

make

them

weigh less heavily on lowincome groups,
and revision of
outmoded local building laws.
The ILO experts also urged
greater mechanization of construc¬
tion,
mass-production of
parts,
and labor
management - govern¬
ment co-operation to increase the
mobility of labor and building re¬
sources. !
:
a
-

,

They also saw the possibilities
of savings running as high as 10
per cent on some
standardization
of

items through

specifications
higher-income by means of modular design based,
for example,* on
multiples of a
groups, it has failed to meet the

will
provide essential background for
of

needs

of 'the

needs

='•>

best

munity.
the reduction

interest

Philippines and headed by
Secretary
of
Finance
Miguel

the

the

to

name

private enterprise
governments
can

could be

form

sumers* or may "cloak inefficiency
on the part of building workers

-

rates, the payment of
housing subsidies, the control of
rents, the planning of local and
regional development, and the en¬
forcement of legislation designed
to eliminate slums and prevent
This application has been re¬
over-crowding, offer no threat in
ceived during the course of con¬
themselves to private enterprise
versations which have been taking
in the building industry.
place in Washington during the
"On the contrary, they actually
past few weeks with a Financial
and
Technical
Mission
sent
to open up to private enterprise a
market
of
a
size
and
stability
Washington by the President of

plication.
K

the

efficiency of production meth¬

"To

a
'

I

that

do towards increasing

can

ods in

construction and Development an¬

.

D.

of the ceremony is to let the world
know that the Bill of Rights and

First Army Colors, and the 321st

Army

; !■

Asbury, Thomson &
McKinnon; Master of Ceremonies,
Gardner Osborn. Participating in
the event; is the Bill of Rights
Commemorative
Society
which
has its headquarters in the Fed¬

for Defense of the Bill of Rights.
General

expected that the

Chairman of the celebration

Francis,

the

the "Voice of Amer¬

ceremony

Clement

Cardinal Spellman will speak for
the nation on the bill of Rights.
He

on

It is also

vised

the Wall Street facade of Federal
Hall

color

of the.temper of the
Unusually large crowd is
expected at the site. The program
will be rebroadcast, picked up by
the State Department and dis¬

Rights

on

present

and

"Because

times

at the historic

site

be

staff

Commanders of about a
hundred other Legion posts are
attending in uniform.

actment of the
Bill

will

entire

guard,

161st anniver¬
sary

Wirth

his

with

their

to

Legion Auxiliary Glee
sending a uniformed a

capella choir. County Commander

Legion will
work

is

Club

American

leave

&

The International Bank for Re¬

businessmen

Street Post of

much

wider market.

Walter, Woody &
Gordon Ries. Jr.;
Hill & Co.; and

George H. Kountz, Field, Richards

Wall

is

"There

dustry

Searighf Commander of Wall Street Legion Post;
Ceremonies Planned to Honor Bill of Rights

the

of houses needed at the low¬

possible costs.

Handling the arrangements is a
committee composed of J. M. Hutton, W. E. Hutton & Co.; John G.

Robert

of

est

Heimerdinger,
Heimerdinger;

strong, Vigorous industry if it

is to serve the nation

industry

steel

the
only

It must be kept

of peace.

tion, and

great and dangerous exi

•'

"iN.f

>.

four-inch minimum unit of
urement
.

7 u $

meas¬

(module).
t

•/ I

*\V v

./y

;

j n h *.

Volume

Number 4736

168

COMMERCIAL

THE

"

&

FINANCIAL

CHRONICLE

Bond Glub of Detroit i;

fliyricesland^Peacelll Elects New Dicers
:

'

By ROGER W. BABSON

g DETROIT, MICH.—The
of the

Bond

Club

of

For
Harry L.

>

J

Erlicher*; Vice-President of General Electric Company,
tells Rocky Mountain Electrical League a slightly lower plateau

by
easing
(3)

work;
i n.cr

there

ment;

was

V

d

(4) by increases due to another ,war.
reducing
How to Avoid War

mil¬ also

lic

*

by printing billions of bonds

hnd bank notes instead of financ¬

ing the

in

war

businesslike way.

a

How to Reduce Prices
Prices

just

could

be

now

by reversing all
these processes, namely: (1) by
reducing the price of gold; (2) by
ceasing to guarantee farm prices
and letting them fall to natural
levels; (3) by discouraging labor
imonopoiies and making labor sub-?
ject; to ariti-trust laws; (4) by re¬
ducing public payrolls, tnus forc¬
ing government employees and
those

"relief"

on

to

no

We can post¬
reckoning: arid
World War III by giving these
European people "Marshall Char¬
ity Money"; but sooner or later
down these bars or

must let

In the sight of God there
may not be much difference be¬
tween* our Economic Curtain and

fight.

Russia's Iron Curtain!

Coffin & Burr Opens

ment

New

market

bond

and

money in
drastic
steps,

These

would

the

last week.
.

do

Chicago office, at 231 South La
Salle Street, under the manage¬
ment of Robert W. Clark, Jr., un¬

part to cor¬

our

situation,

I explained

as

Chicago Office

CHICAGO, ILL.—Coffin & Burr,
Inc., announce the opening of a

however,

not be necessary if we our¬

need

selves
rect

thereby

circulation.

?

Merle J. Bowyer

■

Reginald

Mac Arthur

the election of its officers

for the year

board of directors for the

ensuing

year.

with offices in

No President wants to do

Mr. Dewey will be no
different in this regard than Mr.
Truman.
Just as we have to get
sick before we will give up some
bad habit and take care of our
and

health, so a "bust" seems to be the
only way to bring a nation to its
senses.
It's too bad, but it's human

..

Other

which

this

-

-

v

Association

:

its founding;

Hartford, and Portland and Ban¬
'

nature.

Taxes, Immigration and Peace
other

Two

could be

done

things,
which

however,
would

duce prices and yet i not

re¬

bring

on

depression.
The first of these
would be to reduce taxes; Every¬
one is now trying to pass his taxes
on to the next fellow.
Employees
count as salary only what they
a

take home in pay
taxes

Manufac¬

turers and storekeepers add taxes

to

prices.

Doctors

lawyers

and

increase their fees enough to take
care

their

of

have the

taxes

same

left

that

so
as

Administration.

investors

and

those

and

they

before the

Hoosevelt

dividends

Eugene de Bronicart V-P
Of Herrick, Waddell v
Herrick, Waddell & Reed* Inc.,
Street, New York City,

55 Liberty

Only

living

interest

are

un¬

restrictions

as

so

to

immigration
admit

goods," lie said.

'

consumer

and.

"I

believe

that

assumption

the

warrant

that current business will prosper,

V

.

Detroit and




cost,

Several factors have slowed the
nation

in

tween

supply

reaching

a

balance be¬

and

demand; Mr.
firmly believe
Steel production today would be
m balance if we had not lost 20,-

Erlicher

said.

"T

000.000 tons in the last two years-

due

to

coal

strikes, or for that
if our government- pro¬
gram did not require seven milliori-or eight million tons, which
now are being allocated to special
jobs," he said.
ma tter,

-

The government programs, in¬
cluding
Economic
Cooperation

prices
somewhat,
"perhaps
in Administration exports, military
1949," he continued. Such ,a change allocations, and
other
projects,
would be brought about by buyer will consume more than 15,000,000
resistance
or
technological im¬ tons in 1949, or about one-quarter
provements, or by both, he ex¬ of the nation's expected steel pro¬
duction for that year, he said.
plained.
^
Barring obstructions caused by
international situation,, and

the

despite imminence of further price
increases,

the

nation

soon

may

To

offset

these

handicaps, in¬
develop better ma¬

dustries must
terials

and manufacturing meth-'
ads, he declared.
>

^

.

Board

Dealt Witter & Co.::

Open Seattle Offices fli

Raf-Repellent Wood Developed
to

reduce $2 billion annual rat

s

V J:

'

Development of .a newj low-cost board, that repels rate Wai'laiir*;
Sept. 16 by United States Plywood Corp. The company

nounced

SEATTLE, WASH.—Dean Wit¬
ter' & Co.* brokerage and invest¬
ment banking firm, has opened an

rats to

office in the Hoge Building. Town-

life.

ley Bale, who has been associated
with the firm for the past 17

damage

introduced fay U» S. Plywood Corp.

is

now

reduces

producing a material known as Protekwood that promises to
substantially the yearly $2,000,000,000 American damage by'
food, property and humar.<S>have

This

been

used

rat control.

successfully

for

"But under most con¬

easily-applied lami¬
nated
board, a combination of ditions," Mr. Randall said, "thr
years, will ^e; Resident Manager.
cost of
these materials as rathardwood veneer with impreg¬
Dean Witter & Co.
:

new

first

time

at

Northeastern rat control."

the

^

♦

.

exchanges throughout the United
States.

James C.

Hemphill Ejected

Truax-Traer

Coal

Co.

elected

resi¬

Goldman,
fair pay.
This would do more to Sachs & Co. in New York, who is
reduce the cost of housing and to retiring from active participation
give homes to veterans than any¬ in the company's affairs.
a

reduce

Mich-

New York and Honolulu. The head

from James C. Hemphill, Chicago

day's work for

and

thus reducing selling prices," Mr.
Erlicher explained.

be expected to serve to lower

may

output

crease

Poultry
Producers'
Council at
coming to New York office is in San Francisco.
Harrisburg, Pa., Sept. 14-16. and
from Chicago in
1926, Mr. de
The firm is a member of the
will also be shown at the Eastern New York Stock Exchange
Bronkart has been associated with New* York * Stock
Exchange, San
States Exposition at Springfield,
several investment firms and for Francisco
Stock
Exchange, Los
Weekly Firm Changes
Mass,, Sept. 19-25.
the past seven years whs with
Angeles Stock Exchange and other
The New York Stock ExchangeThe most recent estimates of
Amott Baker & Co.
principal security and commodity the United States Fish and Wild has reported the following firm,

Europe

10-hour

"

high,
prices for critical raw materials
and finished products will be ad¬

All

offices

are

Life

Service

show

that

rats

cost

connected

changes;:/.;

the American farmer alone $63,James F. Donegan will retireby private,lease wire system.
000,000 .a year. The University of from partnership in James B.
J The present offices in the Hoge
New Hampshire report on Protek¬ Taylor & Co. Sept. 30.
Building will be occupied only wood •
points out that "on the
Arthur J. Weyl withdrew from
until such time aspermanent Of¬
farm, rats destroy and pollute vast partnership in J. C. Louis & Co..
fices at 1221 Fourth Avenue, now
amounts of stored foodstuffs, in¬
on Sept. 15.
in
process
of remodeling, are
jure growing crops, kill poultry
ready for occupancy.
:y,
•.
and livestock and ruin property
<

honest

,

today's

Since*

1,000.000 dent partner or Goldman, Sachs &
.good carpetners, bricklayers and Co., a director of the company,
painters who would gladly do an to take the place of Henry. S.
war-stricken

and.

is one of the
We
nated fibre faces, is non-poisonous barriers has been prohibitive.
largest brokerage, i ay es tm e nt
United States
and in no way affect poultry or believe this new
banking and commodity trading
Corporation product is
farm animals. It was demonstrated Plywood
Mr. de Bronkart will be in charge
firms on the West Coast, with 17
the answer to cheap and effective
as a rat barrier publicly for the
of the firm's syndicate participa¬
offices in California and offices in

the great middle class which is Truax-Traer Director
^unjustly suffering today,
CHICAGO, ILL,—At a meeting
v* Another way to reduce
prices held; Sept.; 15, the directors of
would be to readjust

and

Vice-President.

on

able to pass along their taxes to

many

the election of Eugene

announces

H. de Bronkart as

envelopes after tions.

deducted.

are

ot

of Coffin - & . Burr,'
observed the

located in Boston, New York,

gor. Maine.

recession.

•

month

50th Anniversary of
are

a

inflation, the
materials are at

Although the situation today justed by one or both of two fac-t
I parallels in some:ways the condi¬ tors—buyer resistance and,- most:
tions prevalent before the depres¬ importanttechnological improve- sion in 1920, several important dif¬ ments and research,
which in¬

ofUce^Mvi^^bwestmcnt

banking firm

or

Washington, D. C., ihember of the Security Traders

in January, 1946.
:

correction, rather

manufacturing costs
prices of industrial

selling

./•

experience,

he continued.

1948-49:

til recently educational director of
Joseph F, Gatz is a member of
does not Mr. Truman do
the above five things instead of the Investment Bankers Associa¬
te n of America.
Co.
He lias been in the security
scolding Congress for not pegging
Prior to the war, Mr. Clark was business
in
Detroit since
1933
prices = which would only make
goods more scarce and develop Manager of the bond department when he joined McDonald, Moore
tremendous black markets?
The of the People's National Bank of & Hayes, a predecessor company.
reason
is that to do
so
would Washington, in Seattle. After four He is Secretary-Treasurer of the
probably start the business cycle years' service in the Navy, he be¬ Michigan Group Investment Bank¬
came
associated with the 1BA, ers Association of America, and a
downward
and bring; about
a

this

H. L. Erlicher

He cited as among the most im¬
President—Joseph F. Gatz, McDonald-Moore & Co.
portant of these present-day dif¬
Vice-President—Merle J. Bow¬ ferences a greater dependence
yer, Paine,
Webber, Jackson & upon the United States by foreign
nations; high-level exports which
Curtis.
may increase with fuller imple¬
,Secretary-Treasurer
Reginald
mentation of the ECA programs;
Mac-Arthur, Miller, Kenower & Co.
supporf of the economy from na¬
These officers, together with H.
tional defense and armament pro¬
Russell Hastings. Crouse & Co.,
grams; the large volume of money
retiring President, Jones B. Shan¬
in circulation; and a prosperous
non;of Jones B. Shannon & Co.*
farm
group" largely
free from
Gilbert S. Currie of Crouse & Co.
mortgage debt.
and Frank P. Meyer of First of
An economic "change of pace"
Michigan Corp., make up the

1 Why

'.'bust."

affects

,

production techniques for the
Mr. Erlicher said.

ferences
nounces

change

a

unprecedented and, I believe, un¬
reasonable heights. This seriously

next five years,

get jobs.
the day of

producing something useful; and
(5) by ceasing to peg the govern¬
reducing the

new

of

prices

Amer¬

apply h,
trig e n u i t y,
manufacturing ■

can't

we

to

evapo¬

if

a

depression

a

be

1949, which I

Even in tnis time of

men

Nations; no big • armies;
airforces; no prayers or
will bring about World
Peace so long as we in the United
States live the life of Riley behind
a great high fence and the rest of
the world is half starving because
it

than

ican" business-;

peace.

to work

go

air"

sermons

pone

prefer to call

sion

seem

"I think there v/ill

1

of pace, perhaps in

an¬

rated into thin

United

reduced

easily

as

world

p r e s

"may

cents"
No

l.ttle ; "two

my

about

relief; navies,

and

(5)

payrolls

add

e

have

$p; much for prices; but let me

pub¬ worth

on

ways of increasing produc¬
tion, which should serve to lower*
prices. Mr. Erlicher declared.
.'■

serious

other

wages;

lions

of

in bal¬

new

possi¬

The

bilities

more

he said. Scientists and en^
gineers are almost daily finding,

League.

Joseph F. Gatz

chasing tiori resulted in; high: pricey, so
through their repeal today would result in
labor
unions lower prices, both . directly / now
to
raise and in preventing further price

putting

ance,

tain Electrical

power

Babson

supply and demand

a

meeting of the
Rocky Moun¬

pur

Roger

,

and traffic. He

needed today. / Just as

unemplo yment through

techniques

new

.

spoke before

laws are not
their enacr

these

but

five years.

plateau,"' was voiced at Glenwood Springs, Colo., on Sept. 14 by
Harry L. Erlicher, Vice-President of the General Electric Company,
in
charge of
purchasing
swing to a "buyers' market," with

unemploy¬

much

next

A prediction that "business is,going to be good for a long time,
probably on a. new. and healthier, but perhaps slightly lower,

*

and

intentions were probably the best. They did
this by methods: (1) by devaluating the dollars through increasing
the price of gold; (2) by reducing the supply of goods through killing
little
pigs, *)
Our silly immigra¬
plowing thing else.
up cotton and tion and tariff laws were neces¬
paying farm¬ sary when prices wer£ .too low
and

be expected, if business applies ingenuity and

may

*n

prices although their

to

Long Time

an-

.

not

19

Predicts Good Business

directors

Detroit

Roosevelt and his brain trusters were responsible for present high

ers

(1215)

.

-

Placing responsibility for "present blgb prices on Roosevelt "brain >i
trusters," Mr. Babson holds prices could be reduced by: (1) reduc- v*
ing price of gold; (2) by ceasing guarantee of. farm prices; (3) : 1
by making labor subject to anti-trust laws; (4) by reducing public ^
payrolls and relief payments, and (5) by end of pegging govern¬
ment bond prices. Advocates lowering immigration restrictions. '

.

,

Bowers,

partner

in

a

hundred other

ways, r

Rats
♦

Cowles Co. Formed

of

'

CAYUGA, N. Y.—The Cowles
Company is engaging in a securi¬
ties business.

spread
more
disease
other animal."

than

any
•

•

-

Eureka Corp.

Opens

Corporation Lim¬
ited is engaging in a securities
business from offices at 230 Park.
The

Eureka

jv It was pointed out that build¬
ing materials, such as good con¬
crete, sheet metals and wire mesh Avenue, New York City.

20

THE

(1216)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, September 23, 1948

the safe deposit box that Clifford

Fiduciaries and Safe

maintained in his

had
in

By TIIOMAS II. COOGAN*
Second Vice-President, New York State Safe Deposit Association

Secretary and Treasurer, Bankers Safe Deposit Company, N. Y. City

whether

as

lation is required.

In life there

'

are

Concludes experience is best qualification for
resolving problems.
two certainties—death and taxes.

Taxes

we gam¬

de¬

News About Banks

posit companies.
John is duly
qualified as executor of his bro Ti¬
er's
estate
and
he presents his
foreign
letters
testamentary
as
evidence of his right of access to
the box. Thus arises the question

lilllllllDeposit Business
Safe deposit official points out difficulties that may arise is giving
legal access to safe deposit boxes by executors and other fiduciaries.
Says there is much diversity of opinion and practice, and more legis¬

name

own

of the New York safe

one

to

be

an

there

not

or

CONSOLIDATIONS
NEW BRANCHES

NEW OFFICERS,

Bankers

and

ETC.

REVISED

CAPITALIZATIONS

must

ancillary administrator

ap¬

pointed here in New York in order
to gain access to the box.
By an
ancillary administrator is meant
a
person appointed in this State
to
dispose of assets of the de¬
ceased located within
its juris¬
diction.
This is
designed,
pri¬
marily, to protect New York cred¬

After

than 30 years as an

more

the

officer of The National City Bank
of New

which

ceremonies

at¬

were

tended

by bank officers, trustees
and personnel. George Beck, Vice-

York, William S. Lambie,

President of the Dime Club, the
personnel organization numbering
450

over

employees, unveiled the

portrait of Mr. Benson. The por¬
agreement, we mention as little ar
trait, painted by Raymon P. R.
possible—we relegate it to the back of our minds—we relegate it tc itors of the non-resident decedent
Neilson, will hang in the Board
the bark of our newspapers—the obituaries are strictly last-page
Again we encounter diversity o
Room of the bank.
material for a
opinion.
It would seem that the
cient
journalist but
problem of whether trust fundamental difficulty stems from
they are fiontRalph E, Dayton, First Vicereposed by
a
decedent in his the fact that an executor or ad
President and a trustee of the
fiduciary in performing the dis¬ ministrator has no authority which
page informa¬
tion
for : us.
City Savings Bank of Brooklyn,
cretionary and ministerial tasks must be recognized beyond the
N. Y., died on Sept. 15; his age
attached to his function is per¬
They record a
territorial limits of the jurisdic¬
was 79 years.
sonal and limited to that fiduciary
From the Brooklyn
physical expe¬
tion
which appointed him.
O
rience of ihe
or
if it is expandable to mean
"Eagle" we quote:
course, comity between the States
one who died;
trust
in his
judment to select has created situations where his
"He
joined the City Savings
they
hint at
agents to carry out his decisions authority will be recognized, but
Bank
in 1912 as Second Vicethe emotional
to perform these routine tasks that
President
and
was
made
First
this
is merely
permissive, not
William S.' Lambie
involve no judgment—ministerial
experience of
Vice-President
and
trustee
in
mandatory. What must be done?
those left be¬
acts.
Some safe deposit compa-; A
Senior yice-President, will retire 1931, He was also President* and
practice in vogue with some
nies do not care to assume the
on Sept. 30, the Bank announced
hind,
they
a
director of the holding firm of
banking
institutions
and
one
ble

about—death,

by

common

■

simply state
for

fact

pretations unless there is a
T.

"safe deposit"
work — an
event that will

H. Coogan

the

problem, let me cite the re¬
sult of my sounding out of prac¬

necessarily set Oj.1

chain of events that will involve

a

Let

us.

"Green¬

illustrate.

me

field, N. Y.—Clifford R. Doe, 42,
Chairman of the board of Doe
Bros., the nation's largest silk mill,
died at his summer home at Easton, Monday. Mr. Doe was a grad¬
uate of Yale and served in the
recent

war

as

He

Colonel.

a

is

his wile, Kathryn
Wells Doe, and three sons, Clif¬
survived

pro¬

To demonstrate

vision in the Will.

in

us

the latter inter¬

in

involved

risk

a

business

cold

by

tice

this

I contacted
representative
banks, I felt, and asked just where
they stood in this matter. Of the
eight—three permit such access—r
five
categorically
refuse it — a
close division of opinion.
As to
legal reaction, some lawyers re¬
ject it—some accept it. Some ac¬
cept it and regard access to a safe
deposit box as a ministerial func¬
tion; citing the common practice
of
fiduciaries
delegating
their
authority by selecting banks or
on

point.

certain banks

—

ford, Jr., John and Robert."
Mr.
Doe, you just know, was a re¬
spected member of his community, brokers as custodians of securities
a successful businessman; he left
and properties—permitting them
a will.,
He was not one of those to exercise ministerial functions
to

valuables

his

a

Ralph E. Dayton, Inc.

we

*

case,

there

are no

debts of the deceased

outstanding in New York State,
before granting access to the box
If, for any reason, such an affi¬
davit cannot be signed, ancillary
letters should

be obtained.

demand

banks

that

an

Other

ancillary

administrator be appointed on all
such access and refuse any acces?
to

foreign executors without let¬
ters.
Although this latter practice
may be the safest, yet busine-s
reasons
may suggest the former
procedure of obtaining the affi¬
davit, if no debts.

William
elected

♦

*

Barnet

•

n

has

been

trustee of the Home

a

Sav^

ings Bank of Albany, N. Y.,
cording to an announcement

ac¬

by

Thomas R. Ward, President of the

bank,

Sept.

on

The

13.

"Times-Union"

states

Albany

that

Mr.

Bierwirth, President, announced Barnet is Treasurer of William
die following elections and pro¬ Barnet and Sons,
Inc., Rensselaer
motions in its official staff:
John E.

sistant Vice-President
a

wool

Vice-President to

was

serve

oanking division in charge of the
trust company's business in cerain
Middle
Western
States;
Granger Costikyan, formerly As¬
sistant Vice-President was elected
a

will

and

Vice-President

working

concern,

which his

g r a n d lathe r,

William Barnet,
elected founded, and of which his father;
in the Henry B. Barnet, is President.

Cookmaty formerly As¬

con¬

tinue to serve in the banking di¬
subject to and bound bv the judg¬
vision in charge of the credit and
hole in the ground, or his mat- ment of the fiduciary.' That's gen¬
investment research department;
tress.
Mr. Doe had a safe deposit erally the Reason for hiring per¬
A new fact now develops.
Mrs. J. Paul Crawford, Jr., of Philadel¬
box, and in it repose his insurance sonnel, namely to do such jobs.
Doe, it seems, did not anticipate phia, was elected a Vice-Presi¬
policies and the deed to the grave. Further, a third distinction arises;
an
early demise and hence died dent to serve in the banking di¬
Mrs. Doe appears, before having some lawyers feel that when a
intestate. An administrator is duly vision in
charge of the company's
sought legal advice; she must have bank or trust company is made
the deed to the grave—she de¬ an executor that it is obvious such appointed and the traditional pro- business in the, State of New Jer¬
edure already lightly covered in sey and parts of Pennsylvania;
mands access—she is a co-lessee, a bank or institution must act
thd case of the executors, must Henry J. Gertcher, Jr., formerly
but, as we all know, many safe through its officers and employees
be followed5 again—as you well Assistant
Vice-President
was
deposit companies will hot grant and they concede that most testa¬
trusted

who

"

think is of merit in such on Sept. 20. Mr. Lambie* will 'de¬
vote his attention to his personal
providing, as it does, a
corporate director¬
safeguard to both the safe deposit affairs and
companies and to the creditors of ships.
*
*
*
this State, is that where no pre¬
vious demand has been made by
Following the meeting of the
;a local representative of the es¬ Board
of Trustees of The New
Trust
Company
of
New
tate, the executor be required to /ork
lign an affidavit to the effect that York, held on Sept. 21 John E.
which

a

Rudolph

C.

Treasurer

Dick,

and

President,

Director

the

of

Naumkeag Steam Cotton Co., Sa¬
lem, Mass., was elected to the
board

directors

of

Street

Trust

of

The

State

Co.,

meeting held

Boston, at a
Sept. 20. Mr. Dick

on

has had broad manufacturing and

merchandising experience in the
textile industry, both in the North
and South.
■'

The election of Herberts. Bas-

:

the survivor

that she

access.

secure

They require

order from the

an

the

ministerial f unctions must be dele¬

gated to employees acting under

box

a

granting

the

for

to

access

purpose

situation that I think could bear

examination, namely, the
order must be carefully examined
and completely complied with, if
it requires, as. it usually does and
should, that an officer of the safe
deposit company be present at the
opening of the box, in addition, of
some

course,

representative

a

of

the

State Tax Commission.
Time passes, the bereaved widow

having been duly qualified
ecutrix

of

her

as ex¬

husband's

with

her

mentary.

The

representative

letters

testa¬

of

the Tax Commission is present, the
of the box inventoried
and the box is released.
The re¬
contents

sponsibility of the safe
company has ended.
Mrs. Doe

box,

takes out

now

a

new

husband's

At this point summer has

arrived

again.

be in the

Mrs. Doe will not

vicinity of the safe de¬

posit company and she wishes to
appoint her son, Clifford, deputy
—for

the

coupons.

be

act

simple

task

of

cutting

He arrives, but shall he

admitted?

Some

say

"yes,"

say "no." We are now faced
with the difficult problem of ad¬
mission of deputy or delegation

confidence reposed ih
and that person

authority to

form

a

deputy to

ministerial

act.

per¬

address by

The

an-

Annual

Meeting

Safe

Mr. Coogan at
of
New
York

Deposit

Association,

Buffalo, N. Y., Sept. 18, 1948.




executor

that person;

alone, by the tes¬

a

legal

trend of
with such a

thought concludes
fiduciary being
completely
re¬
sponsible for all acts, ministerial
and discretionary. After all, thev
say, "that's what he is paid his
commission Tor."
It

seems

to me, it

would be of

great service

to us who struggle
problem, seeking- reso¬
lution of the problem vainly, if
legislation could be introduced to
with

the

clearly define the functions of a
fiduciary and the nature and ex¬
tent of ministerial acts.
cision

on

this

of

There has

neither

legislation nor de¬
the part of the courts

State, to

allow-

safe

our

deposit companies to permit the
deputy of an executor access even
for

so-called

"ministerial

However, there has been
sion

in

another

chusetts)
without

State

allowing

liability

acts."

(Massa¬

such

on

deci¬

a

the

access

part

of

the

safe deposit company.
Death, unlike lightning, strikes
same place.
Mrs. Doe

twice in the
and

her

Clifford,

while re¬
turning from their summer home,
are

a
a

son,

killed in

dent.

*An

State

a

Such

tator;

some

of

his

as

This

since it may be felt that an exec¬
utor is
selected because of
the

been

as executrix of her

estate.

deposit

of

the

Robert,

a

minor,

father's

his

the result of

as

death, has

into
property and safe deposit box and
come

elected

Vice-President and will

a

be in charge of

the corporate trust

division; Thomas
merly
Assistant

Hildt, Jr., for¬
Vice-President

Company to the board of directors
of the Union & New Haven Trust

Company
at

of

New

Haven,

Conn.,

meeting of the board of the
latter on Sept. 13 was announced
by Edward M. Gaillard, President
a

of the bank,
according to the New
was elected
a Vice-President to
guardian. Now, with the pass¬ Serve in the banking division in Haven "Evening Register." * ;
1
may not be the case, however,
'*
* "V *
V 'U~
ing of time he has attained his charge of, the trust company's,
where a testator appoints an in¬
Paul R. Smith; Vice-President
majority
and quite
reasonably business in the Southeastern Sea¬
dividual to

the instructions of officers.

estate,

reappears

member

are familiar witty, bank-r
Doe family riOW'enters the picture.
ing institutions realize that most

of obtaining
the deed to the grave. She returns
—perhaps with her lawyer and a
Court Order, and now there arises

Surrogate

'Another

know.

tors who

sett, President of the Acme Wire

an

Clifford

foreign

automobile

and

state.

John

Mrs.

Does

resident of New York.

pears

to

demand

the

acci¬

lived

in

was

John ap¬

contents

of

a

would

its

like

his box

to

access

and

contents.

Yes, he has a right
to such access, but only when he
presents:■ proof,; in the form of a
Court

Order,

that

his guardian¬
ship has been terminated. At this
point I considered rendering Rob¬

board States; Donald E. Coyle was
promoted from Assistant Treas¬
to

urer

Assistant

Vice-President

Gray

closely parallel those of

ecutor,

and

you

ecutor

and

an

already

are

"amiliar with the duties of

probably

an

so

ex¬

*

was

in

Rockefeller

the

elected

J.

an

has

Brennan

been

Cashier

Assistant

by

the board of directors of The Na¬

ex¬

tional Bronx Bank of New York,

over¬

it

announced

on
Sept. 21 by
Schwamm, President.
Mr. Brennan joined the bank in
1932
as
a
messenger
and has
worked his way through the ranks
problems that bedevil the days of
to his election as an officer, in
safe deposit personnel when fidu¬
which position he has direct su¬
ciaries appear. First, the question
pervision over all accounting.
of access to a box by a deputy of

tragedies of the
Does, that I think it appropriate to
conclude by focusing your atten¬
tion again on those two common

executor

an

of

a

for

the

was

Harvey

performance

ministerial function and, sec¬

That

trustee of the

a

ing reactions, three legal opinions.
One—court judgment on the first
problem
and,
two—customs
in
vogue, for the second.* You have
knowledge of these problems. You
the prime

qualifications for

the resolution of these problems—

experience.
itself
you

Savings

Bank

South

Brook¬

Brooklyn,

of

N. Y., took

place at the most re¬
meeting of the board of trus¬

cent

tees, it

was

announced by D. Ir¬

diversity of practice exists ving Mead, President. Mr. Landon

is undeniable—we have two bank¬

have

L.

The election of Paul E. Landon
as

ond, the question of the require¬
lyn
ment
of ancillary letters where
access to the safe deposit box of a
non-resident decedent is required.

in

Knowledge

action—the

to select.

,

\

" Y-

is trust officer of City Bank Far¬
mers

Trust

expresses

is for

*

/

' V*

Co.

Brooklyn

A portrait of the late

Benson,

President

of

office.

♦

*

and

Cashier
Bank

elected

rectors

the. Second

Philadelphia,

President

Sept.

on

of

of

by the di¬
In his new

16.

post Mr. Semisch succeeds Robert
L.

Hilles, who

was

man

of the

The

Philadelphia

named

"Evening

Dime

Bul¬

letin" of Sept. 16, in making this

known, said:
"Mr. Semisch has been VicePresident and Cashier of the bank
since 1940 and Mr. Hilles, Presi-.
dent since 1937.

wick,

Aaron W. Hard-

director

a

President

of

since

1937

and

Summerdale Dyeing

& Finishing Works,
Vice-President, and

elected

was

Kenneth

J.

Barber, Cashier.
"Mr. Semisch started his
with

the

1912

and

Integrity
was

Treasurer

Trust

career

Co.

in

Vice-President and

when

that

bank

-was

liquidated in

1940.; Mr. Hilles, a
grandson of Nathan Hilles, one. of
the bank's founders and its first

Philip A. President, is President

The

Chair¬

board, effective Oct. 1.

of Smedley

Brothers Lumber Co."

Savings Bank of Brooklyn, N. Y.,
until
was

his

death

unveiled

monies held

course

dent

was

Joseph

National Bank

William G. Semisch, Vice-Presi¬

National

Center branch,

so

whelmed with the

Rutherford

Rutherford, N. J., died on Sept.
11, He was 63 years of age.

division; Austen T.
appointed an Assistant ?

Treasurer

an incompetent and
setting up
trust, but the duties of a trustee

so

the

of

in the banking

ert
a

of

at the

on

on

on

main office

Brooklyn..;

George

President of the

Oct.

16,

1946,

Sept. 14, at cere¬
the banking floor
of the bank in

C.

Johnson

bank, presided at

"James C.
been

a

Chaplin, who had long

factor in the management

of the Colonial Trust
Company of

Pittsburgh, died

ing

health,

"Post

Gazette"

Sept. 11. Fail¬
the Pittsburgh

on

said
of

Sept.

13," had

.Volume 168

THE COMMERCIAL

Number 4736

forced Mr. Chaplin to

January

retire l?vst
Chairman of the board

will continue

the bank

name

its

present policy and broaden its
jof the Colonial Trust
Company, scope of activities. Recently the
grounding out 45 years of service capital stock was increased from
to the bank he
helped to found $50,000 to $100,000."
;in

as

1902.

For

17

of

those

years,

.from 1924 to 1941, he served as
.President. At his death Mr. Chap¬
lin

Mr. Kendall has served
dent

the

since

ized.

* y,*

■■■

With the approval of the stock¬
of ~ the
Union
National
Bank of Donora, Pa., on

holders

Sept. 10,

was

organ¬

\: &;y

85 years of age. y-yyvyy.;

was

•".vy*

bank

Presi¬

as

$

1

y;*

The Board

Directors of The

of

National

First

'r-:» \

Bank

in

Palm

Beach, Fla. has elected Walter D

Cameron as Vice-President
and
the bank has become the Donora
Trust Officer effective Sept.
15.
office of the Mellon National Bank
Mr. Cameron has been actively
and Trust Company of
Pittsburgh.

engaged in banking and trust
city work for over 26
years, including
states that Howard O.
Colgan, for¬ seven
years with the Irving Trust
merly Vice-President and Cashier
Company of New York as Trust
of the Donora bank, has been
ap¬ Officer and
11
years
with the
pointed Manager of the new of¬

The

'

"Post

Gazette"

of

that

fice. Arnold O. Farquhar and Will
R. Maurer were named
Assistant

Managers.
we

From the

same

paper

quote:

*

"Frank R. Denton, Vice-Chairman of the Mellon
National, said
that Ben G.

dent
,

of

Binns, formerly Presi¬

the

Union

Donora, will
committee

National
the

serve on

for

office.

.The Donora bank, had total
sources

of

than

more

re¬

$8,500,000

June 30."

on

N. J.,

son,

Officer.

President and Trust

as

Mr.

hasalso

Cameron

been interested in the activities of

ihe American Bankers Association

American Institute of Bank¬

and

ing.

I

*

Walter F.

*

*

dent

the

of

Bank

Johnson, Vice-Presi¬

of

Oak

Dallas,
of

President

Texas,

National
was

Executive

elected

cently

Lawn

the

Fair

Park

Na¬

of

Dallas,

effective

The

Dallas

"Times-

A previous item
regarding the
plans whereby the Donora bank

tional

Bank

Sept.

16.

has become a branch of the MelJon appeared in our issue of
Aug.

Herald" states that he will be

19, page 720,

suc¬

ceeded in the Oak Lawn bank by
Fred G.

■

re¬

Vice-

Henry, previously Cashier,

Assistant
A charter for the National Bank Cashier,
becomes Active Vicepi Joliet, 111., was issued by the President, and Dudley E. Brown
Mr.
Comptroller of the Currency on becoming Assistant Cashier.
Sept. 7, according to the Sept. 13 Johnson, who the Dallas paper
bulletin of the Comptroller's of¬ reports was formerly Cashier of
*

.

fice.
be

*

The capital of the bank will

$150,000 and the primary

ganization

consists

of

President, and
K. Anderson, Cashier.
On

tors

Robert

the

of .Detroit,
of

Bankers

Trust

of

the

board,
and elected thereto the
President
Of the institution, Otto G. Wismer.
In addition to

retaining the Presi¬
dency, Mr. Wismer will also serve
in

as

National

Assistant

Bank

committee

been

of

the

preparing

cational

for

investments

Th-is advanced

course is to consist
of six major divisions:
Corporate

Finance arid Corporate Securities

Accounting Approach to the
Analysis of Statements; Issuance.
Sale

and

of

Municipal

Securities; Business Cycles, Mar¬
ket
on

Movements
the

and

Their Effect

Investment

Profession;
Management and Secur¬
ity Analysis; and Salesmanship.

Portfolio

Details

of

estimated

months,

the

that

Oct.

it

with

of

course

about

announced

hours

it

was

opened

in

1946.
*

will

will
1.

be

It

is

1C

occupy

work

month.

per

Members

of

the

L.

*

*

Vice-President
and director of the Uriion Bank &
Lathrop,

Trust Co. of Los Angeles, is cele¬

brating his 80th anniversary with
that institution. Mr. Lathrop is a
native of Appleton, Minn! Before
to

{

» no

Chairmanship, in which
capacity, according to the Detroit he was engaged in the railroad
ousi
.ss.
Conn
"Free Press" of Sept. 16, he will and lumofcx
Iiave charge of the business man¬ ously connected with the banking
agement of the company and. genw and trust business in Los Angeles
since 1915, he became associated
oral supervision of its affairs.

on

Governments

CHIPPENDALE, JR.

By JOHN T.

bond market has apparently entered a stabiliza¬
since the impact of higher reserve requirements on prices
pretty well .taken care of by the support program of the
monetary authorities.
Eligible bond prices have evidently reached
evels that will be maintained ior the time being at least by the
powers that be, so that the "orderly government bond market,"
which has been indicated on so many occasions by informed sources,
will become a reality.
The longest taxable bank obligation has
held the previous "pegged" level of 101 and there are evidences that
his price will be maintained in the foreseeable future. . . . The other
,wo distant maturities of the eligible taxables have not yet reached
'ormer support levels, but if they should move, down to these areas,
The government

tion area,
has been

...

.

.

.

it is believed that "Federal" will be there with bids, to keep quotaions of the

2^s

in the group*.

.

and 2V4S in line with the shortest and largest issues
.

CAUTIOUS

if.

approximately

Fee

will be $75, payable with
applica¬
tion or in instalments.
committee

partially-exempt bank obligations gave ground on riot too
volume, because buyers are cautious and want to see what
will happen to prices of key taxable issues before they take on more
of the tax protected bonds. . .
Nonetheless, there is a definite inThe

leavy

.

erest in the market for the partials, and as prices rebede. the more
working on the course are G.
attractive these securities are to institutions that need tax exemp¬
Gingras, Rene T. Leclerc, Inc.,
tion.
'
'
Montreal; A. D. Hunt, W. C. Pitf eld, Ltd.,
Montreal; L. E. Barlow
;As was the case in previous weeks the 224% ^ue 1980/65 .
McLeod, Young, Weir & Co. Ltd..
are still the leading obligations in this classification. ... If prices
Toronto; George H. Rose, Guoldof the taxable eligibles are going to hold present levels, and ;
ing, Rose & Co., Ltd., Toronto"
there seem to be definite indications to that effect, then the /
and H. L, Gassard, Director of
partially-exempts will be taken on, despite the lack of price sup- ,
...

f

Education of the Association.

Price

winners

in

port by the - authorities..,

Course to studerits who
the best constructive sug¬

sent in

gestion for improving the
or

the best statement

used

material

on

of

the
their daily work were:

course

how

they
in

course

The Prize Winners

The taxable 2s gave up

revised

were

.

increase in obligations due from two
to five years of $658,435,000, which would include the longer
maturities of the taxable 2s.
Undoubtedly the acquisitions of
15 showed

an

.

A. E. Ames &

the

*vy

more

.

.

distant 2s were greater than the $658,009,000 reported,

v

which carried some of the
classification. .

because of the move up of maturities,

Ridley, Wood, Gundy &
Co., Ltd., Montreal.

Campbell," R. A. Daly Co

Ltd., Toronto,
.J. P. Guite, Credit Interprovlncial Limitee, Montreal.
Trenholme Williams, Royal Se
curities Core., Ltd., Montreal.
W. E.

y

the week '

"Federal's" holdings of government securities for

ended Sept.

L.

Ian L.

,

will be continued from time to time so as to keep
prices of these issues in line with the yield curve. ... The 2% issues
were heavily sold by member banks in order to make way for larger
reserve
requirements, with reports to the effect that the 2s due
1951/53 and 1952/54 were let out in sizable amounts. ...
.

W.

l/32nd last week when "pegged" prices

downward to allow for the run-off of premium.

This procedure

Corp., Ltd., Toronto.
V. Webb, Wood Gundy & Co.
Ltd., Toronto.
L. Dixon.

,

RESERVE BUYING

G. H. L. Mills, Royal Securities

Co., Ltd., Montreal.

.

Ele¬

the

mentary

Peter

A.

21

Canada has

advanced edu¬

an

course

Purchase

Reporter

Investment

Association of

Dealers

Ex¬

aminers ^He joined the Oak Lawn
bank as Vice - President and

,r»min<='

the

Our

ONT., CANADA—

mondville, served for eight years

Co.

Mich., created the of¬

Chairman

the First National Bank of: Ray-

Cashier when

«

Sept. 15 the board of direc¬
of

fice

#

or¬

Mortimer

Goodwin,

*

A

(1217)

CHRONICLE

Preparing Course

TORONTO,

while W, Roy Compton,

*

FINANCIAL

In Advanced Finance

of

advisory

the Donora

Paterson National Bank at Pater-

IDAG

&

McLean, McLeod, Young

Weir & Co. Ltd.* Toronto; * V
T. G. Mulligan, Royal Securities

shorter 2s into another maturity

.

-

.

The figures given out by "Federal" include only purchases made
through the 15th, which reflects only part of the liquidation that has
taken place because of higher reserve requirements. . .
>

NON-BANK BUYERS ACTIVE

Although there has been very widely scattered buying of long
governments by .institutional investors, it is
the longer taps

indicated that some of

have been taken out of the market by insurance com¬

with the Union Bank & Trust Co.

Corp., Ltd,; Montreal.
panies and savings banks. . . . This is not indicative of a trend or a
J. E. Wiley, Gairdner & Co.
change in policy on the part of these institutions, but it does reflect
Ltd.; London; -Ontario*-v. • *•/'«Vice-President of the Federal Re¬
the opinion of some non-bank investors that they would rather have'
G. Mac Arthur, 1 James Rich!
serve Bank of St. Louis, was made
and as aC membe^, of ther bank'^ ardspn &
Sops,; Calgary* H'*Mi govermhents at these prices than certain corporates and loans that
Assistant Manager of the bank's
executive committee, is also ac¬
Ey W.- Brown, Royal Securities are ndi^ available'at yields which -are out of line with the return
Louisville branch on Sept. 9. Mr.
*

.

.

Laurence

-

1

*

K.

*

Arthur^ Assistant

Arthur, the Louisville "CourierJournal" reports, fills the vacancy
created by' the death in April of

Sept. 16, 1918, organizing its trust
department.
He continues in ac¬
tive charge of this department,

tive in banking operations. Mr. La

throp is Past-President of the
California
Bankers
Association
and
currently Chairman of its
Committee
on
California
State
.

S. B. Jenks.

Corp. Ltd., Montreal.
that can be obtained in Treasuries....
\
yH/GvMeisener, Royal Securities
Also they feel, that if plugs should happen to be pulled, they
Corp. Ltd., Quebec;
would be better off in protected governments than in unprotected
J, H. Brown/.Gairdner- & Co
>

Ltd.; Toronto,
corporates,.
y L. E; White;yDominionMSecuri¬
ties! CorpiLtd., Winnipeg*
MEMBER BANKS' PREFERENCE
Peter Mackenzie, Dominion Se¬
Bills and certificates continue to gain in importance as far as
curities Corp. Ltd.. Montreal.
: J; R,
Milledge; Stanbury &^Co the member banks are concerned, with a lively demand being in
<

•. *

Ilarry T. Abernathy, Chairman

.

of the Executive Committee of the

First

National

Bank

Ci^y, Mo., died
sas

Kansas

Sept, 14.

on

City "Star" it

He

In the Kan¬

was

stated:

"Mr.
year

and

Abernathy was in his 55th
with the First National and

member

a

of

its

Com¬

mittee on Legislation and Taxa¬
tion.

He has served

committees

other

83 years of age.

was,

of

Bar

ciation

as

Bankers

well

as

on numerous

of

that

Asso¬

of the American

Association;

is

Past-

President,
Building
Owners &
Managers Association of Los An¬

geles; Past-Chairman of the Inde¬
pendent Bankers Association oi

s

■

.

Ltd M

Halifax.

,

E. S. Miles, Burns Bros. & Den¬
ton Ltd., Toronto.,

evidence, since it is indicated that, investable funds over and above
needed

reserves

are

being put into the

shortest: maturities.

.

Weldon, Dominion Securi! Many of the "out of town" institutions, according to reports, are sri
ties Corp. Ltd., Montreal,
been active years..
much on the fence now, that loans which under ordinary circum¬
the 12th Federal Reserve District v J.
A. Rbind, Mills, Spence & Co
he left the Treasurer's desk at the
stances would be made at once are
either being turned down or are
and is actively interested in vari¬
Ltd., Toronto.
Abernathy Furniture Company to
being given the "deliberation" treatment. . . . Funds that could be
ous other organizations.
take a full-time job as an Auditor
*
*
*
Honorary Mention
used for other purposes are being put into short Treasuries by these
at the bank, which he was to

all but the last

had
June 1, 1894,

year

or- so,

D.B.

,

.

President

from

1927

J. L. Ilsiey,

P.C., K.C., wartime
Finance, Minister for the Domin¬
$■* fAx. Abernathy's father had -.pre* ion of Canada, has been appointee
ceded him as, President, and in a director of The Royal Bank of
it is an¬
January, 1940, Taylor S. Aber¬ Canada at Toronto,
Mr. Ilsiey became Fi¬
nathy (son of Harry T.) became nounced.
serve

as

to

1941."

President.

Dan Greening, Jennings,

Petrie institutions, pending clarification of the atmosphere.,.

& Co./Ltd., London, Ont.
H. M. Cunningham. Eastern Se¬
curities Co. Ltd ly Halifax.
J. A. Gerroir,

V Ai change m the name of the
Plan
Savings
Bank
of

Morris

Jacksonville, Fla,, occurred
on
Sept. 20—the new designation of
the institution being the Central
Savings

Bank

of

Florida.

The

change was announced by C. P
Kendall, President, it is learnec
from the Florida "Times-Union,"
which indicates that Mr. Kendall
said the

name

is

more

proposed expansion.

suitable to

The "Times-

Union" likewise stated in

.

part:
"The bank opened for business
on June 5,1917.
Since then it has
adhered to a policy of being a
community asset. Under the new




y

- .y

OPTIMISTIC ON SUPPORT LEVELS
Until

Collier, Norris &

after

election

at

least,

it

is not believed there

will be

Quinlan, Ltd., Toronto.
changes in "pegged" prices of government obligations with the most
W. R. Moore, Stanbury & Co. vulnerable issues the
nance
iviimsier ior ».ne i/imamo..
ineligible obligations because of heavy sales
in July, 1940, and organized Ca¬ Ltd., Halifax.
by non-bank investors.
. Quite a few well informed money market
D. Li Erwood, Burns Bros. &
nada's
wartime financial
struc¬
followers are now of the opinion that there may not be need for/a
Denton Ltd.; Toronto!
^ yV,y
ture.
He mobilized the financia
Virginia L. Douglas, Jennings, further lowering of support levels, because they believe that the in¬
resources of the country for the
Petrie & Co., London, Ont.
war
effort and directed nationa
flation spiral is running out. This, they point out, should improve
E. H. Dimock, G. E. Leslie &
policy, in the field of finance
the position of the money markets very substantially because much
throughout the war years.
Mr
Ruth A. Mitchell, A. E. Jukes & of the pressure of liquidation that hasAplagued the authorities will
Ilsiey also directed the succeeding
be lifted with the passing of high prices and its attendant malad¬
y!Victory Loan campaigns arid su¬ Co., Ltd., Vancouver.
W. B. Pearce, McLeod, Young,
pervised the control of inflation
justments. ..."
.
In 1946 he relinquished his port¬ Weir & Co., Ltd., Toronto.
The demand for loans should abate with the ending of the
.

,

X.

.

.

,

folio

as

Minister

of

Finance

to

accept appointment as Minister of

senior

Justice for the

law firm of

Dominion,

a

pos

he held until his retirement from
active

politics in July Of this year.
Since his retirement from the po¬
litical scene,

.

Mr. Ilsiey has been

quet &

the

In

partner

Inflationary trend and many institutions that have been

Montrea

MacKay,

a

J. L. Ralston.

'

1

and the most likely

position for

merly hfeld by his friend, the late
,

sellers of

must be kept at work '
spot will be in the government bonk market.

government securities will have funds that

Ilsiey, Kearney, Du-

„

..

.

It will take only a mild deflationary trend

different complexion on the money

markets.

to put an entirelyy

.

£2

(1218)

<

.

THE COMMERCIAL & FINANCIAL CHRONICLE

•

Thursday. September 23, 1948

•

izing and the fundamental ques¬ count to stabilize the market for
tions of policy.3
While the Com- its common stock on the ; New
mission agreed unanimously that York Curb Exchange and other
stabilizing was manipulation, the exchanges in advance of the pro-:
;
majority considered tne alterna¬ posed public offering of the stock,
tives of prohibition, inaction and and during the course of the stabi¬
In press conference at Washington, he says move was in line
regulation, and concluded in favor lization that day purchased a total
general anti-inflation program. Says no change is contemplated in )
of attacking the problem step-by- of 1-86,200 shares, The total offer¬
Treasury's gold price and upholds pegging of government bonds. • step through the Commission's ing! wagfs 1,500,000 shares, 900,000
Foresees no immediate further debt reduction.
rule-making authority. Commis¬ "firm'* and 7*100,000 ©n a "best ef¬
sioner
Healy in his dissenting forts" basis, and-the registration,
On Sept. 15, Secretary of the Treasury John W. Snyder, in a
opinion observed that the differ-, statement under the ' Securities
press interview, defended the Federal Reserve Board's action in raisences
between
"manipulation" AcL of 1933 became effective as
ing the cash reserve ratio of the commercial banks as a necessary and
and "stabilization" were often dif¬ of ,5:30 p.m; on Feb. 3.
proper step in the Administration's anti-inflation program. Mr. Snyder

Secretary Snyder Defends Increase in
Reserve Requirements

ficult

said the order
for

budgetary surplus can be an¬
ticipated/ • Regarding other de¬
velopments, Mr. Snyder announced
that the Administration is stand¬
no

increased

reserves

was

indication

an

that

the

gov-

ernment

using

keeping the price of
ounce, and does
not contemplate any change, de¬
spite' reports that the British would
ing firm

was

available tools
to

fight infla¬

tion.

propose an

The

Treas¬

also

Fund

stated

that

there

tinue

ther reduction

to

bonds

John W. Snyder

announced

that

Reserve would

con¬

also

peg

at

of the current

end

the
He

S. Government

U.

par

na¬

tional

alteration at the meet¬

Federal

the

lihood of fur¬

the

at

month.

little like¬

in

per

ing of the International Monetary

Secretary

ury

was

on

at $35

gold

its

all

slightly

or

notwithstanding

debt

better,

opposition

the

SEC Seeks Views
:

,

'

s.

v-

Market Stabilization

on

■'

,•

V

•

*-V

'V '»* ;

',7 ?T

f{

lion.

-

i

,

submit proposals for amendment
stabilization
prices in public offering of securities.

<

On Sept.

16, the Securities and Exchange Commission released
notice, in which opportunity is to be given to submit proposals for
regulations or legislation regarding the stabilization of market prices
by persons offering securities to the public.
According to the release,

a

is

notice

given

pursuant

to'
tered

on

national securities

a

ex¬

actual or ap¬
public investiga¬ change creating
tion of the offering of the com¬ parent active trading in such se¬
mon
stock of the Kaiser-Frazer curity or raising or depressing the
Corporation, regarding which there price of such security, for the pur¬
has been considerable controversy pose of inducing the purchase or
23, instituting

and

a

The matter, how¬

litigation.

has

ever,

been

by

cussed

both

in

sale of

under considera¬
the SEC and the

"Chronicle."

issues

such; security by others."

the contravention

of

The full text of the SEC release

J

Commission

of

(9a) (6)

makes

it

unlawful

follows:
Notice

Section

rules.

.

manipulation

lawful stabiliza¬

or

tion

rests at present on interpre¬
tation of Section 9(a)(2), which

"To effect either alone or with

Opportunity to Submit one or more other persons any
Proposals for Regulations or series of transactions for the pur¬
Legislation
Regarding
the chase and/or sale of any security
by

Persons

Offering

Securi¬

be construed in the

course

stock purchased by way of stabilization

is concerned,

registered

national securities

on a

Section

violates

Frequently,* however,

registered se->

ceive
tions

concerns

a

the

in the light of the fact that the
Congress when it dealt specifically

adoption

scribe

of

rules

regulations

dation

of

or

the

There

judicial precedents

are no

defining the difference between
stabilization "&nd other forms of

manipulation.

The Commission's

"It has for many years

Commission's

as

necessary or

been the
expressed

position,

both orally and by letter to- any
member
of
the
public making

preventing

retarding a decline, whether the
stabilization is effected by an un¬

or

derwriter or ,by an issuer, does
appropriate not of itself violate Section 9fa) (2)

it

was one purpose of the
investiga¬ curities registered under the Se¬
tion to aid the Commission in its
curities Act of 1933 a statement of
functions under the Securities Ex¬ intention to stabilize
appear prom¬

change Act of 1934 of prescribing inently
secur¬

of

the first

on

or

second page

the

prospectus whenever the
a basis
issuer or any of thq underwriters
for recommending further
legisla¬ knows or has reasonable ground
tion.

to

Stabilization

whereby

the

is

that

market

process

price

of

a

security is pegged or fixed for
the limited purpose of
preventing
or
retarding a decline in contem¬
plation of or during a public of¬

believe

that

it

is

intended

to

However, the only sub¬
regulation of stabilizing

stantive

thus far adopted, and the only
regulation under Section 9(a)(6)j
is Regulation
X-9A6-1, which is
limited to offerings made "at thei

Section 9 of market" instead of at a fixed price.
the Securities
Exchange Act of 1934 In connection with the adoption of
deals
generally
-with
regulation the Commission
various this

manipulative

practices.

Section
it unlawful in gen¬

eral terms for any
of the mails or any

person, by use

instrumentality

of interstate commerce

cility of
change,
"To
more

a

or

any

national securities

a

statement, together with

separate statejnepkhx the. late

Commissioner
the

Healy,

technical

discussing

problems

in¬

volved in the regulation of stabil-

•

effect, alone
other

issued
a.

or

persons,

with
a

opportunity
comment

one or

of

transactions in any security regis¬




1 Rule

X-17A-2, adopted under Section

17(a)

of

1934.

,-.V«

2 Rule

the

ties Act of

Securities

Exchange

Act

of

statute

adopted under the Securi¬

1933.

^

and

rules

securities

of

„

or

(c)

in

(5)

Whether, in order to avoid
of law, members
of
stabilizing syndicates should re**

viola* ions

.

ceive frpm, the syndicate manager
more information than
they do
under current practices regarding
the status of the distribution and

the commencement and termizia-.
tion of stabilizing.
(6) Whether it would be desir¬
able and feasible for the Commis¬
sion to prohibit attempts to profit
from

the

price disparities which

sometimes

be

afforded

specific

to

proposals

the

on

which

may

be taken regarding problems aris¬

ing under

special

1948,

undertook for

its

own

ac¬

examplp, where an under¬
writer who lias a commitment to

stock
not
subscribed
of purchase
the through warranty pr fights desires
to purchase warrants in the mar¬
Commission is; particularly inter¬
ested in the following questions: ket in order to cover current sales
of stock and thereby to reduce the
(1) Whether the Commission, by
size cf his commitment. ;
rule; should prohibit all stabiliz¬
(8) Whether any other changes
ing to facilitate offerings of secu¬
.

Without

its

limiting the

invitation

for

*

scope

comment,

whether it should

or

(c) stabilizing of

suer;

pro¬

any

class

appropriate

Exchange Act Release No.
Fed. Reg.
10971,
§
241.2446

2446,
11
(1940).

4 See,
for example,
SEC 319 (1941).

Barrett

&

Co.,

9

.

5 Section

of
of

the

17(a)

1933 and

In

Securities

Act

15(c)(1)

Securities

addition

Sections
10B-5

the

of

Sections 10(b) and

Exchange Act of 1934.
the general
rules under

to

10(b)

and

and

15(c)(1)—Rules

X-

X-15C1-2

respectively—there
rule under the latter

specific
section, Rule X-15C1-8, which in effect
prohibits any broker or dealer partici¬
pating or otherwise financially interested
in
ter

more

a

the

distribution

of

an

over-the-coun¬

from representing to a cus¬
security is being offered
"at the market" or at a price related to
the market price, unless the broker or
security

tomer

to

that

knows

believe

exists

whom
in

a

the

other

he

cr

that

than

by
is

a

has

reasonable

market
that

him

or

for

the

made,
any

acting or with
control relationship.

grounds

security

created
person

whom

he

or

for
is

in the

Commis¬
interpret
tations regarding stabilizing: for
example, Rule 426 under the Se¬
curities Act of 1933, Regulation
are

sion's present rules and

X-9A6-1 under the Securities Ex¬

securities of an issuer other change Act of 1934, Rules X-15C1than the class being offered, or 8 and X-17A-2 and Form X-17A-1
(d) overallotment of the offered under the latter statute, and the
of

opinions

(2) Whether

the

.

Commission

should impose, limitations on the
nature or extent of stabilizing and
related activities; for example, (a)

by limiting v the amount * of

secu¬

rities which may be purchased for

Securities

regarding stabilizing in
Exchange Act Releases

Nos. 3505 and 3506, 11 Fed. Reg.
10988 and 10987, §§ 241.3505 and
3506

(1943).

All interested persons may sub¬
mit views and comments in writ¬

the purpose of stabilizing to some ing to the" Securities Exchange
Commission, 425 Second Street,
percentage of the amount being
offered to the public or some per¬ N.W., Washington 25, D. C., on or
before.Nov. 1. 1948. To the extent
centage of the amount of the secu¬
rity traded on the stock exchange practicably, such comments should
refer by number and letter* to the
(where the security is traded on
problems outlined above:
an exchange), or (b) by

applying
stabilizing operations some
dropping of bids
comparable to that contained in

to all

formula for the
the

Commission's

SA6-1,

or

(c)

Regulation

X-

by

prohibiting • a
raising his stab¬

has

market

existed at a higher
given period of time),
Or
.(d)
by
prohibiting
certain
"classes of persons having an in¬
terest in the offering of securities
level for

3 Securities

circumstances:

for

Ryan of IDA to
Address Groups
TORONTO.

.

controlled

426,

will

on

purchased in the stabilizing stabilizer from
process."
ilizing bid under any circum¬
The record of the present in¬ stances. (or alternatively, by per¬
vestigation indicates that Kaiser- mitting such an increase in the
Frazer
Corporation
on
Feb.
3, bid <only where an independent

dealer

series

services

quotation

or

confirmations given to customers.

prohibited from selling securities

be

is

fa¬ both
ex¬

isting

amount

stabilize.2

fering of securities.

9(a)(2) makes

(b) in reports of transac¬
quotations in newspapers

othersinterastedih the distribu-: against

or

that stabilization security.

inquiry,

recommen¬

regulations and
ing information to serve as

or

sugges¬

any

presented by one of the hibit specific- types or aspects of
witnesses
the
presiding officer stabilizing: for example, (a) stab¬
made the following statement on ilizing in advance of a public of¬
the Commission's behalf:
fering; (b) stabilizing by an is¬

legislation

and

or

issuers, underwriters

benefit of

which

motion

;

rules

or

incident to distri¬
butions of securities: for example,
(a) whether the public should be

re¬

not

in the public interest or for the or any other section of the. Secu¬
rities Exchange Act of 1934 so
relating to protection of investors.
the stabilization of market prices
The Commission has in effect long as the stabilizing purchases
by persons who are offering secu¬ certain disclosure rules concerning are effected at whichever is the
rities to the public. This notice is stabilization.
These rules were lower of two figures—(1) a bona
given pursuant to the Commis¬ adopted under provisions other fide independent market price fob
sion's order of March 23, 1948, in¬ than Section
9(a) (6).
One rule the security being stabilized or (2)
stituting a public investigation In requires the filing of reports by the. public offering price of the
the Matter of Offering
of Com¬ persons effecting stabilizing trans¬ issue once the offering is made
mon Stock
-—and that within these restric¬
of Kaiser-Frazer Cor¬ actions.1
Anotlte^
poration. That order specified that that in the case of an issue of se¬ tions there is no limit under ex¬
and

tape
tions

are

prior to any substantial alteration
to outlaw the practice by statute: in the Commission's, rules.

with stabilization determined

proper

or

vention of such rules and regula¬
tions as the Commission may pre¬

amendment

either genf

each transaction

a- stabilizing bid with the
intention of.. replacing the secu^
security not registered on an tion of securities as sellers or pur-:
rities from the offered issue at a
exchange. Consequently,- the line chasers may havh^fbr ;changes in
lower price; or (b) .whether disbetween fraud ©^manipulation: the, present treatment of stabiliza-,
and lawful stabilization with re¬ tion;. • Whi^ef
in tribiiting firms'should be required
to make&«bona pde offering at
spect
to
unregistered securities existing, rules or regulations -or
If the public -offering price before
rests similarly at present on inter¬ through additional legislation.
pretation of these general anti-( the Commission determines after selling their allotments at higher
fraud provisions, which like Sec¬ receiving, these ' suggestions that prices.
tion (9(a)(2) must be construed changes are npcessary, a further
(7) Whether any action should

for the sole purpose of

fixing,

Securities and Exchange Commis¬
sion is proposing to consider the
or

run¬

to

9(a)(2)

curity violates the 'general anti-

exchange for the purpose of peg¬

.stabilizing the
hereby given that the price of such security in contra¬

Notice is

the Commis¬

has imposed no

sion

-in

or

quotation: for example, disclosure
(a) on the stock-exchange ticker

the

ment among

ging,

ties to the Public—

reserve/

restrictions.
the agree¬
underwriters reserves
light of Section 9(a) (6). Sections
to the managers the right to repur¬
9(a)(2) and 9(a)(6) are by their
terms limited to securities regis¬ chase a fixed percentage of the
tered on a national securities ex¬ amount of securities being offered,

must of

of

Stabilization of Market Prices

erally

proposed offer¬

a

applicable right to stabilize for a short period
with respect to -"mar¬ preceding the opening of the bids
ket offerings" (which in recent but it has not been customary for
years have been very rare)
the the issuer to stabilize in connec¬
question
whether
a
particular tion with negotiated undei writ¬
So fat: as tile amount of
course
of
conduct
is
unlawful ings.

This

previous

closure: Of / stabilizing

experience

In the absence of any

general anti-manipulative administrative interpretation was
provision, however, is limited by publicly expressed on July 15,
Department of Justice for the last Section 9(a)(6), which outlaws
1948, in connection with the pres¬
several years and has been dis¬ stabilization
only if effected in ent investigation. In ruling On. a rities)
tion

(4) Whether there should be anyrequirements for the dis¬

added

a

Issues notice of opportunity to

the Commission's order of March

completion-of the distribution if
the stabilizer has previously pur¬
chased securities to prevent or re¬
tard a decline ih the market!
h

a

securities. to

limited

being stabilized, or (c) an obliga¬

rule except

fraud provisions5 when it concerns

of rules and regulations or for legislation relating to

the

of

a

tion: to prevent .or retard any rise
in the market price prior to the

utility com¬
soliciting competitive bids in

pany

ing

when it

V

^ .

Practices

of market

it is not unusual lor

authority to outlaw stabiliza-l connection with

no

which

•:'[

In the Commission's

change. However, the Commission the amount not infrequently
has repeatedly held4 that conduct ning as high as 15%.

against it.

during the next fiscal year, since

perception, and he dis¬
agreed with the view that Section
9(a)(6) left the Commission with
of

obligation for

an

curities sold while the market was

with

*

(b)

or

time to repurchase on demand se¬

.

from

a

effecting

any

purchases

whatever of securities of the of¬
fered
and

class for

a

during the

period prior to
offering, except

properly limited: stabilizing pur¬
chases and purchases from the
person
making the offering or
from other participants in the dis¬
tribution.

\

tour

on

the

of

of

meetings with members,
with members in Van¬

couver on

Sept. 24 and in Calgary

Sept. 26 to 29. He will speak
meetings of members in Mont¬
real on Oct.: 7 and in Toronto on
on

to

Oct. 15.

Similar meetings in other

Canadian cities will be announced
later.'-'

.

.

Salter to Be Partner in
MacQuoid & Coaidy
the

F.

Sabater, member of
Stock Exchange,

York

New

will be admitted to

assumption by the stabilizer Of
any
affirmative obligations: for
example,
(a)
an
obligation to
"sponsor" the market for a period

the

after the distribution is

an

completed,

In¬

will meet

William

ilize should be conditioned

CANADA—

Canada, who has been making a

'

(3) Whether the right to stab¬

ONT.,

G. G. Ryan, President of the
vestment Dealers Association

partnership in
firm of MacQuoid
120 / Broadway, New
on Oct. 1. Mr. Sabater
years has been active as

Exchange

&

Coady,
York City,
for many

individual floor broker.

,

^

Volume 163

Number 4736

Reveals

THE

COMMERCIAL

Tax and Debt Ridden World

a

How
i

at

(in

of

tween

Government

V

experts

i;

for

One

1946,

the

United

$43
of

burden

that

each

in

one

1946

was

the

equivalent of $1 or more out
of every $4 of their national in¬
comes

that year.

in

In

few

a

ex¬

treme cases, the Institute
said, the
1946

tax

lent

of

burden

the

was

equiva¬

more
than half the na¬
tional incomes in that
year, France

being

one

The

in this group.

United

capita

$313,

tax

States, which had

the

burden

in

Institute

1946

stated.

with

Russia

second

was

proximately

with
$297, and the
Kingdom third with $279.
In the public debt burden classifi¬

United

$1

American

tax

out

Russia

1.

Denmark

in
re¬

United

of

making in 1939 while

the

world

still

clung

hope for peace.:
"From

,

■

to .1946

more

the

over

than

any

the

L

expenditures, much of which

■

went

contributions to our allies in
Lend-Lease and in other ways for
as

468

National

,

doctrine

459

see

190

684

1,365

of

2,095

Advisory

,

Council

States

of

per

y^.

Badenberger

Henry JI. Badenberger, retiring
director of the, New * York Curb
Exchange' department of Outside
Supervision, was tendered a din¬

the

capita.

United

States

Canada
$1,365 per capita.
(

"This

debt

$1,830
third

was

per

with

Associated with' the Curb since
old outdoor days on Broad
Street, Mr. Badenberger will as¬
sume

tax

situation,"

run

point of view has
bearing on the financial

a

longdirect

welfare

and

security of all the peoples of

the

world,

and for genera¬
come—their incomes and
now

earning power, their savings, their
standards of living, and the whole
structure of family
life.
Thus,
though overshadowed for the mo¬
ment by the struggle to maintain

rose from $100 per capita
1939 to $468 per capita in 1946
while the per capita tax burden

and Curb

$125 in the same
The Swiss per capita debt

He is

Exchanges

All

Gov.

Earl

Warren

f

:

future under

no

our

Earl Warren.

«V*

and

-.v.:

i-,7V..v

going

for

on

'':'V;.

decade

a

mostly under the leadership of

••

two

or

and

men

who call themselves Americans!

on Oct. h

system."—Gov¬

■

.'-O)

—

women

"

charter member of the

a

New York Curb Exchange Em¬
from $338 \iix
Century Club,
in 1946 buLithe pfer ployees:'Quarter
capita tax; burden declined.^ Ire*; having been Secretary-Treasurer
land showed only relatively small
and
President in 1947. At present he
increases in the period.

increased

country.

And it has been

with Francis I. du Pont & Co.,
members of the New Ycrk Stock

grew from $51 to

burden

.V.,

general part¬

a

-

ernor
■:;r

ner

in

period.

the duties of

our

waking hours are de¬
to
establishing what is

and that it has

the

"As to the impact on
neutrals,
the Swedish public debt, for ex¬

good in

"They have insinuated themselves into this cam¬
paign and are hiding under the wholesome name
and banner of
'progressives.' They tell us that
everything is wrong with America, that it has failed

rose

ample,

and

the Institute said, "from the

tions to

capita debt burden

despair.

into the Government.

way

common

per

preaching the
They can

of

;s.;"They give no credit to anyone, or to
any of our
institutions, for the great material and
spiritual
progress. They have infiltrated into
,jnany phases
of our
society. They have made their influences
felt in unseen
ways. They have even wormed their

i

about fourfold.

country

wrong with our nation.

was

equivalent of
capita in 1946 and that

no

voted

<

$2,095

peo¬
some

their

on

Monetary ..and .Financial

victory. On the other ner at a downtown restaurant last
sec¬
hand, the Russian per capita tax
evening by the New -York Curb
ond only to the United
burden little more than doubled
Kingdom,
Exchange Employees Quarter Cen¬
the Institute said.
The
British .between 1939 and 1946 while the
tury- Club.
*
public debt was the
Soviet
cation the United

born in this

845

667

.Kingdom

Binder for

re¬

war

were

our

even

have become enamored of these
false gods and are

137

219

122

;

Unfortunately,

384

Problems.

grew

more than
fivefold. The rise
flects the enormous American

the

>_

x—\

International

sevenfold,
or
far
other nation, and

capita debt burden

per

_______

Source:

in¬

.

!

34
_____

Belgium

per

burden

1,830

100

___

CanadaUnited

1939

capita American tax

351

Norway

the

199

_______

•'*

ple.

$472

29

_

;

other.,

who

$64

_

being
against

are

arrayed

institutions and divide

297

v.-

BURDEN

,

most

to

DEBT

Australia

j.

,

CAPITA

279
136

129

:

and

"Every device known to con¬
spiracy is used to discredit our

127

•

;'

54

—„.

States

Russia

each

159
•65

.

x—

Sweden

-159

20

—

Finland

in

193

Classes

races.

created

v

42-

PER

against

184

V

;

;'

''U: 46

Netherlands

trospect, indicate the feverish war
preparations Germany and Russia
were

43

Prance—43
United Kingdom
97

t

$13

income

figures,

' $313

37v";

Australia1

ap¬

every

1946

$43

Belgium
Czechoslovakia

of

.*

1939

Canada

15th

burden

of

national

These

year.

creased

been well down on the list before
the war, led all nations in the
per

in

was

1939

a

capita, equivalent to

per

den, the Institute stated, is that in
nearly a score of nations the tax
in

States

place with

\ >.

of the global bur¬

measure

.

BURDEN.**

United States

governments

compare the years 1939 and
the latter the latest available.

TAX

And, So It Is!
stealthy appeal, under the guise of showing
what is
wrong with America, is being made to the
credulous, the cynical and the weak. Neighbors are
poised against neighbors.; Races are
being inflamed

be¬

1946:

CAPITA

23

"A

govern¬

countries

Finland

figures, which are<£ '
only,' tional income in 1939. In contrast,
|

central

PER

selected

Country

i

as

(1219)

Compare

central

1939 and

a
picture of a: debt-and-tax ridden
has probably never before been
seen in
history, the
Institute of Life Insurance
reported on Sept.
The experts'

such

of

dollars)

ments

Congressional request give

world

Nations

CHRONICLE

The

<

committee of U. S.

a

FINANCIAL

^;rtjyfy

in 1939 and 1946.

Figures compiled by

&

fM tww*n<t* »tp< fc>u*>*>Hw

following table gives the
comparative order of growth in
per capita tax and debt burdens

Institute of Life Insurance publishes
figures compiled by National
Advisory Council on International Monetary and Financial Problems
showing relative per capita tax and debt burdens of
leading nations
;

W

.

International Monetary Fund
Approves Peru's
Proposals for Exchange Stabilization
r

1939 to $603

Among

is a member of the advisory eomnations, the Ar*
/The Government of Peru has been consulting with the Inter¬
national Monetary Fund
gen tine
per, capita
debt burden hnittee of that group...
V
,:J
regarding measures which that government
rose from $118 in
>
1939 to $195 in
Guests at the dinner included proposes to take with a view to restoring its
international payments
peace,
the worldwide extent of 1946 while the per capita tax bur¬ Edward C.
position.
Peru has been faced with a
Werle, Chairman of the
difficult problem of
the public debt and tax burden den
limiting
increased from $24 to $40 in Curb's board of
imports because of domestic infla- ?—:
——;——&—_—-,.
,v
governors; An¬
makes it a problem of the first the
drew Baird, Vice-Chairman of the tion and of maintaining exports
period."
magnitude for virtually all na¬
because of rising domestic costs.
The figures were gathered and boards Francis Adams ;' Truslow,
tions, large and small.
The
measures
proposed * by
compiled for the Senate Commit¬ President; .Charles
the
Moran,
Jr.,
"The major cause of this situa¬ tee on Finance of the
Government of Peru include the
last; Con¬ member of the board of gover¬
Latin

American

•

„

,

,

New Orleans Bond Club

been

severely affected as well
belligerents. The problem for
time showed signs of
easing

as

a

as

public expenditures in various na¬
tions declined from the peaks with
the

end

of

the

ment
are

outlays,
displaying

a

but

war,

as

in

govern¬

this

country,
renewed uptrend

due to the international situation.
1

"It is

1939

the

significant to nbte that in

Germany
per

capita

led

the

tax

world

burden

in

with

$157, equivalent to approximately
$1 out of every $3 of German

na¬

tional income in that year. Russia

ments

of

Exchange; Doctor Louis Fox, di¬
rector of the Curb's Medical De¬
partment, and Mortimer Landsberg, a member of the Exchange

Treasury,

State
and
Federal
Reserve

Commerce, the
System, Export-Import Bank, and
the Securities and Exchange Com¬
mission.
Data are given for,138
countries and dependencies, cov¬
ering the entire world, but in
many cases the figures are incom¬
plete.
*
^ 5
Taxation
and

local

figures

exclude

governments

and

who acted

Two

the

foreign exchange and to obtain

their

The Texas Union Oil
that

the

be

used

to

on

debt

to

which

will

in second place with $129
per

$80

per

installed..

an

to

proposed
the

will

measures

number

of

It is the

equivalent of just under

capita,

the

more1 than

GROWTH
IN

OF

PER

W.

W. ;Long, President of the
Texas Union Oil Corp., estimates

CAPITA TAX BURDEN

LEADING NATIONS COMPARED
/.(Central Governments Only/ in Dollar*):

^

that at the

current

price of $2.65
per barrel, which is the price paid
to ' the: company by the Stanolind
Pipe! Line Co., the, entire cost of

.

the wells should be paid out with¬
in eight months.
This makes full

allowance for the one-eighth
alty to the landowner.
;:'

Fund has approved the proposals
with
certain
recommendations
which

the

Fund

understands

the

Government of Peru will follow.
At

the

measures

they

are,

mined

roy¬

time

same

emphasized

that

the

Fund

the

has

exchange

be effective only if
accompanied by deter¬
on the
part of the

can

efforts

Government

of

Peru

to

halt

in¬

,Mr. .Long' forecasts

,

f

V*

that these flation, to secure additional rev¬
wells can; be expected to .produce enue from sources other
than ex¬
profitably for many years after
change taxes, and to limit the ex¬
they jfiave paid for themselves.

Cashiers Ass

n

"

The :' Cashiers'

Outing

Association

The consultations between Peru

and

of

Wall Etreet, Inc., held its annual
outing Saturday, Sept. 18, at Reinhart's ..in Pleasant Plains, Staten
Island: John J. Boyen was Chair¬
man of the picnic committee.
1939

the ' Fund

ducted in

a

have

been

spirit of complete

a

view

to

RUSSIA

From U. S. Government Sources




GT. BRITAIN
PREPARED

BY

INSTITUTE

co¬

achieving the desired

Denis

J.

Co.,

■

-

t aryTreasurer
V
e c r e

G. Price Cran*

Board of Directors:

Waller

Inc.;

?

Fowler,

W.

Hattier

C.
&

Minetree,
John

J.

H.

f

•>:

Weil

Sanford;
Steiner

&

Co.,

White,

Joseph

Rouse

-

&

P.

Co.;

Zollinger, Jr., Scharff &

Jones, Inc.
V

Jr.,

Hilderbrand,

'

' .\.X

n«——MB——■—

•

Brown Named President
Of

Monmouth

Bankers

Co.

Group

Wolcott Brown,

President of

Manasquan

National

Manasquan,

N.

J.,

Bank

of

elected

was

President of the Monmouth Coun¬

ty. Bankers

Association

at

their

recent dinner held at the Sea Girt

aim of financial

stability and uni¬

Inn at which Henry J. Taylor was

exchange

the principal speaker.

to Admit

soon

as

the

system

possible.

The exchange measures are put

:
m

con¬

operation and will continue with

as

-

St.

Villere &
S

fication^ of

1946

Havener, Gill
U. S. A.

& Co.,
VicePresident; Ar¬
thur
Keenan,

J.

pansion of bank credit.

I

"

:

.

Inc./

initial

earlier well

were

Price

Brown

of 100 barrels per

a

at

-

Kerrigan,
Newman,

effective

exchange rates in Peru.

1948,

*

Crane, Presi¬
dent;. J a c k

expansion of exports.

add
an¬

of

G.

14,
/

of¬

new

ficers

Sept.

time

necessity for inflationary borrow¬
ing.
Exporters will be given a
higher return, thus encouraging

the
expectation of the Government of
two wells which it has drilled, in
Peru that these measures will
give
the Caddo Parish field, Louisiana,
it time to take the further
steps
has: come in (Sept. 8) at the rate
necessary to stabilize the finan¬

or

Tuesday,

the

day, duplicating cial situation and
to balance Peru's
performance of the international
payments with a uni¬
capita, equivalent to more than fourth of the equivalent per capita
(Sept. 1) which also
fied exchange system, v
$1 out of every $4 of Soviet na¬ Federal Government figures. feT;!/ came in at the same rate of "100
After careful consideration the
barrels per day.
was

ORLEANS, LA. — The
Club of New Orleans held,
luncheon at Arnaud's Restaurant

a

a

government's

the

These

Corp.

second

NEW

Bond

the Central Bank and to avoid the

master of ceremonies.

Producing Wells

nounces

which

revenue

repay

For Texas Union Oil

state

foreign equivalents. It is interest¬
ing to note, in this connection,
that
aggregate
state
and
local
taxes in the United States in 1946
were

as

Installs New Officers

creation of a surcharge on im¬
ports of non-essential and luxury
goods to reduce the demand for

nors; Edward C. Gray, First VicePresident of the New York Stock

1'

tion is
the
war
and
its
astro-, gress by a committee composed of
nomical cost. Neutral nations have
representatives
of
the
Depart¬

FRANCE
OF

LIFE

INSURANCE

Havener, Gill & Co., 61 Broad¬
into effect through a decree which
New York City, will admit
issued
in Lima,
Edward T. Doyle to partnership was
Peru, on

way,

on

Oct.

1.

*

Sept. 7.

'

.

Bridgehampton Associates
BRIDGEHAMPTON,

N.

Y.

—

Bridgehampton Associates, Inc., is

engaging in

a

securities business.

24

THE

(1220)

COMMERCIAL

FINANCIAL

&

CHRONICLE

June 1948.

The Business Outlook
(Continued from first page)
been

chronic

duction has increased about 3.7%

been

check

cautiously

8.7

175.1

6.6

21.1

22.3

5.7

96.3

102.4

63

46.7

50.4

7.9

37.2

40.9

14.3

38.8

6.9

60.5

Gross

goods

private investment-

New

26.4

construction

Residential

10.3

nonfarm

4.3

Other

6.0

7.4
20.6

I

to

Government

-1.8

10.2

3.9

j

Federal
state and

j

32.1

15.7
11.9

income

Personal

Personal taxes

19.3

208.8

10.1

21.6

0.9

168.2
4.1

187.3

11.3

12.2

297.5

-

Disposable income
Savings

-

———-

merely to retard

The above

i

ex-

.

figures indicate

sev-

the

fourth

to be

profits

quarter

appear

make

for

corpo¬

19465

of recent manufac¬

cars

In 1948 the number of

new

dwell¬

ing units completed will be about
one million, and the net increase

encour¬

in the number of
be

between

new

families will

and 700,000.
This is the first year since the war
that the dwelling units constructed;
have substantially exceeded the

IV

That the boom should belevel-

increase

ing off is not surprising. Let us
look briefly at several of the most
important reasons for the leveling

in

600,000

families.

Some

years

will be

required to meet the great
shoitage of housing which has
accumulated

during the last 15
Nevertheless the fact that
output of houses now substantially

off. The following three are par¬

years.

ticularly important:
end

used

ture and the standard retail prices
for new cars is slowly aiminisning.

to have dropped

flow of

produced

prices of new cars have
been moderately increased. As a
result, the spread between prices

vailed during the expansion.

(1) The

been

the

and

profits

adjustments

have

automobiles

peak. It is true that

a

example, in the last three
over
7 million passenger

or

years

continuance of the cautious

age a

by rising from $172.0 billion in
the first quarter to $175.1 billion

many

large

f

small

a

business policies which have pre¬

contraction

accelerate

was

leveling off of profits will

18.5

14.2

There

since the last quarter of 1947. The

goods

localZZIIZi*ZIZIZI-IIZ

period.

performance. Nevertheless

16.3

18.6

21.4

of

in

demand

consumer

increase between the first quarter
and the second quarter of
1948,

rate

-61.8

189.6

purchases

the

fouith-quarter profit figures an
unsatisfactory measure of business

2.3

.
.
and services

.......

that

appear

24.1

urgent

demand. This does not mean that

shortages of durable
goods, housing, and in¬
1947, has dropped substantially dustrial equipment which accu¬
and seems unlikely to increase.
mulated during the depression and
(8) Corporate
profits,
which the war have been met, but it
had been growing rapidly up to does mean that the upward pres¬
the second quarter of 1947, have sure on prices has been consider¬
virtually ceased to increase since ably. diminished.

year-end

23.3

16.6

27.6

equipment-_
Change in business inventories
Net foreign investment

most

fields and have taken the edge oif

$2.6 billion.
(7) The export surplus of goods
and services, which had risen rap¬
idly up to the second quarter of

but

'

Producers durable

expansion j
likely to become too effective |

rather than

decrease

$248.2

Services

bank credit and the rise in prices.

to

(billions)

Nondurable

They are continuing these efforts, j

and

or

$223.3
164.2

Durable

Are the restraints upon
soon

increase

1948

(billions)

parts of the expansion
particularly the expansion of

—/

Percentage

quarter

1947

some

moving

Second

quarter

pered somewhat, by the Treasury)
have

justed annual rates.
Second

Gross national product
Fersonal consumption

During the first half of

1947 the rise had been

to
compare
the distribution of and expenditures for goods nearly
spending in the second quarter of 9%, but there have been great
this year with the distribution in differences in the increase of sev¬
the second quarter of last year. eral kinds of spending. The figures
During this period industrial pro¬ on spending are seasonally au-

v

economists
and
economic
services.
Today,
however, these predictions are be¬
ing reenforced by important new
developments. The record-break¬
ing crops of 1948 and the sharply
reduced need of Europe for food
have caused agricultural prices to
reverse their nine-year movement
upward.
The fall in agricultural
prices, which is now well under
way, is regarded as presaging an
early end to the upward move¬
ment of all prices. Such a pros¬
pect is likely to affect much busi¬
ness planning
and to induce the
postponement of much business
spending.
Two other major influences may
bring about an early down turn.
For over a year and a half the
Federal Reserve authorities (hamamong

Thursday, September 23, 1948

exceeds the growth of the number

products

of families

available for consumption or pur¬
chase by individuals or business

means

that the urgency

of the demand for

housing is drop¬
eral important changes with reenterprises has been increasing j ping and that builders will have
spect to the support of the boom in the second.
relative to payrolls and other dis- greater and greater difficulty in
uuring the last year. Net foreign
HI
bursements by industry. This fact raising the prices of houses.
investment has become substan¬
The evidence that the boom is is not shown by the index of in¬
tia meantime. Will a fourth round tally less important.
(3) The rise in prices of the last
In^ fact the
of wage increases be inflationary,
boom m the United States has leveling off is quite conclusive. dustrial production because all three years has almost restored
the
as
were
the first three rounds, virtually ceased to be dependent This fact is best shown by com¬ stages of production are
(quite
"normal",
be¬
relationship
counted
as
or will it be deflationary? Sooner
output. tween the ratio of expenditures
"P™ foreign demand. Consumer paring changes between the sec¬ correctly)

pansion? A fourth round of wage
demands will soon begin and will
be well under way by next spring
—unless a recession develops in

later the time will

or

spending

when

come

Will the fourth round be that

ary.

time?

:

Other

believe

people

dominant influences

flationarv,
of

the

present

still in-

They point out that
is based

boom

upon

greater accumulations of shortages
and
a
greater increase in the
supply

money

vious boom

than

in

pre-

any

Hence the

expansion
might be expected to be longer
than previous ones. This is espe-

eially T true

in

view

of >• the

fact

that the boom has been accompanied by less speculative excesses

than is usually the case. The holders

of

the

influences
out

that

cash

view
are

the

surplus,

that

inflationary
still dominant point
large government
which helped hold

down the rise in

consumer

prices

become

relatively

ably faster than the physical out-

Pu*

that the

after three years

even

expansion.

are

has

less important—though consumer
spending has increased consider-

increases will be deflation-

wage

goods.

?f

spending

•

for

Even

consumer

durable

consumer

g°°ds (for which the shortages
are greatest) has increased by
only a very moderate amount—at
a slower rate than expenditures
for non-durable goods and; services. During the last year, however, both business spending and
government spending have greatly
increased in importance as a support to the boom. Gross private
j investment, for example, has risen
from 11.6% of the gross national
Product in the second quarter of
*947 to 15.0% in the second quarter of 1948 and government spending during the last year has increased nearly twice as fast as
private spending. Gross private
investment is now as large relative
to the gross national product as
it was in 1929. Consumer expen.

during the last year to about 10%,
has virtually disappeared and that
the government can probably not
delay much longer making a con¬ ditures, which in the second quar¬
siderable increase in its military ter of 1947 were 6.2 times as large
expenditures. Today the economy as gross private investment, were
is producing about all that can be only 4.7 times gross private inturned out with existing plant, vestment in the second quarter of
Three years of expansion have ,1948,
taken up all of the slack. Addi- '
The growth in the dependence
tional increases

in

output can be
obtained only as labor efficiency
rises or as plant and eauioment
are improved or enlarged. Hence '
a

rise in demand by the govern-

ment

would

almost

exclusively
affect prices rather than output.
n

The

conclusions

of

this

paper

(1) that the boom is leveling
off and (2) that no recession is
in
sight
but
that
important
are

changes
boom

in

are

the

pattern of the
occurring. Before exam¬

ining the

evidence that leads to
these conclusions let us examine

briefly what has happened during
the last three years of expansion
and what are the principal present
supports for the boom.
1948 industrial production

about 17%; personal incomes,
about 28%; wage and salary pay¬

rose

ments,

the

boom

investment is

about

private
fact of first imgross

upon
a

portance because it

means

that the

has become considerably
vulnerable to recession. Con-

economy
more

spending, for the most part,

sumer

is far less affected by expectations
and forecasts than business spend¬

ing. The substantial rise in business spending during the last year
means

that there is

a

considerable

volume

of spending which might
substantially contract if business¬
men's views of the immediate fu¬
ture

to

become

pessimistic.
is true, is
offset in some measure by the
drop in the importance of net foreign investment as a support for
were

This

the

development,

boom.

ment and

Between October 1945 and mid¬
summer

of

it

gross investforeign investment

way

present supports

to

indicate

of the

the

boom




is

able

industry is dropping. Between the

rise in supplies relative to incomes
during the last year as compared

second

quarter

second

quarter of

tures

for

of

1946

the

and

1947

expendi¬

the

end-product of in¬
dustry increased from an annual
of

rate

$202.8

billion,

quarter

second

of

to

$228.3
between the

12.5%;

or

second

billion

1947

and

the

quarter of 1948, from $228.3

billion to $248.2

billion,

or

8.7%.

second

quarter of 1946 and the
second quarter of 1947 the whole¬
sale
price level increased from
111.4 to

144.3

or

28.8%; from the

second quarter of 1947 to the sec¬
ond

quarter of 1948 from 144.3 to

164.3,

13.9%. The Consumers'

or

price index

increased from

in June 1946 to 157.1 in June

17.8%

or

and from

157.1

133.3

1947,

in June

1947 to 171.7 in June 1948, or 9.3%.

(3) The rate of increase in
wages is dropping. Between June
1946

and

June

1947

the

average

hourly earnings of factory work¬
increased from $1,084 to $1,226,
or 13.1 %; from June 1947 to June
1948
from $1,226 to $1,319, or
7.6%.

(4) The rate of increase in the
total

compensation

of

employees

is dropping. Between the second
quarter of 1946 and the second
quarter of 1947 the total compen¬
sation
from

of

an

employees

annual rate of

increased
$114.0 bil¬

lion to $125.3 billion, or 9.9%; from
the second quarter of 1947 to the
second
annual

quarter of
rate

of

1948, from

$125.3

billion

an

to

$133.9 billion, or 7.0%.

(5) The rate of increase in pri¬
bank
deposits and money

vate

outside of banks is dropping. Be¬
June 1946 and June 1947

private bank deposits and money

product in the

second

quarter

justed rate of $38.5 billion in the
first quarter of 1948 to $37.2 bil¬
lion, the annual seasonally ad¬
justed rate of consumer expendi¬
tures

more

than took up the slack

consumption.
a

Such

outside

of

banks

increased

from

$157.8 billion to $164.1 billion, or
4.0%; from June 1947 to June

1948, from $164.1 billion to $165.3
billion, or 0.7%.
(6) The rate of increase in loans
of commercial banks is

dropping.
During the first half of 1948 loans
of

all

commercial

had increased
in

the

last

banks, which
by nearly one-third

year

and

a

half,

rose

only slowly—from $38.1 billion in
December 1947 to $39.7 billion in

mit

increase in the supply of
The following table shows
the relationship between expendi¬
tures for domestic private use and
private bank deposits and money
outside of banks for certain re¬

an

considerable

(2) Two years of high produc¬
have gone far to meet the

tion

Expenditures

cent years:

|

Private deposits

Ratio of

and currency
outside of banks

expenditures

(billions)

(billions)

money

$94 6

$54.5

for domestic

private

1939

use

■

76.5

...

1940..

85.0

i__..

132.0

—

1.736

63.3

1.209

70.0

'

117.8

—

1.214

130.2
r

'

'

150.8

.905

.875

■

173.9

1947..
1948

an

money.

with the preceding year.

second

Before the

1.031

194.8

...

160.9

167.0

1.166

163.3

1.2891

'

quarter

212.3

*

the total expen¬ the large shortages which still re¬
ditures for goods and services in main people are
undoubtedly will¬
the

course

war

of

a

year were

consid¬

erably

larger than the stock of
money. During the war price con¬
trols,
various
restrictions
on
spending, and the enormous in¬
crease in the money
supply caused
the volume of money in the posses¬
sion of individuals and business

ers

al

of 1948. than in the second quarter
of 1947
16.6% in the second

for

index would show

1929

(2) The
rate of increase in
prices is dropping. Between the

tween

17%; expenditures
goods, about 25%; wholesale -quarter of 1948 and 16.0%? in the
prices, about 59%; prices of con¬ second quarter of 1947. Further¬
sumer goods,
about 33%; hourly more, so large is the unsatisfied
earnings of factory workers, about consumer demand that when pri¬
34%; hourly earnings of construc¬ vate
gross
investment
dropped
tion workers, about 31%; loans of from
an
annual
seasonally ad¬

best

(1) The rate of Increase in ex¬
penditures for the end-product of

together represented only a slight¬
ly larger share of the gross nation¬

for

The

ond quarter of 1947 with

Private
net

—

commercial
banks,
about 50%;
private bank deposits and money
outside of banks, about 14%.

sec¬ There is much making of parts of for goods and the money supply.
changes | goods, however, which produce 1 Hence further increases in spend¬
between the second quarter of j payrolls
and
disbursements
for' ing depend (1) upon the willing¬
1947 and the second quarter of raw materials before much fur¬ ness of
people to spend money at
1948. The following is the most nished output becomes available. an
abnormally rapid rate or (2)
It is unfortunate that there is no
important evidence that the boom
upon the willingness of the bank¬
is leveling off:
published index of output avail¬ ing and fiscal authorities to per¬

ond quarter of 1946 and the

to become considerably
larger than the total annual ex¬
penditures for domestic private
use—a
very abnormal relation¬
ship. Since the war the removal
concerns

ing to spend money faster than
they were in 1939 or 1940. Never¬
theless.

if

money

supply

the
can

privately-heldi
be held ai-'ap-tf

proximately present levels,
no
great rise in spending is to be
expected. Certainly the country
is not likely to spend money as
rapidly as in 1929.
Let

us

assume

that

the

mone¬

tary and fiscal authorities succeed
in

keeping
the
privately held
money supply at approximately
spending and of present levels and that annual ex¬
nearly all price controls has led to penditures rise to about 1.5 times
a
rapid rise in prices and in the stock of money—undoubtedly
spending, but the increase in the too-high
an
assumption.
This
privately held part of the money would mean that expenditures for
supply has been very moderate. private use might rise to an an¬
As a result, the rate of spending nual rate of
$248 billion a year,
has risen rapidly in relation to the or 17% above the rate
during sec¬
money supply, and by the second
ond quarter of 1948. Some rise in
quarter of 1948 private spending physical
production
would
un¬
was even larger relative to the
doubtedly accompany the advance
privately held part of the money in spending. Hence, on the basis
supply than immediately before of the very liberal assumption that
the war. It was not as high, how¬
spending might reach 1.5 times thd
ever, as in 1929.
monetary stock, the present price
of restrictions

to

on

Since the willingness of people
spend money is related among

other

level is probably within
the peak ttiat

15% of
might be expected—

things to their holdings of provided, of course, the authorities
the present moderately do a reasonably good job of con¬
money
high rate of private spending in trolling the
supply.
If
relation
to
the
money
supply spending were to rise to only 1.4
means that large further increases
times the money supply (a much
in spending are not likely unless
more
realistic assumption), total
they are accompanied by a rise in expenditures for private use would
the supply of money. This state¬ advance
to
an
annual
rate
of
ment should not be interpreted as $231.4 billion a year, or less than
meaning
that
no
increase
in 10%? above the present rate. This
I
that
the
spending will occur without a rise assumption Vindicates
i in the money supply. In view of present price level is within 10%
money,

Volume 168

of the peak.

Number 4736

It is, of course, pos¬

THE

COMMERCIAL'&

continued

have

sible that the monetary and fiscal
authorities may be forced by cir¬

and

first and

cumstances

some

(such as the unwill¬
ingness of the public to save or
the wage policies of trade unions)
to permit a more or less substan¬
tial expension in the money sup¬

ply. In that event estimates of the
extent to which prices might rise
above present levels would have
to be revised.

.The

'

relationship

between

present price level and

the

the
will¬

high rate of production
employment than by an early
recession, and the government for
time to

confronted

likely to be

in

a

ingness of the public to spend is
so
important that I wish to de¬

of

velop it from a somewhat differ¬
point of view. One might won¬

spending

ent

most

der

why in a competitive economy
the price level should not
always
be

a

precisely

high

enough

to

equate

supply and demand. In
.markets where prices are set by
competitive bidding among buy¬

prices probably do keep the

ers,

quantities which sellers

will¬

are

ing to supply and the quantities
which
take

purchasers

willing to

are

almost

precisely
such markets prices
adjusted to the state
In

the

present

equal.

closely

are

of

In

demand.

of the
"United States, however, the mar¬
economy

kets in which buyers bid com¬
petitively for goods are com pa atively few. In most markets the
seller names the price. This means
that there is some
lag between
the

naming of prices and the
testing of; prices by the state of
demand.
sellers
too

The

prices named by
be either too low or

may

high to equate the quantities

offered

and

manded.

the

quantities

During periods of

de¬

reces¬

sion these seller-named
prices are
likely to be too high to equate

supply

and

demand, and hence
are
constantly
marked
down.
During the last several years the
seller-named prices in most indus¬
tries have been too low to

bring

the quantities of
goods demanded
down to the quantities of
goods

available.
have

their

(but

not

In

all)
of

dollars

most

up

industries

the

seller-named

too

low

still

are

output

many

sellers

gradually marking

prices.

prices
the

Consequently

been

to

make

industry worth as
buyers are will¬

as

ing to spend for it. Hence sellers
have continued
slowly to mark up
their prices. It is
apparent from
the analysis of the

relationship

between expenditures and
money
supply, however, that prices are
nearing the level beyond which

higher prices will not raise
ditures

expen¬

sufficiently to prevent

increase in

an

unemployment.

Does the fact that the boom is

leveling off

is imminent or

ployment
some

are

likely

time

that

mean

at

a

particular, what

a

recession

output and

to

high
are

em¬

continue

for

level?

In

the probable

consequences of

in

the

needs

or

rise

large

latter

booms.

of

does

unions to force
wage

a

fourth round

increases?

Are

more

abundant supplies of grains
likely
be
deflationary?
Would
a

to

fourth round of wage

inflationary
The

or

increases be

deflationary?

question

of

the

will

be

followed

the

de¬

case

consumer

holdings

penditures
1.7

of' expansion.
Espe¬
cially worthy of notice are the fol¬
lowing facts:

higher in

before

the

goods and per¬

of

cash,

demand

1939

ing

personal

holdings

of

bank deposits. The year
not a time when spend¬

was

was

running only about

are

times

being stimulated by

more

is

low

relation to the volume of.

in

less

income-even

than

prewar.

of

today

only 20.0%

are

| ™±ea£ l!!™'!
taxes
comparison
.

.

of

.

the

are

the relation of'

rise

posable

income

The

year.

in

bank

low

loans

din ing
ratio of

cial Joans to income
for several

bank

reasons.

loans

aggravate

ling




the fact that

ture

-

needed

relief

The

pressures.

drop in food prices
expendi¬

a

other

on

prices

have

There

is

prices

will

goods.

Low

food

been stimu¬
lating to the demand for housing.
usually

that

prospect

no

be

low

by

food

prewar

standards, but even a moderate
drop in them would help the sales
of

nonagricultural goods.

many

—

in

other

u»

worcs*

existing prices give Ue
industry a total value

Is not

fourth round

a

of

wage

increases bound to be deflationary

inflationary—particu¬
larly since the rise in prices is
leveling off and since many man¬
agements are
deeply- concerned
about

high

break-even

amount

below

of

above

or

which

money

the

people

willing to spend for that

are

Since

put.

the

out¬

preponderance of

evidence points to the concluskix
that most prices are still too low
to equate supply and demand, a
fourth round of wage increases of
moderate amount could be passed
on

to

by most indus¬
causing a drop im

consumers

tries

without

the quantities of goods which con¬

actually buying. Henee

sumers are

fourth round

a

of wage increases?
probably not be deflationary.
Incidentally, the high break-event
points which are of grave concern
to many managements will prob¬

will

rather than

points?

turn

ably
in

the

out

15%

be

to

less

recession

next

executives fear.
of output

serious*

than

most

The last 10%

in

or

most

plants iss
in¬ undoubtedly being produced afc
creases might be large
enough to very high cost. Hence a moder¬
be deflationary—that is to
pro¬ ately
lower rate
of
operatic**
duce
a
drop in production and would
permit
managements
to
employment—but I think that this make
substantial
reductions
ii*
is unlikely.
Whether a wage in¬ expenses..
Y
v
The

dis-

the

last|

commer-1

seriously

to
a

is important'
It means that i
not

.

produced

bv

distobing
6

a
large number of consumers
drop in business spending is

likely to ■ raise
-

-

-

by giving

£

spending
*
b

consumer

consumers

goods

more

incidentaTlv

buv

it

s

worth

&U"

the

boom has

rapidly raised con¬
sumer holdings of cash and bank
!d u°e I deposits—particularly during 1946
debts when many types of goods were

recession by compel¬
diversion
of
a
large

e

as in
higher

b£

drop in busi-

a

is

There!^sesSXh!re M
qufte

to

a

the
,

would

SD8ndin£

ness

in 1929.

no

commercial

today

lt should

met. Hence unless

crTf

24.5%

has been

,

income^to^pay
pened after ^ 929^ blt° also3means sti11 quite scarce" Personal hold"
fhiVtho..!
iVpHnnhi
in#s of cash and bank deposits,
inpct f.nnr.trn
^
which were $90.1 billion in Dehn

M

wHIintf
willing tn
to
so

that

in^nr
incur

new

loans

new

are

hQnl7 debts : cember 1945> Were
bank dphtf
Decpmhpr 1Q47
likely to be | in December 1947.

$102.8 billion

as old ones are paid.;
A drop ln business spending
drop in demand from a w01jld be offset at least in part by
drop in the willingness to borrow a rise m spending by state and
local governments. These govern¬
is likely.
Some people prefer to compare ments have a large backlog of
the size of commercial bank loans needs but have been retarded by
conditions in
with the supply of money rather various
executing
than with the volume of incomes. their plans. Expenditures of state

made

as

Hence

fast

no

Commercial

bank

loans

are

low in

relation

money.

In 1929, for example,

mercial

the

to

very

volume

of

com¬

bank

loans were nearly
all privately owned
bank deposits and money outside
of
banks; today they are only

66%

high

as

and

local

governments

struction

are

continue

to

and

rise,

materials

(5)

as

on

con¬

rising and will

now

provided

are

labor

available.

A drop in business spending

would

be offset

in

entirety

in

or

part by a rise in federal spending.
The fears of an early recession
rest on the false

assumption that

level of commercial loans in rela¬

the United States is at peace. The

tion

country may not be engaged in

both

to

incomes

and

money

that changes in the willingof banks to lend or of busi-

means
ness

ness

have

deflationarv
or

even

(c)

less

in

affairs

is

not

peace

by

the

to

the standards of the world before

or

1914, or even before 1939.
The
government has been slow to pro¬

effects

than

1929

in

vide the

relation
after

of

individuals

1939.

indebtedness

Consumer

comes

a

J shooting war, but the present state

inflationary

and

concerns

becom-: tional

difficult to make and in

much

will release incomes for

^

...

with

m

holdings

money

today thall in 1939 because
J
accumulated needs have not been

an-

in 1939. and 43.3%

to

taxes.

personal
In

is

in-

June, 1948,

indebtedness

spending is quite to increase for

the

willingness of people
money

whether

„

fourth

of

round

wage

as'high'in"reTati'on

to

1939_in fact

The loans of all commercial banks

was

7.5%

some

time

more or

interest

to

hold

country with

a

military

establishment

appropriate to the
present precarious state of its
foreign relations. It is rapidly be¬
coming plain, however, that a
large expansion of military expenditures can no longer be postponed. It remains to be seen

j whether

an early drop in business

whether

consumer, or

j indebtedness at present levels so
major uncertainties long as industry is operating at
which are developing concerning capacity.
the short-run trend of prices of
f (3) A drop in business spending
agricultural products. In view of of the moderate amount that is
the importance of business spend- most likely would
probably be
ing in supporting the present level offset by a rise in consumer spendof
demand, a substantial
drop. ing, unless the causes of the conwould easily produce a moderate: traction in business
spending were
decline
in
output and employ-! such as to be alarming to a conment.
In my judgment, however,' siderable
proportion of consumers,
the leveling off of the boom is Such an
offsetting rise in conmore likely to be followed
by a1 sumer spending occurred, as I
view

prices

too higdL

en-

high relative to consumer spend- less regardless of business condi-, spending will permit the govern¬
ing; A; drop in this high rate of j tions, unless the government vig- ment to step up its military
business spending would not be orously discourages consumer bor-;
spending without creating dansurprising— particularly in view rowing. It would be in the na-'gerous upward pressure on prices
ing

spend

are too low or

*j

an
early recession is fairly of incomes after taxes in comparipersuasive. It is based in the main son with 13.9% in 1939. Consumer
upon
the fact that the present indebtedness is likely to continue

of the fact that profits

under

deflation¬

or

couraging developments' or by a
(a) The, dependence of demand rise in
prices Hence unless the
upon the .'export surplus has sub¬
rate of consumer
spending is held
stantially dropped.
down by pessimistic
expectations,
(b) The volume of bank credit U should

for

rate of business

holdings of
deposits. This is

somewhat

now

cash and

years

consumer

The

their

deposits held by trust funds). At
the present
time, consumer ex¬

strong economic position—despite

answered with

certainty.

to

bank

This, however, is not true of
relationship between expendi¬

sonal

type
of
spending
developed during the
latter phases of many booms.
(2) The country is still in a very

low

a

and

tures for

has

by an early recession or
period of high and more or
less stable employment cannot be
by

relation

immediately

speculative

borrow

whether

leveling off of the boom

products

but

the

deflationary effect of lower food
prices (or the prospect of lower
food prices) will be limited by

catch

greatly increased about
24.0% as large as total prL
supplies of grains and of attempts
| vately owned money. The low
of
of

farm

for

inflationary

increases in population and in the
deposits, and time deposits. In 1939
labor force which have occurred
the annual rate of expenditures
in the last 20 years. This
type of for consumer goods was 1.9
times
business spending is less sensitive
personal
holdings of cash and
to the business outlook than the
bank deposits (exclusive of bank

three

of

deflationary,

inflationary

in general

from

relation to the money
supply than
it
was

ferred
replacements and to ad¬
just the size of their plants to the

which

supplies
be

is

ary depends upon whether

is

con¬

war.

on

dant

will

crease

25

of

kinds is

It represents in
up

a

increases?

which

attempt by busi¬

to

concerns

effects of

wage

output

rise.in

a

equate supply and demand. I have
pointed out that spending of all

not

even, to any great extent,

in prices.

measure an

ness

phases

It

of

uncertainty introduced into
the price outlook by more abun¬

give

why

reason

another way of saying that
prices
in general are still too low to

represent an attempt to anticipate

earlier

round

The

the circumstances this
uncertainty

cash

business

from

fourth

will

m

The present

difference

business

yet spending the normal amounts

high rate
business spending has an im¬

portant

moderate drop

a

spending is likely to offset
moderate
drop ; in
business
spending is that consumers are not

early recession is imminent.

future.

was

possible deflationary

a

for rejecting the view that

(1) No. drastic drop in business
spending is likely in the immedi¬
ate

the
1948

there

The

r

an

between

second quarters of

(1221)

sumer

modities—particularly metals and
fuels.
There are five principal
reasons

CHRONICLE

spending. , In
any
event, a drop in business spending
is not likely to induce much of a
drop in consumer spending.,

the problem of
rise in the prices
nonagricultural
com¬

many

pointed; out,

wnen

with

discouraging
of

is

come

FINANCIAL

the

government will

be compelled to discourage
tain

of business and conspending in order to make

types

I sumer

room

cer-

for a large increase in the

output of military goods,

not

these

conclusions

rather

that accomplished by Chicago Great Western.

This has been particu¬
larly notable with respect to its transportation ratio. Last year these
transportation
costs
absorbed

44.6%

of

which
industry aver¬
age of 40.0%:
As a matter of fact,
over a considerable
span of years
Chicago Great Western has fairly
consistently
reported
a
higher
transportation ratio than have the

reorganization it had outstanding
slightly more than $17 million oF
non-equipment
fixed
interest
debt, including RFC debt. By the
end of last year this had been re¬
duced to less than $13.5 million,

Class

Late

gross

revenues,

well above the

was

I

carriers

as

whole.

a

If

including $5 million due the RFC.
in July,
1948 it was an¬
RFC

the

that

recent trends continue, this situa¬

nounced

tion

been reduced to $3

might well be reversed by tne
statistics

time
1948

are

On

the

for

released.

full

year

year-to-year basis Chicago
reported a wider
cut in its transportation ratio for
a

Western

Great

the

first

six

months

the

of

year

than any

other major Class I car¬
rier. Ih every month of the sec¬
ond quarter its ratio was below
that of Class I carriers

in

as a

whole

month from
inclusive, the cut
transportation ratio as com¬
pared with a year earlier was
wider than it had beer) in the
preceding month. In the month of
June alone the year-to-year drop
was
12.4 points, from 49.1%
in

Moreover,
March

every

to June,

in

June, 1947 to 36.7% in June, 1948.
Comparisons in the last month of
the half-year were heavily dis¬
torted by the extraordinary ex¬
penses in June, 1947 incident to
very severe flood conditions.
While

the

themselves

June

may

by

figures

not be taken

as

of the extent of the
in the company's
operating performance, there can
be no minimizing the trend that
had been in evidence before that,
any

measure

improvement

influence

cumulative

the

and

thereof. For the full half year

the
transportation ratio was off 3.5
points compared with a rise of
0.9 points for the industry. Great
Western's ratio of 42.2%

the

was

still

Class I
roads (40.8%) but the margin had
narrowed appreciably. This favor¬
able trend continued in July when
the road's transportation ratio was
cut 5.4 points from a year earlier
to
38.8%. Julv figures for the
above

for

average

entire industry are not
it

seems

that the cut

was so

able

but

further

was

yet avail¬

hardly

likely

large.

if conditions remained
There

is

the*

shortly

favorable-

indication

every

hatl

that

announced

loan would be paid in full

;;;•

4,...

debt

million and it

that

conditions will remain favorable.
On

reorganization,

contingent

interest debt consisted of $6,113,-'
600 Income 4V2S, 2038. Almost one*
million of this had been retired

by
Early im
invited tenders
of the bonds, in which operation*
$806,000 were, acquired. Additional,
open market purchases have been
the

of

end

last

year.

the company

1948

made

then

since

dicated

that

the

outstanding is

and

it. is

present

now

in¬

amount

down close ta

$3 million. A total non-equipment
debt of no more than $10 millior*
appears

a

as

distinct possibility-

Stock
capitalization
consists of
366,104 shares of $2.50 preferred
stock

and

iron.

\

;

r

352,639 shares of com„

A

plan

this

year

proposed earlier
calculated to further
simplify
the
capital
structure
through elimination of the pre¬
ferred stock. It was proposed tc*
offer stockholders $20 in Incomes
4V2s and one-fifth share of com¬
mon
for
each
preferred
share
was

with

of

dividend

accumulated

rears

ferred
this

is

ar¬

share. The pre¬
cumulative only up to

$7.50

a

$7.50. ; An

recommended

ICC

that

the

examiner
Commis¬

deny approval of the pro¬
posal. The company
has until.
Dec. 31 to file exceptions to the
sion

report.
Whether this
be adopted is a
question, but regardless of
outcome
of this particular

proposed

plan
moot

the

can

ever

phase of the road's plans there is
little

question but that the status
equities has been, and still?
is being, improved considerably.

of the

,The improvement in the operat¬

VI

Do

One of the most spectacular improvements in operating perform¬
scored by any railroad in the country so far this year has been

ances

ing performance is not the
optimistic

concerning the

nearoverlook

favorable
Western

aspect

of

the

only
Gr^at

picture. There has also

Aubrey Huston Dies
Aubrey Huston, associated with

business outlook
Ripley
&
Co.,
Inc.,*
been a considerable improvement Harriman
deflationary effects of uncerin its debt structure. When the Philadelphia, died Sept. 13, after
tainty with respect to the prices,
,
.
of agricultural products and the road
emerged from bankruptcy \ a long illness.
term

the

...

o(i[,

26

THE

(1222)

COMMERCIAL

of prices in a

771 As We See Itf|!|||
(Continued from first page)

-

In

gratifying contrast to the extravagant, "soap-box" type
of oratory to which the President has resorted. It is, of
course, too soon to be certain that this tone of adulthood
will be adhered to by the Republicans throughout the

7

'

Substance Unsatisfactory
It must be said,

however, in all candor that when the

substance of what has

far been said

Thursday, September 23, 1948

number of markets for agricultural staples.
prices now received by the

and this despite the fact
received are still exceedingly high, even after
recent declines. What has happened is that high prices
for raw materials (sometimes from the farm) plus repeatedly increased labor costs, plus higher taxes, have
so raised the cost of things farmers must buy (or think
they must buy) that they are in some instances at least
obtaining lower prices in terms of the goods they have
to buy than they did in the so-called normal period prior
to World War I. Evidently the dog has been busily chas¬
ing its own tail.
Robbing Peter . .
below "parity"

are

.

so

all sides of this debate is

it

v..

U '"•-V*

'■

'*V-''/•

V

both wage earners and veterans.

V

.

•'

i-

wants to chisel at the expense of

the

: veterans.,
But how many
people realize that in the hospi¬
talization program two-thirds of

the

Now it is obvious

Dewey, or
promising great^

enough that the President, Gov¬
else must be very cautious in

relief to the housewife, or her wage
husband in the matter of the cost of
living, if at
the same time he is determined to
"keep the output of

earner

farm products up"

by the employment of methods which
inevitably also keep the prices of wheat, corn, cotton, beef and pork up. Essentially the same situation is%
encountered when policies of the labor
unions, which
continuously add to the cost of manufacturing the neces¬
saries of life, are to be supported and encouraged. If
the veteran happens to be a farmer he
may possibly get
must

as

much from the

largesse offered him from Washington
and from the various state
capitals as he stands to lose
by unduly high prices of things he must
buy by reason
of

labor

union

tactics

necessary by the
and as veteran.

and

excessive

taxation

favors he is being granted

as

made

farmer

.

Fiscal

Policies! andilnflation 1
(Continued from page 4)

the latter part of 1945.
But the
balance—some $7 billion—repre¬
funds derived from

Unhappily,
to

out

run

that

can

be

we
of

are

threatening

budget

used

to

a

surpluses

retire

The President blames this

debt.

on

tax

reduction; but I submit that, with
the terrifically high and incentivekilling taxes that we have had,

worker in

are

you

left it to the military they'd

the

of

course, is due

national

defense

primarily
and

for¬

disabilities.

connected

In all communities instances of

abuse of veterans'

relief,

unemployment v

other

on-the-job training and
veterans' privileges are mat¬

ters

of

common

•

knowledge.

Unquestionably, the veterans'
program has, on the whole, accom¬
plished great good;' but just as
surely there is room for tremen-dous savings without hardship to;
deserving veterans, if we forget;
politics and really tackle theproblem with courage and deter-1
mination.

-

Then there is the policy of peg¬

ging agricultural prices. Here we are
supposed to; be fighting the;

high

cost ofliving and ^ef we find
spending millions '
buy Up huge; qUahti-/
of
potatoes mostly to rot,*

the government
of dollars to

ties

.

making nonrecourse loans against
wheat at $2 a bushel on the farm;
and supporting, other farm comihodities at similarly high prices. *
There

are

sorts

all

of

social

projects in the budget and
are being proposed all the1

welfare
more

tinted Many Of these Undoubtedly^
are good, but like a family that is
spending too much and is;heavily;
in debt we may have to consider
putting off some of the
less*
pressing expenditures to a better
day. 7; ;'r 7 *7:7^0:
It would be easy to go on citing,
examples of spending that ought
to be carefully scrutinized,
We.
know something about the hordes
of government employees in
Washington and scattered through
the country and we know some-thing, from recent Congressional
revelations, of the ease with which
loafers and even subversive char¬
acters have attached themselves,
and clung to the
Efforts of

public payroll.

.

Congressional Appro¬

priations Committees

of us feel quite helpiess.
jealousies. in the face of these tremendous:
The Navy doesn't want to see the expenditures.
We see where the
Air Force step ahead, and so on money is leaking out, but there

Then there %re also the inter-

service

rivalries

mission/ there

are

seems

to do
this

no way for us individually
anything about* it. It is. for.

reason

that I

am

say "a word "about
cut
costs by the

appropriations

prompted to-

the. efforts to.
Congressional;

committees

under

Congressman Taber of New York
and

ybpr oWq Congressman Wig?;

glesworth of Massachusetts in the
Hodse arid Serfator Bridge^ in* ;the

t'ehqjmious op¬ Senate77w.'v; •;:

portunities

for .savings"'; if
unification is achieved. V rv
c

Most

and

is

This, of
to

of the growing load of vet¬
suffering from non-service-'

cause

erans

fortify the mo0r."

throughout the defense establish¬
result has ; been to
putting the shoe on the ment. i Th
wrong foot.
The real trouble is hamper and retard the develop?
that we are spending too much. ment of the unified defense policy
Our budget of roughly $40 billion envisioned by Congress in provid¬
ing-for a single department of
is just too high.
national defense, with; consequent
Moreover; the worst of it;is that
loss of efficiency and increased
the budget, instead - of declining,
cost;
According to a statement by
is tending to rise.
the7Presideht's ';Air; Policy - Gom*
this

Defense and Foreign Aid Costs

a

lars

without loss of efficiency or
impairment ofyjsecurity.
We all have,# am
sur¬
confident, the
plus of receipts over expenditures highest regard; for the capacity
in the Federal budget, most of and
patriotism"? of ourJ military
which was used to retire govern¬ leaders.
Yet they are human like
ment debt held by the commercial the rest of us &nd in
the matter
banking system.
This is a solid of amounts ancf kinds of equip¬
achievement
which, at a time ment have a natural instinct to
when private borrowing is tending cover against
afl possible contin¬
to expand, has been one of the gencies.
Youp may - remember
principal factors tending to hold Secretary Forre&tal's quoting "an
inflation in check.
English statesman" as saying, "If
sented

Who Pays for the "Benefits"?
If he is

under treatment

prices do not tell the whole story. Thanks
to a number of circumstances, including the large degree of and the veterans who have serv-ice injuries and need treatment
mechanization, farmers now produce much more abundantly
are
crowded because we have a
than they did in the earlier period. This has been partic¬
national policy of laxity !that has,
ularly true this year as a result of excellent growing weather. opened these hospitals to every
Thus the net profit of farmers this year will be large enough veteran no matter how his disa¬
We (are
to satisfy almost any realist — and would be regardless of bilities were incurred.
spending millions of dollars for
"support" operations. At least such is the case for most of new veterans' hospitals—all be¬

Housewives have farmers,

anyone

veterans

suffering from disabilities that.
have nothing to do with thjeir,
military
service.
It's
a
good,
husky dose of socialized medicine

Of course,

wage earners, veterans and others as-husbands. But the fact
remains that as farmer, as
wage earner, as veteran or as
housewife these types of individuals have a

ernor

say

Senator

as

Consider, for example, the yet-;
program estimated to cost
approximately $-3% billion this
fiscal
year.
Certainly
no
one

.

good deal in
conflict, the one with the other. Indeed, this fact is so obvi¬
ous that it
gives the speech writers and the political promisers great inconvenience and
difficulty — since all > appar¬
ently feel that, they must make special pleas to each and
every one of these, and possibly other types of people in the
population.
\

But,

erans'

,

-.-

cut.

.

*

j.

(1

be

Bridges said, "it takes guts to
it." 7 77'■/7.%777.
: 77 7 7; 7 >

.

l..\

it's ridiculous to

billion,

can't

do

1

i

a

$40

—

on either, or both
given careful consideration, one
can scarcely escape a
feeling of discouragement that so little the farmers. Over-production on a massive scale has ap¬
that is really enlightening is found. Governor Warren at
peared here and there as a result of these support devices,
times is reminiscent of the minister who was said by Presi¬
and is likely to continue under existing conditions. In such
dent Coolidge to have preached on sin and was against it.
instances, it may be said that the farmers themselves, despite
Governor Dewey also shows a definite tendency to wince
all that is being written on the subject, are victims, not
and relent and refrain when
approaching issues, such as beneficiaries, of the system.
agriculture and the labor unions, which are supposed to be
But the point is that what the farmers get over
politically explosive.
and above that which should and would come to them in
It would be highly amusing were it not so serious a
a free
economy has to be taken, from someone else in
matter to note how these men of ability and responsi¬
the nation, and among those who have to pay for it are
bility, but with political ambitions, are able to "ration¬
the wage earners, many veterans and many housewives.
alize" lines of conduct and courses of policy whose con¬
In reverse, the same is true pf the wage earner who is
tradictions and inconsistencies would, we feel confident,
being paid much more than he ever expected to make in
be perfectly plain to them were they sitting on the side
his life for much less work and certainly much less prolines and watching this strange game known as politics.
duetion. Of course, this whole structure can be sus¬
All these candidates, or at least all of them who must
tained only on the theory that there are other elements
appeal nationally for votes, have this year a number of
in the population-—such for example as the Wall Street
elements (to adopt the "modern"
way of thinking about
"gluttons for privilege'~who can be obliged to foot;the -v
"practical politics") to appeal to whose interests as ac¬
bill.
But stick ah idea is a snare and delusion.
This
tually put forth by their partisans at least are rather
redistribution of income has gone so far now that little
obviously in conflict.
more can be expected of it in the form
of revenue,
,*•
*' V
''
•••*'., Aiw/,!' 7..fjft* 7 " '
i' v "
*
although much more may come of it in,the: form of /
Conflicting Interests
damage to the economic system.
Probably the most important of these elements are the
It is unfortunate that no one among the political leaders
farmer, the wage earner (particularly the union member), can
bring himself to think these things through and talk
the veteran and the housewife. Of
course, there are dupli¬
frankly about them.
cations in such a list. There are a
great many men who are

or

in other parts of the budget..
budget footing up to almost,

gravy
in

that prices

dispassionate assertion last week about
historical record of the two leading parties was in

campaign, but it is certainly much to be desired — and,
we should suppose, much the more effective procedure.
The general tone of what Governor Dewey has' so far
had to say definitely tends to raise the hope that such
campaigning as., the President and Mr. Wallace have
been engaging in will be left to them and to the lesser
lights who always talk in such terms as these.

CHRONICLE

number of instances,

a

1 farmer

<

Warren's calm,
the

FINANCIAL

&

real 7 The
"

-

; In* other words;, success depends

loud; outcries

of

some

;of

thebureaucrats #rdicatef that $hj£se:

committees have-been getting qe-.

the trades where
wages and eign-aid programs. ' As to the not just on how much we spend, suits; but at the same time they
costly "benefits" are forced upon his employer he
may pos¬ first, many - people;: say; that?; this hut'.also bn how wisely.- -• >
sibly get as much from these as he loses by the inevitable is one part of the budget that can't /This is; equally true of the pro? gently 40;essehtiaK%id7
be touched.
rise in the cost of
Unquestionably; it is gram 7 °f :foreign, ^economic aid. worthwhile pro j e c t s ...are sup-,
living attendant upon such practices, or an
area where <the layman pecds Tod niUch money/instead ot help¬ ported, While cutting out as muchhe may not. It is doubtful if either
can
indefinitely enjoy to tread7warily, and where none ing other countries back to a self- extravagance and waste "as they
great net gains by such means as these.
of us wants to be parsimonious. sustaining: basis;'iCan. actually in¬ can catch;:
:
/They have a* ;staff;. of >
some

.

,

If either

or

anyone else does, the advantage must, of
be paid for by other elements in the population
where the resulting rise in the cost of
living adds to
loads already imposed to finance
the favored farmers,

course,

workers

and

veterans.

things work out is




now

An

illustration

of

how

these

being furnished by the behavior

Yet from the debates in

Congress,
testimony
before
Congressional
committees, and other evidence,
it

seems

clear

that

not

even

the

defense

budget ought to be con¬
sidered
sacrosanct;
t h a t ; w e
could, with care and better man¬

agement, save many defense dol-

and prolong

their depend¬ trained, inves,t i g a t o r who
gof
through
the
various
executive *
departments and familiarize them-Other Expenditures sely^s with operations so; that* they,
advise
the
Surely, with so many dollars can
appropriations.
going for defense and foreign aid, committees when the bureau and
we
ought to be making a stern department heads come up to.
effort to cut out the frills and Congress with their budget procrease

ence

upon; us.
•

7

WMawaanit.»a>»Mwtow«ww3

Volume

168

Number 4736

posals. / They
■-

a

*.'

have

great deal for the

THE

accomplished
of

cause

econ¬

-ffcr- • which they seem to get
more 4 -brickbats
than
bouquets

V^'V omy,

COMMERCIAL

&* FINANCIAL

CHRONICLE

promoting ] the
sale
of
savings
during the war, and their
help is needed today in assuring

mean
enforced cutting down of
loans, with consequent penalizing
of legitimate business and produc¬

to be

the

tion.

the. terms

(1223)

bonds

success

of

the

savings bond
But whether the money

4>ecause

"•

■

security portfolios are not going
such eager lenders and will
be more picky and choosey as to
conditions

and

when appropriations are Program.
V That the
raising of reserve re¬ loans they make. We saw how that
somebody always raises' a] saved is invested directly in sav- quirements was* never intended to happened last spring.
howl.
} ;>
j ings bonds or channelled through
be one of the regularly employed
Whether the time is now ripe
£ Their success last year in cut- ! the savings institutions into Treas- instruments of credit control was for
altering the support levels for
ting the President's budget is re- |.ury refunding issues, it all serves made clear again and again in government bonds is admittedly a

fleeted

in

the

despite:the same purpose of absorbing
inter-1 Public purchasing power and enhational aid, the final expenditure I ablmS the Treasury to retire govtotal proved to be more than $1
j ernment debt in the commercial;
billion under the President's orig- j banks, with consequent reduction]
inal estimate.
For this current' °* bank credit.
the

expanded

time

same

that

fact

for

program

has

approved

en-j

an

larged defense program, increased

andrrest **4

Finally, there is the question of*
5,re<Rt policy and interest rates.

Practically all authorities agree,
a
.a Pcnod of business boom
payments to farmers for still an-i ?
inflation such as we have
other year.
These increases bid
-een "avmg ^ a time for applying
fair to swallow up the savings s?me
upon credit expanfrom the cuts and to put the ex-! I10*?'
President and the
Veterans*
the

benefits

wartime

and

extended

formula

of

benefit

,

the,^fral Reserve have,Repeatedly

penditure total well above
figure originally projected by the
President. Even so, the Congress
succeeded in holding the budget
much below what it would be had
all Presidential

requests been ap¬
proved. including those added on
since the original budget was pre¬

j

concern that credit is

being used too freely.
Not

so

many

years

would have been

ago

do.

years

of

ments

by

huge
seem

like chicken - feed and

discount

rate

and

open

market operations. It was recog¬
nized then to be too harsh and un¬

wieldy

device for applying ac¬
tual pressure on the banking posi¬
a

tion; and the
plies today.

argument ap¬

same

The

faet

effective

still

that

is

the

I

the

how

see

that

can't
my

we

election

an

it

economize

is

always

hard

in

and

year

is

an

election

year.

to
.

too close

there is

a

the people.
Until
real desire for economy
to

cause

of

the

element in

new

the

picture—our huge national debt,
Any rise in interest rates such as

creasing the already heavy inter¬
est cost, and
(b) depressing the
market for government securities,
with consequent losses to banks,

Thus the credit authorities have
found themselves in a dilemma of

by the Executive, it is going to be wanting to control credit on one
lough work .for Congress to get hand and feeling the need for be^ery far on its own;
| ing tender to the government
Nevertheless, these committees bond market on the other.
•have been keeping up the fight
W"
'
'
■
and they need all the
encourage-]
Request for New Powers ; ,
ment
and support we can
give
In this .dilemma, Washington
them, particularly in our local; has
reacted
in
the
typically
trade associations and chambers bureaucratic
way
of asking for
of commerce, for it is to a large more power—in this case, more
extent the demands of the people! power
to increase commercial
back home that make economy I bank reserve requirements,
difficult.
I venture ,to
suggest j
There is no doubt but that the
that; your Association might find authorities can make life uncomjtt most interesting and worth- fortable for the commercial banks
•

_r

while to have Chairman Taber

or

Representative Wigglesworth, the
next
ranking
member
of
the
House

Appropriations Committee,

Senator Bridges, of the

or

Committee,
sometime
work

they

to

they
are

tell

up

you;

about the

doing

are

Senate

program

your

on

and

what

against.

I have dwelt

this question of
budget at some
length because of my conviction
.

on

controlling, the

that government spending
of the most crucial issues

before

test

us

of

today.

have

It is, indeed,

capacity

our

is one

we

for

a

self-

government.

It involves not only

.the

of inflation

question

stable

have

and a
but wh ether; we

economy,
a

free

For if

economy.

we

have taxes of the kind this sort of

spending
doubt

calls

that

for, I have grave
this free enterprise

system can endure
known it in the past.
■

('{\

V '

4

•.

.

,

as

have

we

*

;

^1

f

,

Distribute the Debt

]' Next to reducing the

rate.

and

frozen

a

Federal

be

of the
that we

sure

things in the right focus.
budget and credit are impor¬

Both

Nor

can

do

go

tionary

pressures to a

credit

restraints

That

on

of long-term Treasury obliga¬

greater degree of market

a

stability than

credit powers

the shorter-term,

on

issues—telling in¬

effect,
on

a

that

the

ma¬

government

se¬

is

the

point where

could

ancillary rather than
am

lower-yielding

what

more

play an
major role.

a

outcome

which

I

would be welcome to the

sure

Federal

Reserve

authorities

who

responsible for credit control,

are

and I think it is the outcome that
would

best

the

serve

interests of

the country not only for the pres¬
ent control of inflation but also
for the long-range preservation of

free-enterprise system.

our

Credit Control

expensive and in giv¬

ing the signal for the need of us¬
ing credit more circumspectly.
Another thing they did was last
December to lower the pegs in the

(Continued from

other

lenders

to

walk

into

the

the control of the Senate,

in

shortly bring the

relation

the

Federal Reserve and convert gov¬
ernment bonds into cash for the

of

expanding

estate

mortgages

purpose

to

income

levels.

.

In

real

L think there,is no dqubt but
these moves,' coupled with

that
the

use

of the

substantial

Treas¬

surplus to retire government
debt in the banks, were helpful in
damping down inflationary pres¬
sures early this year.
ury

The policy of advancing shortinterest rates and the Fed¬

term

eral Reserve discount rate

be

can

further.
However,
the
for action here will be lim¬

carried
scope

ited

The

25

If

long

so

policy

as

continue the
the long-term

we

of pegging

should
inflation to an

developments

bear

principal

-crops

of

the

neces¬

for the Federal Reserve

sary

thorities

to

make

au¬

important
methods.- Nonany

changes

in

theless,

if ] insurance

8.3% larger than the previous rec¬

to

offer

their

companies
large investors continue

and other

year
of 1946.
Cotton with
15,169,000 bales is 28% over last
year.
Wheat, while 5.9% below
last year's record-breaking total,
will
still
be the second largest
crop
ever harvested.
And corn,
the most basic food crop,, with
3,506,400,000 bushels, is an all-time
record breaker, 46% larger than
last year. Europe has good crops
too, so that inevitably the price
of food has to drop; and it un
doubtedly will drop sharply when
it once gets under way.
The housing shortage likewise
despite the political charges, is

this

out

conclusion, it will not be

ord

poses.

J

event!

country, according to the U. S.
loans on Department of
Agriculture, will
and
for be 11.7% larger than last year and

other business and industrial pur¬

Policy

6)

page

levels in actual dollars as well as

government bond market, making weighing these matters, remember
it less attractive for banks
and that statistics are assembled after j

interest

rate

by

Federal

expan¬

Secondly,

raising

cial

bank

then
out

reserve

re¬

commer¬

there

of

the

would

thorities—short
of

the

seem

dilemma

entire

for

no

the

way
au¬

The

ing the peaceful 1920's.

con¬

clusion is obvious.

the

long-term

issues

on

the market in such large volume,
it may become necessary to lower

the peg slightly below par. Frank¬
ly, I don't expect this. But it can
be

done,
of

some

and
•

the

be

may

"boys"

done, if
don't quit

"rocking the boat."
Summary

May I
In

summarize:

trying to forecast what the

monetary authorities will do, you
must keep in mind that their pol¬

regimentation
The filling of the pipelines of
credit machinery, distribution
(manufacturers
in¬

selling of governments which no one has advocated—save
debt, the most effective fis¬ which—so long as the price-peg¬
through adopting and maintaining
cal device for curbing inflation ging
policy
holds—the Reserve more flexible ideas as to where
is getting more of the debt out of Banks would be
obliged to buy. government securities should sell.
Ihe
commercial
banking system Thus, in a considerable measure, This could mean
moving the sup¬
and into the hands of individuals one
policy simply cancels the port levels down another notch.
and savings institutions such as other.
People say you can't do this
the savings banks and insurance
Thirdly,
raising
reserve
re¬ without
overwhelming
the
Re¬
companies.
quirements is a blunt instrument serve Banks with a stampede of
I am sure there is no need for which, in anything like a normal
selling. No doubt there would be
me to
enlarge on the importance money market, can work serious some outburst of liquidation, but
of this before an audience of sav¬ hardship on* individual banks and
apprehensions as to the volume of
ings bank officers and their trus¬ their customers. In particular lo¬ this might well prove exaggerated
tees and directors. It calls for en¬ calities
where banks may have in view of the greater losses that
couragement of saving in all its been faced with especially heavy sellers would have to take into
accounts.
In
forms—savings bonds, savings de¬ lean demands and do not have their
any
event,
posits, life insurance, .etc.
The enough government securities left, whether holders sell or not, lend¬
savings banks did a fine job in higher reserve requirements may ers who are facing losses in their
.

*

ventories

alone

new

reached

a

record

receive

of

August),

the

increasing

production all along the line (60%
of the
cent

companies covered in a re¬

survey

dustrial

of

the

Conference

In

National In¬
Board

re¬

tliem-^-especially

closing,

no

my

may

debt is too large,

short-term
much

bond market to
can

beyond question that ket for

The public

debt, and there is too

permit

the

get out of hand.

be certain that the money

market will be

This,

the
you

there is too much

refunding,, to

You

production is catching up.

if

reassure

opinion there will be

ported physical output per man-

greater than prewar 1939-41)

I

repetition of 1920.

hour

demonstrate

money mar¬

request is made after the election!

figure of $30 billion at the begin¬ that in
ning

the

powers over

ket, and what is more, they will

of

ment




to

revert for

me

subject

-

quirements would force

govern¬

have

just

the

icies are determined by the pre¬
Reserve
vailing economic conditions (with
purchases of government bonds at closer to an end than most people
possibly a wee dash of ^politics!),
by the application of higher re- fixed minimum
prices.
think.
During the
first
seven
by the c?sh position of the Treas¬
serve requirements, but the quesmonths of 1948, 550,000 housing
There we have the bear by the
tion is whether this offers either
ury, and by the imperative neces¬
tail and, as is usually true in such units were completed, which
is sity of a stable government bond
an equitable or
satisfactory meth¬
28%
more
than in
1947. Even market. " In consequence, if the
od of curbing undesirable credit cases, are afraid to let go. It would
be a relief to all, I'm sure, if we more
symptomatic, the housing inflation continues, and if the in¬
expansion.
did not have to "let go," and could premiums for immediate occupan¬ crease
in
reserve
requirements
In the first place, it affects only
count upon the inflation situation cy have disappeared
in 82% of continues to be neutralized by the
the commercial banks and does
being curbed by some combina¬ the 208 cities included in the sum¬ sale of long-term bonds to the
nothing to check lending by non- tion of
increasing production, a mer semi-annual survey of the commercial banks, it may be nec¬
banking lenders who can readily continued reduction of the na¬
National Association of Real Es¬ essary to lower the peg, but I
augment theirfunds by selling their tional
debt, and the modest steps tate Boards!
doubt this will happen as little
government bonds to the Federal in the
firming of money already
In a recent penetrating study on will be
gained by such action and
Reserve
at
the
pegged
prices.
taken, or within the power of the price behavior, Professor Fred¬ the
possible
disadvantages
of
Over the past year or more the
authorities to take, without dis¬ erick C.
Mills, the distinguished lowering it are great. It seems
insurance
companies and other turbing
the
long-term interest statistical economist, points out clear from the
foregoing that if a
non
commercial
bank
lenders
rate.
that World War I expansion was further
moderate
increase
in
have been actively engaged in this
On the other hand, if inflation mostly in prices, with physical short-term rates and the discount
type of operation, with effects as
pressures continue, and if we ac¬ volume increasing only
moder¬ rate, together with the higher re¬
inflationary as though the credit
had been extended through com¬ cept the premise that the central ately, whereas from 1939 to the serve requirements and the pos¬
bank has an obligation to use its present we have had an advance sible lowering of the peg to slight¬
mercial banks.
Why, it may be
power for the restraint of infla¬
in prices resembling World War ly below par, do not enable the
asked, crack down on the com¬
mercial
banks and leave these tionary credit expansion and the I and a gain in physical produc¬ monetary authorities to meet- their
preservation of a stable economy, tion similar to that achieved dur¬ responsibilities, they will ask for
other channels for credit
sion wide open?

-

budget

to

Business Outlook and

Thirdly, Congress is not natu¬ savings institutions and other in¬
rally constituted to economize; it vestors.
is

to

indefinitely guaranteeing to hold¬

Later central bank open market
operations came to be recognized
as in the arsenal,of credit control

debt, in? fa) in¬

people back home?"

Secondly,- this

credit

over

nailed

interest

tions

authorities

control

remain

long-term

ers

Present Powers Adequate

no

Almost

politicians I wo u 1 d"
accompany .traditional
we can afford to spend methods
of credit' control would,
money for ^Europe why it is
J argued, have undesirable rep¬
give something more to ercussions on the

■

all

concluding, let

moment

statements

rlK^? UndGri
national

In
a

Reserve

already have all the monetary and
they need, and the vestors, in
only question is, when and how turity date
sented lastj January.
vigorously they should be used.
In appraising the work of these
One of the
things they have
committees, it must be recognized |
weapons
been doing has been to permit a
Today, however, the adequacy gradual advance in short-term in¬
because of the 0f these weapons is being called terest rates, which has been a
tremendous ?
sums of money talked
into question.
This is largely be- good thing in making credit some¬
about m connection with
efense
and
ERP.
Such
totals make most economies

;

:

Conclusion

tant, but there is little question,
in the delicate question,-and the answer as to which is
the more seriously
Bulletin, annual depends a great deal on whether swollen or more basic to the infla¬
we think the
reports of the Federal Reserve
inflationary trend is tion situation. A concentrated ef¬
BGard, and other official sources. still upward, or levelling off. The fort
to
cut
down
less
essen¬
Its use was to be only on excep¬ Federal Reserve evidently feels
tial government expenditures, to¬
tional occasions of redundant ex-' that it is still upward, else they
gether with a tightening of some
cess
reserves
(as following gold would not be raising bank re¬ of the
government's own lax poli¬
imports in the thirties and early serve
requirements.
But
apart cies with respect to promotion of
forties),- and for the purpose of from immediate questions of pol¬ urban
mortgage
credit, and a
placing the Reserve System in a icy, one thing seems to me to be modification of
agricultural price
position .* to exercise its control clear, viz., the Federal Reserve
supports which directly affect the
through the more flexible instru¬ cannot over the long run exert cost of
living, could weaken infla¬
past

Federal

there

dispute as to
any elemen¬
tary student of money would have
said, "Advance the discount rate"
what to

longer, has any signifi¬

no

cance.

the

of

cut-

.'■>

curity

27

a

a

controlled mar¬

long time to come and

that the prices of

government se¬
stabilized

by

together with international uncer¬

curities

tainty and the political uncertain-

Treasury, government trust fund,

cy

at home, particularly regarding

will

be

and Federal Reserve actions.

28

(1224)
to be expected by the

omy

Where Are Building Construction Costs
(Continued from page 13)
To be suie, we try

always have.
to

the

deliver

the

bricks

bricklayer

have
ate

operation

to

ant.

intermedi¬

thxs

The

large jobs.

on

cential

of

use

possible

as

mecnanized

near

as

mixed

concrete,

'distributed in "transit-mix ' trucks,

has cut the cost of concrete

some¬

what.

The machine-threading ano
cutting of pipe on the job is eco¬
nomical and is increasing in adop¬
tion.
But the building industry

has

able

been

not

with

keep

to

branches

other

pac^

the

con-

of

settlement

the

for

of

jurisdic¬

tional disputes without delay and
without

stoppages of

This

work.

has

already made itself benefi¬
cially felt and gives real promise
for the future. -Labor is support¬

nearly
of

tion

Going?

a

the

and

workers

crea¬

build¬

market for

wide

materials—all factors tending

ing

keep construction costs up.
If we do not have a great de¬

to

broad apprentice tiaining pression or economic disturbance
wnich should in time re¬ there is little we can see for the
an
increased
next five-year period that would
suppiy ■
qualified
skilled
building
me¬ tend to force building costs down.
ing

a

program

in

sult

chanics.

^7777777^777^7

7

;

Today's high costs obviously are
occasioned to a large extent by
cost or materials.
A few typical
examples will suffice to illustrate
this point.

If the Russian

velop

costs would

building

war

tend to climb.

have

not

do

should de¬

menace

another

into

but

war

If

act

wt

the

as

"Big Brother" to Western Europe
with great exports of materials,
the
construction
industry
will

The prices all refer to
Metropolitan New ^oi*k but ai"
not far off for other major Metro¬

probably

fluenced the cost of building con¬
struction has been tne unioniza¬

politan areas.

present nigh tempo. The economic

tion of

$30.00—11

struction

,

industry when it

comes

to mechanization.

that has

condition

Another

in¬

building mechanics prett}
throughout
the
nation

widely
Fifteen

or

more

unionization

dustry

the

in

ago

years

rea*

building

in¬

effective only in

was

tne

Take Lon£
Metropolitan areas.
Jsiariu, tor example. Here vcr.>
large housing programs were car¬
ried
out
on
an
open-shop anc
often

basis.

non-union

a

on

In

the South

practically all buiidin^
was open shop cr a
onl.y unionized in the
very skilled trades. World War 17
plus the Wagner Act, changed al
construction

the

most

The

that.

Week

effect

of

the

40-hou.

brick that today costs

Common

years

per thousand,
Form lumber

that

costs

today

$98.00 per MBM—11
$35.00.

Plywood that today costs $310.00

MBM—ll

ago

years

cos,

j>78.00.

Reinforcing

bars
that
today
costs $102.40 per ton—11 years ago
cost $47.00.
Cement that today costs $3.35
per bbl.—11 yeais ago cost $1.80.
.

Structural

ordinary
costs

steel

erected

simple

for

building

$2,25.00—11

If

$90.00

ago

years

an

today

-

;

supervisory

staff,

official

for

rate

is $3.20 an

seven-hour

hour

licly

controlled

Eleven

be

of

ment

day.

manned

without

premium

pay¬

overtime

and

sometimes bonuses in the shape; of

transportation
costs.

and

.

Take

the

living

even

Or

•

carpenter—today

his

-Q, V ■

t; -pj/

tions

prevailing

under

agreements or in
which are costly.

Production

trade

-

union

practices
t

man-hour

per

in

nearly all classes of building labor
is materially below that
prevail¬
ing at the time we went into
World War II.

This falling off in
productivity has been occasioned

by two broad factors:
(1)

The

fact

last
'

than

war.

they

These

•

that

building mechanics
older

7\7

today
10

are

most
years

before

were

men are

the

physically

unable to match their
prewar production records.

(2) Because the mechanic
laborer does not and cannot
made to work

wise
can

would

get

as

hard

when

another

street."

that

are

not

are

as

he

material

insulation,
fluorescent
lighting,
floor coverings,
limestone r exte¬

to

construction

do

rather than
down.
Government operation is
notoriously* inefficient and costly.
Allocations

up

come

are

and

now

■

ture,

or

to

*

r>.<

■

s

controls of mate¬

and

increase

to

than

way

if

costs

in

by creating

no

other

expensive

black markets for those who

must

Government

not

likely

to

the immediate fu¬

down

by more
than 10% at any time within the
next five-year period, subject of
to

course

come

a

pression.
don't

war

or

a

de¬

great

five

Beyond

years

we

caused

reach

to

us

by "asking
"What
building costs down
few years?"
-

possibilities

in

great

any

detail.

1921

in the

next

find

we

months

that

In

of

the

about

construction
back

and

at

1920s.

costs

something

then

steadily, and remained
rest

in

went
up

While

up

for the
had

we

sharp dip in construction costs
1931-1932

back

m>

1938.

There

to

and

1933

normal
was no

they

by

such

were

1937

or

accumu¬

is

today.

as

devastating and destroying as
War II and the building

World

War

I

was

not

is

but

it

does

not

to

tinuing at

increases

forests.

or

in

cost

of

The

materials, we
slight decrease in
construction costs, after which the
demand will again increase and
might

tion

a

We

believe

that

uing

recent

in

the

American

there

quent

ings require in
costly materials.
There

do

not

materials

new

usuable

his present rate of
If there is any slack¬
ening up in demand with result¬
ing lessening in employment, this
would be the first phase to be
effected.
Many people, however,
express the thought that Amer¬
ican labor, not only in the con¬
struction industry but in the in¬
con¬

mechanized age elbow grease can

is

being

made to
mechanize
the
work
by power
hand tools and by distribution of
materials
and
to

mechanically on the job
by getting materials as close

the laborer's

Better

general
to

seem
or

are
being
hand, buildings are getting
more
and more complicated and
the industry from the contractor's

other

side is getting to be one of great

specialization,

almost

following

the medical profession. This makes

risen

that

we

has

ago

a matter of
fact,
higher than Mr.

building,
more

more

hotel

if
a

in

they

have

must

office

an

building,

school, or hospital, or
they might as well

or

what have you,
make up their

any
methods

industrial

new

if

or

space

can only say to
advising our
they can make

are

that

with

money

mind

to

get

the

job under contract as quickly as
possible. To wait for a break in

in

the

cost

of

long wait.

buildings may
If

a

break

be

comes

a

our

of

ophy of "never experiment with

tion.

the
great architects'
offices
have been schooled in the
philos¬

client's

a

Let

money.

in

someone

its

extent

and

of

short

we

Beyond that

cannot

dura¬

push

thoughts.

our

Plywood—A Cinderellalnduslry
(Continued from, page 11)

not

envision

serious

a

or

Competitive
products
include
lumber, masonite, sheet rock, cel-

pro¬

longed bad market in the next few
years.

otex, Hermosote, steel, aluminum;
glass and concrete. Lumber prices

Geographically, 1948's minimum
demand potential breaks down ap¬

proximately
Middle

as

haye advanced about the same as
plywood; aluminum prices have
actually dropped and there has

follows:

Atlantic-

.488,000,000

been

673.000,000

West North Central

213,000,000
227,000,000
57,000,000
233,000,000
76,000,000
953,000,000

South

Atlantic

East South

i

Central

.Total

pointed

kets.

securing

ton

and

ture

that

.

same

Let

the

Pacific

Coast

example, with West
Central,
mainly
Texas.

There,

building

ton.

Surely that is

In

New

000.

Markets
ex¬

isting demand potential. Prospects
for new markets are encouraging.

•

farm

field.

2 000,000
farmers in
States.
Some
years

There

the
ago,

State College conducted a
which showed that actual

Washing*

being built

redwood
*

are

*

1947, production
1949

virtually

'

may

was

.•

1.600,*

reach 2,000,000,-"
hit

should

somewhere

are

crease

United

Iowa

2,200,000,000 and 2,300,*
000,000.
In my opinion, produc¬
tion will begin to drop off in 1950
and gradually fall back in a few
years to the 1947 level of 1,600,*
000 000 feet. 'This production de.

•

the

are

between

far, I have referred to

Take

of

000,000, 1948

for any sales department. ;

So

getting low in

are

Northern

plants

untouched.

challenge

a

New

stands

anywhere else in the
country; and there, also, plywood
consumption dropped 15% below
1941.

resources

in Northern California where vast

increased

has

than

more

more

Central* and

for

South

into the future. Pro¬

32.

nine

ber

states,

lis peer

At the war's end there
Today there are 43; and
are
building.
The
ground swell is to the South. Tim¬

were

results?

Compare

lost markets;

stantially.

activity

elsewhere in the
nation would yield approximately
the

few of these

duction units have increased sub¬

doubt

similar trade promotion and

sales

a

however, plywood pro¬
ducers are too busy filling the
requirements of end Uses falling
Withirt their present price range.

California—representing

we

a

Today,

of the nation?s population,
today consume 331/3% of the in¬
dustry's output. This consumption
is 74% above what the three states
Can

One notable example is in¬
wall

mands. Perhaps the day will come
we
will attempt to recap-

Oregon, Washing¬

1941.*

had
mar¬

when

9V2%

consumed in

some

conceivably meet, all current de*

directed toward the Pacific States.
—

demise

of

price basis. The industry is
aware of these competitive
inroads,** but it also realizes that
irrespective of price- it could not

Major sales efforts have been

These states

OPA's

keenly

markets—as and when need¬

new

ed.

other

paneling. That market
has gone over to synthetic boards

graphical dispersal of the indus¬
try's production in order to dem¬
onstrate opportunities in.

since

not caused the loss

thiif' geo¬

to

the

misleading
deny that plywood's price in¬

crease

on

have

I

in

It would.be idle and
to

.2,800,000,000

-

increase

some

competitive; materials.

side

hand

as possible.
plant instal¬
made.
On the

months

conclusion, I

clientele

be

new

14

guess is that' for the next four
or five years it will be
moderate

construction

lations

moderately, contin¬
high
level."
This

a

of

have

you

building construction
in immediate sight. The
building
industry is a conservative one
both inherently and by law.
Many

workman

mechanic will not continue to be

effort

rise

at

In

with the basing-poinl
of pricing and its conse¬
effect on distribution are

is

and that the average laborer and

Every

a

Ward anticipated.

as

away

system

good deal of pride of craftsman¬

ship

see

will

ccsls

yet unmeasured effects of the do¬

judgment is that product Mountain States.
per man-hour may increase a Pacific States

little.

or near

of construction

tion

have

steel, the

con¬

its present vol¬
and with improved produc¬

ume

shown itself very markedly as yet.
As to materials being
cheaper

mines

Con*

the

statement: "With construction

cheaper

seem

for

He concluded this article witn the

for the

that

Our

•

„

There

design will lower the cost of his
building. It may be that there is
real field for improvement here

great

a

normal

a

belief

West South Central

sciously or unconsciously declared
something of a sit-down strike
this opinion
against physical labor. Men seem
might bring to feel that in this
generally

productivity of building la¬ lated
backlog of unsatisfied build¬
borers
and ,; mechanics
has
in¬ ing demand in the 1930s as there

will

come

from

raw

ma¬

terial shortage and not, necessar*

survey I

ily, a slackening of demand.

plywood |
In my judgment—and I am
overlapping profits and higher adaptation for each of Iowa's 200,- speaking to you as an individual'
that men are able to work
with boom of the 1920s satisfied the
overhead
in
C00 farms was 6,000 feet of fir ply¬ and not an industry representa¬
job
management.
fewer interruptions than was the
backed-up demand rather quickly. Contractors' fees on cost-plus- wood.
Potential adaptation, ac¬ tive—there are not enough peelerf
case for
nearly a year after V-J
Even if the prophets of
v-uooort
gloom work, which is the basis on which cording to these authorities, was
indefinitely thd
Day. The leaders of the American are
right and a severe economic the better private work is gen¬ 55,000 feet per farm. Industrial ; production of 1948 and 1949. Some
Federation of Labor are
appar¬ bust is around the corner there
erally done—in the East at least- uses alone, can easily absorb over mills in Washington will soon feel
ently doing their best to increase are those of us who
believe that are so low, following the scales a billion feet per year according the raw material pinch. Produc¬
productivity. An agreement has a great
public building and pub¬ established by the Army and Navy to recent studies; and that repre* tion there will gradually be cur¬
been reached with the Associated
lic works program would be
got- Defense Plant Corporation in the sents 50% of the industry's pro¬ tailed and, eventually, some plants
General Contractors of America 1 ten
under way with a
v>v- ' Wxii De iorced to liquidate. Thus,
resulting war, that there is but little econ¬ duction.
materials

&

four

be more sparingly applied than
depression it was a decade or so ago.
would have its effect, but subject
to the length of the depression its
Management Improvement
effect might not be for long.
Contractors are constantly try¬
If
we think
back to the sharp dip
ing to improve their management.

Obviously

in

the

East North Central

Let's analyze the elements that

bounced

creased somewhat in the
past two
years.
This is partly due to the
better deliveries of

(4) Will materials in themselves

dustry in general, has either

attempt to dream.

even

v

satisfied with

go

are

in

down

this fact.

encouragement

in

a

rials and of their distribution tend

'.from here?
production.
judgment is that

Frankly* our
building costs

like

indications, however,

'V

we

had

the

building

h- / A Looklnto Future

be

job "across
7777

where

costs
>

Where

much

owner

Turner

of

Company, wrote an ar¬
"Engineering NewsRecord" which was quite widely
quoted under the title, "Are Con¬
struction Costs to Continue High?''
ticle

not encouraging in the pursuit of
lower costs. Better designed build¬

push them

The time allotted does not per¬
mit of the exploration of these

why they are where they now are.
,

appreciate

not

jump.

1947, H. A. Ward,

July 24,

Vice-President

riors, underfloor duct systems, and
the like, which are specified in
fine buildings very generally
now,

be

become cheaper?/

many

On

method to

or

costs

liberal and

new

struction

ing

to

adaptable, still pre¬

been fulfilled. As

socialistic

a

and

great hurdle for any

a

buildings be designed. One
only to think of air condi¬
tioning,
acoustical ^treatments,

.

for

much

he other¬

he

with

jommodities.

seven

knows

line

of

out

or

Productivity of Building Labor
There

cost

sent

materials is wages—clear back to

food

identically as high
of wearing apparel

flexible

and

in

have

of

furnishings. In other
words, building construction costs

,building laborer—today

Wages are not the only element
influencing building costs upward.
There are many
working condi-

electric

today
cost

house

and

U:,

Lis rate is $1,95— 11 years ago it
was
$1.00.
,
,-r
v.

and

the

almost

are

the

as

than

v<1

•A

the

less

So

rate is $2.75—11 years ago it was

$ 1.53.

and

/77?

•
.

.

costs

risen

cannot

Y

gas

Building

rates.

tnis rate was $1.6o. Ac¬
tually, however, with the shortage
of bricklayers
the average job

a

years ago

better

has

,

the

buildings is due to Lie

demands that

better

prophesy

building or
with its time-and-a-half for over¬
wonder that our com¬ construction programs carried out
pany's index is today 219 against directly by the government would
time, has added something to the
However, probably also be* costly.
supervisory costs on building con- a 1937 figure of 99?
a building construction cost index
struction.
Can we in the building industry
The making of exten¬
sive tax and insurance returns has figure of 219 on a 1926 base of do anything to offset present high
100 indicates merely that building costs or to keep them from going
added
a
costly burden to con¬
construction costs are 97% above as many of the
tractors.
industry think
'/
1
7
r
All these factors add up and the what they were Jan. 1, 1941, Ac¬ they are bound to, still higher?
owner has to pay the bill.
There are several directions to
cording to the Bureau of Labor
'
Of more direct influence is the Statistics of the U. S. Department which one's thoughts might turn:
increase in wages which has oc¬ of Labor, the cost of living as of
(1) Can production of labor be
curred.
It is only necessary to June
15, 1948, was 72% above increased?
quote
two
or
three
1, 1941.
In other woros,
important Jan.
(2) Can better management by
drafts to see what has happened ouilding
construction
costs
are
contractors offset higher costs?
*
to our labor costs. Take the brick¬ only 10% above the cost of living
(3) Can buildings be designed
layer.
Today, generally in the which has been held down some¬
Metropolitan area of N'ew York what by rent restrictions anu puo- more cheaply than in the past?
job

on

part of the high

the

reduction

more

of modern
owners

try new; materials and new
methods."
Building codes, while
cost \ney are slowly being made more
7

s^ate,
which may be possible, the effecl
on building costs would
probably

towards

veer

build.

per ton.
Is it any

and

more

small

else

owner

7

all

economy

government tends to be¬

our

come

direction.

in the next few years, I doubt
it,
because about 90% of the cost of

under¬

building mechanics' wages.

ago

years

its

at

conditions

our
present
to prevent a

tend

,

cost

per

socialistic

and

$1*.4> lying

cost

ago

maintained

be

this
No

of con¬

employment

full

struction

in




so

World

l;IT

'."u

•.V Vs

for

i-.

■

no-ix<

r

\1

<

.

Volume

Number 4736

168

the

ceiling on raw material should
inevitably limit production and by
the same token, hold up the de¬
mand potential for the end prod¬
uct.

In

jittery

event, let

any

nomic

life

whole

of

for

the

COMMERCIAL

industry

between

six

and

as

&

seven

the plywood produc¬
2,000,000,000 ft. on a % in.

over

in

reserves

FINANCIAL

CHRONICLE

Campaign

AftL

V
Washington
total 178,000 000,000
feet; in Ore¬
gon 261,000,000,000 feet.
Govern¬
Timber

&

(1225)

a

'

years.

not be

us

THE

•

'

to Unite America

(Continued from page 14)
doubted

and

denied.

| day—the very same tragic day— We will know that our advance
is
at_ and | that the American people were carrying, ais into
unexplored ter¬

sneered

board feet of lumber per year

is little accessible

rights Of ; told that the exposure of Com¬
munism in our own government
assembly,
religion, of the press, academic is a "red berring."
freedom, the fundamental free¬
With mankind as our witness

the

old

dom of choice of

tion of

-basis.

The

^Northwest

industry J produces
nation's

approximately 65% of
the total and the remaining 35%
is mostly in
strong hands. There

lumber

9,000,000,000

and
produce

sawmills

37,000,000,000 board feet.
This
year's approximate
duction of

ment owns

2,000,000,000

At

pro¬

% in.

on a

available

through

public

auctions.
The

200,000,000

Concrete forms

thereon

a

made

housing. .955,000,000
____120,000,000
-150,000,000

prices

plywood companies must rely
dwindling open log market
and
on
publicly owned timber
on

Feet

Railroads

current

not

houses..120,000,000

Farming

least,

Can

•.

question

the

is

simply
plywood

have-not

panies, relying

this:
com¬

publicly owned
Military
-----100,000,000 timber and high priced open log
Door panels100,000,000 market
purchases,
effectively
Furniture factories____100,000,000 | compete over a period of
years
Automobiles
20,000,000! with plywood concerns—such as
Trucks and trailers
25,000,000 ; M and M—who have substantial
Tobacco hogsheads
35,000,000 low cost timber reserves. Frankly,
Movie sets
■ 7
.100,000,000 I think not.
Marine
50,000,000
Perhaps there will be an answer
on

freedom

of

priceless

speech,

—

Total

to this problem. There is
activity
toward greater utilization of timber.
But I sometimes wonder,

.2,075,000,000

—

The Douglas Fir plywood indus¬

try is

gentlemen,

small, compact group, of

a

who

manufacturers

sold

are

people

to

just:. what

,

put

;

of

the

or

denied

quality control and responsive to

up

unconventional

of total production.
Pursuant to commercial

distribution

diums—much to the irritation and

grade

dismay of legitimate producers.

manding high performance. Any
plant that runs afoul ox these ex¬
acting standard runs the risk of
being deprived of the right to use
the industry's
grade mark, and

These grey market transactions
stemmed from the industry's old

tho.3e

grade

marks

are

virtual

a

guarantee of high quality.

traffic

Apart from the inherent quali¬
ties of strength, versatility, light¬
ness, is the tact that plywood in¬
volves

substantial

labor

fill

a 4 ft. x 8 ft panel can
32ft. hole in short order. For

a

example,

fir

plywood

sheathing

involves 40 to 50% less labor cost

conventional

than

ilar

boards. A sim¬

saving is indicated

ply¬

for

wood roof sheathing over lumber.

Plywood used

siding

as

will

cut

labor costs 35 to 50% below lum¬
ber.

As

a

base for

linoleum, strip

Flooring will - cost three times
.

much

as

or

plywood.; For concrete
plywood can be used eight
nine times and then converted

to

sub-flooring purposes; and the

as

Forms
•

labor saving for each use runs as

high

50%.

as

mated

labor

For boats the esti¬
saving is 300%

over

small boards.

Problems Ahead

.

All this is

bright and shining
picture, and I would be happy if I
could place a period on my re¬
marks

at

a

this

point.

But

you

gentlemen realize there are nega¬
tive factors in any economic pic¬
ture.
The plywood industry is no
exception.
Some are in process
of correction; others are not so
susceptible to solution.; They are
as

follows:
1. High grade fir peeler logs are

to the fir plywood

industry what
oil is to the oil industry and iron
ore to the steel industry. Wriggle
and squirm as one might, you get
back

the

to

plywood
to

years

stantial
,

of

a

fact

that

any

to endure in
must have a sub¬

company
come,

reserve

Plywood

been

basic

have-not

timber

industry in terms

up to recent
substantial seg¬
ment is still in that unhappy pred i c a m e n t.
These forty-three
reserves

indeed

years;

a

plants — not including
Weyer¬
haeuser—have, according to a re¬
cent

reliable

estimate, approxi¬
mately 15,000,000,000 feet of tim¬
ber to suoport their operations. If
this volume of timber was spread
equally throughout the industry
•—which it is not—and if all other
sources

owned

market,

dried up, such as publicly
timber and the open log

it

would

mean




an

eco¬

Grey

Frankly, I think the volume of
market
transactions
was

throughout

fact

about

world

our

end

1S

A

near*
only

shows

survey
survey

current

8.100,000

feet

of

monthly production falls in that
category. This amounts to about
6%

and it is my
tion that by the

confident predic¬
end of the year

will

be looking back on this
grey market situation as if it were
a half forgotten nightmare.
we

Plywood

Vj

prices • % have

risen

is

of

We

live

in

in

world

a

on

idea js

not destined to

enslaved.

pattern
Some
nomic

in the plywood
with

concerns

life,

industry.

short

a

is backed by

Labor and logs ac¬

some

crisis

human

beings,

be tens of millions—no

may

cost of plywood. Since
1941
minimum wage has increased
from 67V2C to $1.45, with an aver¬

being

are

—

starved

of

what

America

believes

$80.00 to $100.00.

only begins to tell the
story. Yielding to demand pres¬
sure,
the quality of peeler logs
has gradually dropped. Along with
this
trend, the type of veneer
which
produces ; higher
grade
panels also decreased.
vaneer,

sound

or

a?

we

11 it, is the currency of our busi¬
ness. A Douglas Fir
Plywood As¬
cr

sociation

survey

following

significant

figures:

revealed

the

facts

better life.

a

is

veneer,

face

or

1.845,353,000
production
feet

on

current

stock, totalled
surface feet. 1948's

will

be

2,000.000.000

% in. basis. Projecting
data, the face stock yield

a

for this increased production

will

be only 1.451,352,000 surface feet.
Putting it another way, let us
assume

face

1941

stock

production

yield.

as

100%

Comparatively

have

one

new

people:

Let

cour¬

us

say,

welcome

we

the

united, Amer¬

icans

bound

together

faith

that

by an in¬
liberty with

under

God

is

vincible

.justice

its

the

most

precious thing on earth.

men

In

of

often

our

•

failed

in

we

every

Divine

delivered

Urges
1

-

Des

at

Moines, Mr.
Sept. 21, at Den¬
delivered another ad¬

on

short

dress devoted to discussion of the
conservation of natural resources.

has

man

in

Address

Conservation

;

Dewey
ver, Col.,
believe

fallen

hearts

that

the

Denver

v:;

*

Following the foregoing address

Freedom

sometimes

and

But in

him., that

In

my

faith.

It

'

this

to

the will

of

from

cross

men

Never

the

is

ments
land

and

the

tyranny to

Cases of Tyranny

to

call up some of them as
Let them testify. Call

Jan

Masaryk,

death to

a

dom. Jan;

of

life

Czechoslo¬

living

Nicola

up

leader of

garia.

;

Petkov,
the

free

Call

Komorowski

Stanislaw

Mi-

kola jczyk the great exiled leaders
of
Poland
who

are

to

from

behind the

Oksana

picked

school

by

to

come

the

our

She

secret

police to
country to teach the

death

or

freedom from

the

win¬

dow of her

diplomatic prison, she
gave her testimony. That was the

1948's

production in
receded

to 56.28%."
I
out

1

'

V

*

mention these facts to
the pressures that have

pelled

plywood

food

com¬

which
homes

must

We

widen

youth.

our

the security of

maintain

our

support

growing

We must and

nation

will pre¬

we

and

intolerance
racial

and

and
bigotry,
religious dis¬

Above

all

we

must

confidently face the immense la¬

now

on.

the

.

I

As

make

in

ours

paign
of

uct
no

!

f

the

in

specific proposals
these problems of

course

of

answers

and

no

I will not offer

one

cam¬

V

this

and

steel

ride

coal

our

we

use, every

power,

bomes,

a

and

I propose

cific

As

to give them. The spe¬
proposals I will make will

we

go on from he re

for heat

use

born

in

the

means

the

ducing atomic

every

railroad

of

pro-.,

energy comes from

the ground.

"What the land grows, the rivers
that

keep it
deep

green,

hidden
affect

inside

the livelihood

the

minerals-

it—all
and

these

are

the

well-being of every

one

source

of

of us.

We have reached the stage

in

' our

country's

development

when to be careless is

with
the

to gamble
security and

country's

our

future

of

free

men

every¬

where.

•

"There is

tremendous urgency
about this now. We live in a nerv¬
world.

a

Our liberties and

our

life are under con¬
stant challenge.
Earnestly as we
way

of

cannot do less

keep ourselves strong.
A
strong America needs more than,
a

powerful military establishment

for

together,

Our ; basic

defense.

lies

in

natural

our

ended

drain

idealism

resources.

solution

answers

we

bit of gasoline;
we

was

Even

mendous.

have

from

comes

Everything

on, every

ground.

on

three

our

strength

and

in

our

During the

war

years

resources

ago

the
tre¬

was

We drew lavishly from

minerals.

our

people

i

and:T

you

in

wood that

or

and

solu¬
solution

group.

American

■

world

earth.

automobile

that

easy

one

group and another

another
The

this

Our chil¬

part of thejp

a

than

they will not be the prod¬
wishful thinking.
I have

trick

tions.
to

with

.J

with you about

work for peace, we

dealing

Rockygrasps

y

talk

everything

good

rich

•

the

eat, everything we weqr, every
piece'of board and brick*and iront

ous

price increases not
be borne-of fear.
They will
substantially in'-*excess of the
come from my own deep faith
in
wholesale price increase index. A;
America. They will not set faction
Actually, I now believe that we
against : faction,
group
against
have reached the peak of
plywood
prices: stability in that department group. They will aim to join us
should be the order of the
day together in a more perfect union.
from

have

bor of making peace in this world

•

this

land—your land and mine.
more
importantly, I want to
about
our
children's land.

"Nearly

and act wisely and with -courage
to achieve it.
r

Will Make Specific Proposals

in

man

tions will' surely suffer.

'

crimination.

strength

dren will be denied

we

for

right to expect honest
point

-

the gains of labor so that its

against
against

to

terms of face stock yield

must

production will
grow and flourish. We must work

children of Soviet diplomats. She
could
not
even
understand the

language of America but in her
heart, she
came
to - understand
America.
When she jumped
to

will

confidence

the
was

the

needs.

came

Kasenkina,

teacher.

we

more

We need

people.

we

serve

compete in the Olympics only
up

must
trou¬

prices so our farmers can go ahead
confidently- with full production

last month and refused to return.
Russian

we

basic

Unless
we
have
a
government
which really understands our land
and its
problems, future genera¬

troubled to¬

are

with

the

Here in the West

inheritance.

true.

are

older

and

iron curtain

talk

man

and fuller production for the ben¬
efit of all our citizens.
We must

of

Even

all

people. We must pro¬
tect our enterprise system from
monopoly while encouraging free

nesses.

out

we

opportunities

our

wit¬

our

come

maladjustments

them.

our

the

executed
forces of Bul¬

our

woman—is free

We must increase

to the
religion. Call

Bor-

the

for

the

General

up
and

young

talk

f

majesty of 'our
Here you feel the power

-T want to

<

cause

martyr

of freedom of

cause

every

young

nation

a

end

up
Archbishop Stepinac
lies today in a Communist
a

every

day by many things and
fears. We
bled by high prices and

our witness.

in

plan for the future and make

remove many

cut off from free¬

Masaryk is

i

This

alone

to
o

Mr.

•

of the land.

oppor¬

means.

almost

'

and

sweep

country.

world, is still the place where

As

Call

prison,

peaceful

ours

their dreams

vakia, the heroic son of a heroic
father.. We
may
never , know

who

by

of

our

lines,

the

the

always exists ^to improve.
It is the only system where men
can
freely change their govern¬

youth—where

us

where

one

resources.

grandeur of
Mountains in view, a

of

tunity

witnesses.
up

the only

of

sources

want

some

troubled world.
with

is the only system on earth which
make a mistake and cure it.

It

about

you

The free system

methods

related

"Tonight I

;

let

to
police state.

and

Let

*

;

and

Speaking along these
Dewey stated in part:

will

we

can

freedom.
Lists

vation

people.

our

which

the

bayonet have been able

suppress

forward.

in

surrendering

hope that is America is flaming
That is why we in America have
siich a solemn obligation to love
and cherish all of the freedoms
we enjoy.
We are the last, best
hope of earth. Neither barbed

women

faith

anyone tell you that
unfinished job is too
big. Never let anyone tell you that
we can meet our
problems only by

every
obstacle of iron
and steel. In millions of hearts the

nor

the

America's

They know there

through

wire

It is the faith of

is

go

a better
way. %■
The truth about America seeps

speaking,

:

wisdom,

new

less

are

and

In 1941, production was 1,620,000,000 feet on a % in. basis. Sound

and

Let us go forward into this fu¬
ture as courageous,

every

and

vindicated. The oppressed
peoples of these lands know there

Call

But that

Individual

and' know

being

Call up the athletes who

Peeler log prices in 1938
ranged

in

'faith

some

yet,
at this very moment, the
promise of America and the truth

age rate of $1.70.
from $28.00 to $30.00; in 1941 from
$31.00 to $38.00, and in 1948 from

but

promise

address Mr. Dewey
single individual is of price¬
importance and that free men strongly, advocated Federal ex¬
worked to death in concentration
against whatever odds have an un¬ penditure to preserve soil fertility,
camps and at
slave labor. And
land reclamation, timber
beatable quality. That faith is
preser¬
knows

tyranny. All these

of

ag6i

catastrophe,

unimagined

if

We

it

the

approximately 75%

stake

do

of it.

one

and

their belief in what

our

will be seized upon to blot
out their freedom too.
of

nation

a

on

Faith

excuse

Millions

as

.

or

the

for

found

of

one

of

can

challenge of tomorrow.

old

an

new

us

knew ti.e

men

not

We

to see that this

summon

we * are

from

came

age.

universe.

age and a new vision.

can

only they were free.
The Amei'ica of today is the liv¬
ing, towering symbol of the eter¬
nal Tightness of that faith,
-

they expect the knock on
the door.
Millions who still en¬
joy freedom live in fear that to¬

gladly brushed
elbows with death to escape from

count

fathers

happy

could

moment

tomorrow

we

future

unfamiliar footsteps and at every

have

cost increases.

to

mobilization of enormous force.
Millions
of
families
who
have
known freedom are in fear of evil,

or

us

meaning of liberty. Yet they dared

be free but to be

That idea

and

world in which few

is

a

eco¬

understandably
followed the policy of getting all
the traffic would bear; others with
a
long economic life, such as M
and M, have pursued a more con¬
servative policy.
Naturally, these price advances
are
largely responsive to basic

Our

around

blessings and be hum¬

proud
Americans.

The evil
man

our

bly

which

the march that

on

the march.

look

we

count

such

Whether he took his life or was
sharply • since CPA's demise. So murdered. We do know
this, thjat
have
lumber
and
door
prices.
however, it came; he preferred
There has been no uniform
price

As

atomic

achievement. That is our purpose.
That is the measure of our
oppor¬
tunities. For such a future let

a

affirmation. Our
faith reaffirmed holds our
destiny
and the hope of the world.

ominous importance.

tyranny is

time—above all times—for

a

is
one

great American

the

The ideals and the rights
hold to be good are held to be
evil in those countries.
No other

to
(

Face

have

Result:

grey

of timber.

manufacturers

bear.

Market.

savings.

Basically;

would

is

are

we

is

bugaboo, raw material shortages.
Log s t ar ved plywood .plants
traded plywood for logs. The log¬
ger then sold the plywood to any
Tom, Dick or Harry for all the

these

millions of regi¬

many

people

me¬

"standards, it is merqiless in de¬

all

—

of the

do much

is no time for doubting the
rightne:s of free government. This

a

world.

new

rigid self-policing implemented
by an efficient industry assoeia- supply.
lion.
This
association - handles1
(2) Another problem has been
trade promotion, advertising, grad- grey markets.
Quantities of ply¬
ing inspection, representing 90% wood have been peddled through
a

or

car

a

iniw the

has, at last, begun to tap the

powers

this

even

farfri

a

to

occupation,
own

right to

mented

day

induqes

plywood
plants in the Pacific Northwest in
the face of limited raw material

on

Man

,

-

.

ritory— on

of

of

home

would be excessive if not prohibi¬
tive. That simply means the have-

teen basic industries and end uses.

Conventional

growth

purchase in the Pacific Northwest.

basis feet of fir plywood will be
channelled to the following thir¬

Prefabricated

privately owned
yellow fir left for

The

,

We

called

on

the

rich substance of the land to pro¬
duce to its utmost.
at

a

Now

must set about

we

the damage.
to

We cut timber

tremendous' rate

That's why

of

speed.

restoring
we

need

replace the careless policies cf

our

tion
and

present

national

with

brand

a

program

administra¬

new

approach

comprehensive

national

a

of conservation."

30

(1226)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

operations

(Continued from first page)
which

the

of

have

changes
place in our

taken

more

goods

consumer

available.

come

have

for the job you

commended

In

are

have

doing.

tial difference between
situation

economic

ent

those

ing

trends.

To

anced

situation

a

to

the
of

low

condition

unbalanced

an

1946,

miums

cating

to

on

Treasury

effectiveness

of

that the money supply has
declined.
At the end of

Dangerous Factors

billion less than the all-time peak
of $113.6
billion reached at the

talk

it

that I

nomic

looks
gave

Club

of

today, recalls

a

before the Eco¬

New

York

nearly
two years ago, in November, 1946.
At that time, there was great un¬
certainty over the business pros¬
The

pect.
broken

stock

had

market

cycle

ness

because

busi¬

a

is

four months.
In the fall of

by

of

which

rowed

real

urban

or

much

estate,

1929

stock market specu¬

lation which

was

nanced with

borrowed money.

also

largely fi¬

Today, it seems quite clear that
neither production nor prices are

by fully one-third.
erally have been cautious about
employment was at an
expanding their inventories.
We

Civilian

all-time
"How

gen¬

level

record,

long

can

v

owe

it last?"

was

big question at that time.

A

this continued well-balanced

the situation, in large part, to the good
sur¬

This

was

year

the

during the same period
only $1.0 billion.

But.

perhaps the most signifi¬
in

the business struc¬

ture of the nation

volume to maintain

financial position.

highly liquid
The liquid as¬

sets

are

of

individuals

esti¬

mated at
approximately $200 bil¬
lion, of which more than $140 bil¬

has

1939.

been

Net

porations

accumulated

since

working capital of
has

billion since
cent total of

increased

by

cor

Present

and

which

rise

trated

agriculture

in

consumer

levels.

but

will

by

made

a

well

in

few

addition
pressures

One

credit,

American

the

tion has

of

illus¬

the

situation in farm
While prices of farms
advanced even more

lief that .business would reach a
oy borrowing.
We must be constantly alert,
On the contrary,
top within a few months, and that
it has been
accompanied by a de¬
however, to the potential dangers
by the following summer it would
crease of about 30% in farm
that
mort¬
have
threatened
through
start a substantial decline.
But I
gage debt, in contrast to an in¬
growing
inflationary
pressures.
saw no reason to accept that
opin¬ The
crease of 160%
during the specuoutstanding need of our econ¬
ion.
For with all the enormous
ative land boom of World War I
omy is to counteract these pres¬
resources of our
country, with our sures.
The total farm
The Government has only
mortgage debt of
huge unfilled demand for goods,
limited weapons for this purpose, $4% billion at the end of 1947
and with certain safeguards that
but the Government is vigorous in was less than<8% of the value of
had been installed by the govern¬
all farm lands and
buildings.- In
using those that it has. Let no one
ment during, recent years to
pro¬
this, and in other respects, agri¬
have any doubt about this.
One
tect our economy, many of us did
culture stands
of
these weapons has been the
today on a much
not believe that a postwar reces¬
'irmer foundation than if did in
sion was inevitable'just because policy of directing debt manage¬
;he twenties.
ment to a rapid reduction of the
one occurred after World War
I.

Federal
debt, particularly
talk to the Economic held
by banks.
Club, I pointed out some of the
important differences between the
Budget Surpluses

In

that

my

postwar situation of 1920 and that
of

1946, and stated, that in view
these differences, I could not
see how a fair appraisal of ^Amer¬
ica Today" could
justify the feel¬
ing that a material recession in
"America Tomorrow" was inevi¬
of

table.

The events of the past two
years have borne out this belief.
Far from suffering the recession

that many had

Support Program

Budget surpluses, enabling debt
reduction
years,

during

the

have been aimed

past

two

at reduc¬

ing inflationary pressures. I stated
when I assumed office

as

Secre¬

tary of the Treasury in June, 1946,
that it was the
responsibility of
the Government to reduce its

penditures in every possible
and to achieve

Praises Social Security and Farm
In any appraisal of the

of

economy now as contrasted
with the situation in the
twenties,

full

regard

must

Bankers'

predicted, our na¬ or better.
tional production and
consump¬ and I have
continued to emphasize
tion have pushed forward to new
the imperative
necessity of reduc¬
records.
ing our debt burden during this

of social

future—with

tect

alertness

forestall

and

to

de¬

threat £ to
stability—we have
any

careful

sults

during the first half of this come, and for an
in holding down bank credit. better America.

year

greater and

even

Britain Hits Target
(Continued from page 17)
have
base

can

been

that

shown

confidence

our

we

in

successful achievement of

our

ob¬

whole—No, they
doing-their stuff!
as

a

are

trade < account

£ 156

of

showed?

we

million

half; year which;; i&
than

•

•

total

a

for

the

£ 69 million

had* forecast.

we

ftetjovery in Invisible. Income

come": to what is

But. now I

haps

the

ment

shown

most

hopeful

in

these

per¬

develop¬

tables—the

definite signs of recovery in our
invisible
income.
Nothing per¬

had

was more

disturbing in 1947

heavy

our

invisible

adverse

account.

net income

a

awakened

To¬

day^ under ; the provisions of Sp^
cial Security
legislation, we have
Federally-sponsored State unem¬

ployment insurance which would
aid

made.

We have earned

on

balance

In

1938

we

invisibles of

million, equivalent in value

accounted

for

government
seas—an

lion to
also

•

£207

due

overseas

by much heavier
expenditure
over¬

increase

to

from

million.

loss

a

of

investments

£16

But

mil¬

it

was

income

on

^hieh

shipping.

im¬

and

we

surplus

Compared

ol

million

£ 30

from

more

with

a

in

earned at the rate of £ 66

receipts from travel
million

£ 19

million ahd

mil4J;
Oui£
from

were up

to

£28

a; Tate of
expeCiHhe

we

net

1947;

Hon in the first half of 1948.

half year to make an

there

as

are

,

even better
that is the time when

generally more foreign

;

visitors.
Finally, the net income
from all other financial and com¬

mercial ; activities
much"

above

has

our

This, latter item is

a

also risen

expectations,'
compound ol

many; varied

penditure
possible to
from

I

the

oil

am

items: of both ex-:
and income but it is.

that the income

say

operations of
industry has increased and'

sure

overseas

that will be

a

matter of

great satisfaction to all those who'
have contributed

in the

ence

by their abstin¬
petrol.

of

use

•;

:l:r"

To

Sum

>

Up

In the upshot, therefore, the ne£
on invisible account which

result

showed

a

deficit of

in 1947 and which
be

fell

considerable

of

stores
abroad were higher.
It is, how¬
ever, on the receipts side that our
most striking advances have been,

our

£232

settlements

sales

showing,

on

our

wartime

income

Summing up this part of the
story, we ^can say that on visible

haps

as much as
receipts from

spent about

forecast but

from

people

more

we

we

various

jective.

deficit

count

the

be

responsibility.

be called for in

Electronic

so

more

given to the to more than a quarter of our
supports
which total imports. In 1947 we had a
been
provided
since the deficit of £192 million—a
change
early 1930's by a government act¬ of over £424 million. 4
ing with vision and dispatch in
A good deal of this change was
response to a
sense

way,

balanced budget,
Both President Truman
a

the

Associa¬

and

nation^

future.

.

have

ex¬

<

a

aggressively sponsored. our economic
screening of loan every reason to hope for contin¬
applications brought visible re¬ ued prosperity in the years to

A

than

strength

our

safeguards

future
wise.

significant
;
stabilizing our economy.
For with our eyes ever toward
the voluntary

vey

'

A greater

we are

devices;
plastics, and other new inventions
attracting an increasing public
demand. We have only begun to
tap the billions of savings built
up during the war years. All of
these facts testify to the powerful
reserve
strength in our national

for credit control which

program

be held to
minimum. And consumer
should not be allowed to

are

pressure now.

the
American
people aave
rapidly r I want to deny specifically that
of the opinions of economists, aided by various
actions
and in recent years than during the any part or section of our people
bankers, and other business ob¬ timely warning signals from the comparable
period of World War are not working well—some in¬
servers showed a widely held be¬ Government.
I, the rise has not been financed dividuals— it may be — but the
sense

the

and

through

economy

buying should

cilities may well

now

type

should

Specu¬

heavy
unfilled demand for houses, for
automobiles,
farm
machinery,
freight cars> steel, electrical ca¬
pacity, new schools and highways.
Our population is growing, and a
still greater expansion in these fa-t

strongly deflationary

valuable

loans

of

to

experi¬

sound basis.

a

faces this nation if

banking fraternity has

contribution toward

stake

proper

credit

un¬

a

re¬

$38

real estate.

of

be

The

types

on

at

that

of

and even more prosperous

reas¬

a

This

inflationary

much

become over-extended.

un¬

credit expansion not only contrib¬

Government

is

is
are

mentioned.

record

at

All

lative
a

too

repetition

a

ence.

alert for

inflationary
have

I

have

be kept

Reassuring

picture
but there

the

to

And, the strong financial posi¬ that
in

We

risk

is the extent of real estate specu¬
lation and another is the rapid

securities have increased
$22 bil¬
lion since 1939.

tion

Picture

of

excess

an

The nation is faced with

present

suring one;
unhealthy symptoms

193.9, reaching a re¬
$62 billion. Corporate

holdings of cash

be

by

expenditures, ah even
responsibility
will
be

tion of which brought
heavy losses
to lenders as well as borrowers.

breakdown.

necessary

a

now

must

we

to

short-lived speculative boom after
the First World War, the liquida¬

econ¬

developing evidence of
balance that-might cause an

later.

is the fact that

individuals and corporations
built up assets of sufficient

lion

and

omy,

utes to

cant factor

both

unbalanced by

December.

$4.6

was

reduction
was

have

was

last

deposits

partly seasonal, but last

bor¬

with

demand

of

The boom which

money.

1946, the produc¬ being supported by a rising tide of
tion of both manufactured goods
speculation, such as characterized
and farm products was far above
the 1920 booms.
The speculative
any previous peacetime level. In¬ interest in
the commodity markets
dustrial production was 80% above
is proportionately normal. Specu¬
the 5-year prewar average, and
lation in the stock market has re¬
farm
production
exceeded
the
mained rational. Businessmen
prewar

end

widespread

financed

was

nation-wide

This fear

by a great rise in
business inventories,
which had
increased more than $6 billion in

fed

were

tition of the 1920 crash.
reinforced

unbal¬

an

speculation in commodities and in

ended in

was

on

The booms of the twenties, for ex¬

decline would shortly follow.
Business observers feared a repe¬
ness

built

foundation, generally char¬
acterized by excessive speculation.

badly in September, which rural

led many to believe that

it

justed

only be temporary,

can

anced

ample,

basically sound high-level

able

oyer

greater

those

on

be

placed on the men who determine
loan policies in the nation's
15,000
banks.
A
liberal
uncoordinated
credit policy contributed to the

our

any

lately

Discussion of the economic situ¬ A typical boom stage in the busi¬
as

a

The

July, the

of

longer

no

substantially to infla¬

control

ceipts

present situation
that have enabled us to maintain

these

currency outside of banks plus ad¬

ation

tion

,

features

will

contribute

adminis¬

ties. We must concentrate

program

sharp reduction in pre¬
long-term issues. Indi¬

the

Since the Treasury, in this fiscal
year,

in

omy today is much healthier and
stronger than it was in the twen¬

.

Let me point out some of the
factors which could be dangerous.

Looking Back at :1946

credit

trading,

or

actions, it is encouraging to note

Some

market

of

use

than the reduc¬

inflationary pressures,
been tightened by a

has

and by a

develop,

underlying forces and trends
the general economic picture.

February,

more

gradual increase in interest rates
short-term Treasury securities,

fraternity and of bank more and more of our people—as
supervision. For this reason, no it should—provided we do not al¬
be of greater sig¬

$30

by

on

banking

subject should

reduce

credit

tremes of weak and

nificance to bank supervisors than

since

As part of the

generation,

our

reduced

Treasury Anti-Inflation Program

not allowed

were

large extent,
Let me repeat this—
the ex¬ to develop.
strong bank¬ for I think it touches the heart of
ing have resulted from the fore¬ the whole situation. Our prosper¬
sight, or the lack of it, of the ity can be continued and spread to
within

stock

been

the

on

action

has contributed sub¬
toward
preserving
a
well-balanced economy.

Re¬

strictions

ing the period.

banking of an understand- ditions which could be prolonged
national and world eco¬ indefinitely, provided an unbal¬

of

nomic

This

stantially

con¬

tered
by
the
Federal
Reserve
Board, have done much to prevent
tion in the total debt.
There has excessive speculation in that field.
been an actual increase
during this The Federal Deposit Insurance
period of $3% billion in Federal legislation protects the savings of
debt' held by non-bank investors. depositors, and the stability of the
This increase reflects principally banking structure is thereby im¬
the increased amount of securities mensely improved^
When all of these factors are
held by Government trust funds
and the vigorous sales campaigns summarized, they indicate without
for savings bonds conducted dur¬ question that the national econ¬

in banking periods of the twenties. A highand connection with banking su- level
economy with widespread
pervision, I have acquired a very prosperity, such as we have today,
aoes not necessarily imply that the
strong conviction in which I be¬
It
lieve all of you will join.
This foundation must be unsound.
relates to the importance to suc- may well be based on sound concessful

full and accurate information

$3V2 billion

experience

my

and

investors

cerning the registered issues.

billion

the pres¬
and

Securities

enabled to obtain

are

system has

It is important however that we
system during the past
quarter-century, and we all know distinguish between a high-level
the extent to which those changes economy and the boom stage in
were
beneficially influenced by the so-called "business cycle." For
bank supervisors.
You are to be herein; as I see it, lies the essen¬

banking

done, and

in securities

the

carrying out the Treasury's

In

.

be¬

"v\

1

Commission,

debt management policy, the debt
held by the commercial banking

proved substantially as more and

vast

of

Exchange

Our High-Level Economy Can Be Maintained
supervisors

Thursday, September 23, 1948

reduced to

£192 million,

we

expected to

£49 million in the

first half of 1948—actually came
materially in maintaining pur¬ from £175
million net to
£50
chasing power should there ever
out at a surplus of £ 16 million;
period of great prosperity.
Present Situation
million, to smaller net shipping
\ develop a serious business setback.
or
an
improvement over 1947 at'
It was most
receipts and to heavier expend¬
The industrial production index
gratifying to be
the rate of £224 million a year.
Today, the position of agricul¬ iture over a large
able to announce at the end of the
is now about 190, as
range of com¬
compared
I believe this marks the beginnnig
ture is bolstered not
only by the mercial activities. ?
with 180 in the fall of 1946. Em¬ fiscal year just passed that we had
\.
of an
upward movement which
strong financial condition of farm¬
In the first half of 1948 we had
ployment has reached new high completed two years of budget
will be maintained so that in time
ers, but also by measures to in¬
*

records,

with

more

than -31

mil¬

surpluses.

In the 1948 fiscal year
achieved by far the largest

lion persons now in civilian
jobs.
This does not include the Armed

Forces. Agricultural production is
V*

surplus

000,000.

close to

record

farm

the wartime

income

months

of

than in the

in

1948
same

Our material

the
was

peak.

Cash

first

eight

5% .higher

period last

year.

we

in

history—$8,419,-

But, unfortunately, the
of these two years

of

sur¬

pluses will not be repeated during
the present fiscal year.
And that
is due to the ill-timed and ill-con¬
ceived tax bill
.passed in the last

well-being has im- Congress. ■'




our

V

■■

.

sure

proper returns to the farmers
for their farm products. The Ad¬

ministration's

program

for

pro¬

expected

some

provement in this part of
counts
and

tecting the rights of labor, which
iture,

through

other

smaller

government

our ac¬

stabilize

structure.,

the

Under

entire
the

wage

however,

protective pectations.

has

exceeded

On

invisible

expend¬

on

make

bution

particularly on relief and
has broadened the use of collec¬
on
Germany and through some
tive bargaining in wage negotia¬
recovery
in shipping and other
tions, has served to strengthen receipts. Our actual performance,
and

our

again

military

our

ex¬

government

ac¬

our

to

a

income

will

significant

once

contri¬

making up the balance
trading account.

overseas

So, to sum up the situation,
provisional figures show that com¬
pared with the economic survey
forecast for the first half of
we

had

:

a

visible deficit

lion larger but

a

1948,,

£69 mil¬

net invisible in-

,

.Volume

Number 4736

168

£65

THE

million

against

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1227)

greater giving
only £4 million
than the forecast. These fig¬
ures
may
still be subject to -e
good deal of correction but they
are sufficiently near the mark to

very

1947

would have been incurred anyway
a little later on.
We also received

but

indicate

under

mained.

grateful to all those in
the Commonwealth and
Empire
who have rallied in voluntary co¬
operation to meet and overcome

come
a

;

total

nil.-

deficit

"

more

ance

that

deficit

better
the

was

the

due to increased

a

rather

visible trade
itself

was

of

practically

because

we

had

of

our

contracts

the first half

year

expected, but this means
smaller expenditure later on.

prices of imports.

Hemisphere Deficit

American

Aid

Essential

to

Maintain Production

This general outline of the bal*
ance of payments picture is only
a

As

Our prob¬
of achievbalance in the

tors,

payments.

than

part of the picture.

a

we spent on imports
Western Hemisphere

million which is £ 27 million

of

total

our

overseas

we had
visible account of

our

forecast—a small

a

deficit

on

surplus

a

invisible

a
no

sur¬

less

account

nevertheless

re¬

lar
in

resources.

six

are

months

has

been

The
since

achievement
the

immense

end

and

varied

of from
we

most

greatly
had

transactions

which

range

genuine long-term invest¬

a

ment

in

sterling

the

development

area

movement

of
the

to

resources

of

so-called
refugee
money."
We pro¬
visionally estimate it at 145 mil¬
lion pounds.
funds

"hot

or

than
now

.

changed

imports;
converted

we
a

countries, result¬
have, however, ing in payments in gold and dol¬
large deficit on lars to countries outside the dollar

from invisible account into
£294 plus. That is, we are

ing

reasonable

by

>; r

the

a

on

By 1947 our imports had
increased while exports this serious crisis in the affairs of
Genuine investment in the de¬
very little, so that the sterling area.a we had just a small trading sur¬
We have
encountered certain velopment of industry and of nat¬
plus.
P.X'' difficulties in
ural
resources
in the Common¬
balancing our trade
X This year both have increased and
payments with some Euro¬ wealth is an indispensable part of
T
again but exports a little faster pean and other
our program of recovery and we

result of these special fac¬

lem is not merely one
.

hardly begun,

plus

than

we

.

:

had

larger deliveries of food¬
in

stuffs

largely

number

'

Western

a

favorable opportunity of an¬ than 137 pounds sterling million.
ticipating expenditure which This was, it is true, largely offset

perform¬

invisibles offset
on

which

balance
.

the

on

extra

the

forecast

a

This

31

a

small

sur¬

amounting
to
49
million
now supply¬
pounds sterling in the first half
ing more in goods and services of 1948. This was at a very much
(particularly in shipping and in lower rate than our similar losses

more

excess

area

must not underestimate the extent

to which such investment has been
and

is taking place.

Drawings
I

Sterling

on

Balances

finally to the movement
We also have to solve the ever in the circumstances especially in oil) than we are receiving, in the
in
sterling balances which has,
in 1947, but it exceeded the fore¬
more stubborn problem of achievview of the rise in prices. This aggregate. The excess in the first
on
occasion, excited a good deal
cast in the economic survey by a
ing a balance with the Western was partly offset by an increase half of 1948 was at the rate of
of controversy.
Taking first nonlarge margin. This is one of the
Hemisphere, with which we had of £ 12 million in our export pro¬ 80 pounds sterling million a year. most
difficult aspects of our prob¬ sterling area countries, compared
in 1946 a deficit of £360 million, ceeds, though this is a good record The House will realize that this
with
an
increase
of
2
million
lem and it is a constant anxiety.
almost the same as our total defi- of progress for six months in re¬ has been a contribution by us to
To a very considerable extent the pounds in our sterling liabilities
; cit.
By 1947 that had increased ducing the, sizq of our Western the cause of European recovery.
in 1947 there was a decrease of no
European
payments
agreement
(to £670 million, an increase in Hemisphere deficit.
That deficit It must be read in conjunction
should help to alleviate these dif¬ less than 142 million pounds in
which visible arid invisible trade was still
Two coun¬
very uncomfortably large with the large surpluses which ficulties.
The total drain on our the first half of 1948.
shared almost equally. Not only at a rate of ; jtist under £ 400 mil¬ other
members of the sterling
gold and dollar resources is thus tries, Argentina, which has been
did the increase in the cost of lion per annum and it still re¬ area have been showing in their
shown to be 25 pounds sterling supplying us with produce in re¬
imports far outstrip thd r'se in mains the most* difficult problem trade with certain OEEC coun¬ million in the first half of this turn for our earlier loan to her
receipts from our exports but our that we have to deal with. It is tries, all of which constitutes a
under the Andes Agreement, and
year—a figure which has already
expenditure overseas on feeding this lack of balance above all that very large volume of aid to the
been given in the quarterly an¬ France, which has been experi¬
Germany and' on many commer¬ must be removed if ever we are recipients by the sterling area as
nouncements
which
have
been encing a considerable deficit in
cial purposes increased heavily to stand on our own feet without a whole.
made
to
the House.
In other her balance of payments with the
just at a time when much adven¬ external aid.
words, the drain was at one-half sterling area as a whole, are re¬
Eastern Europe's High Prices
titious income which we had re¬
For the time being the aid we
sponsible for the larger part of
the 1947 rate.
are
ceived in 194-3 came to an end.
The last group, in the table in¬
getting under the European
this decrease. pp; ;pxsy.iPXpP •rPP.:
This is still a very large figure
the
Not only has that process been Recovery Program is helping to cludes
European
countries
The rest of the sterling area
indeed—much in excess of the aid
are
not
members of the
shows quite a different develop¬
reversed in the first half of 1948, bridge the all-too-wide gap. With¬ which
we are receiving or are likely to
ment.
In 1947, our liabilities fell
but we have got back to a rate of out that aid we should have had OEEC, those of Eastern Europe,
receive under the European Re¬
deficit not very different from to cut off vital supplies of food most of the Middle East, includ¬
by 147 million pounds, a move¬
covery Program.
All our efforts ment
and raw materials with the grav¬ ing Egypt and
the Sudan, and
that of 1946. And this, despite a
which reflected the great
must therefore be bent to reduc¬
unbalance in the position of the
rise in import prices which has est consequences not only to our most of the Far Eastern countries.
In the second
standard of living but to our/ca¬ It is here that we get the greatest ing it still further.
rest of the sterling area, particu¬
affected our Western Hemisphere
quarter of this year it was, how¬
imports as much as those from pacity to produce. We can cer¬ impact of the rise in prices of our
larly with the dollar area.
ever, substantially lower than in
•elsewhere. We have reduced our tainly draw encouragement from imports and it is here also that
During the first half of 1948
the first and of course it was only
the progress that we have made we have had difficulty in expand¬
expenditure on Western Hemir
balances
have
increased
by as
during the second quarter that we
and confidence that we are on ing our export trade.
sphere imports from £716 million
much as 116 million pounds.
Two
started to receive ERP aid.
Expenditure
on
imports
has
in 1947 to an annual rate of £588 the right road but we still have
factors must be
held primarily
million in the first six months—a a long and difficult journey to gone up to nearly three times the
Dollar Earnings Must Be
responsible for this increase, first
1947 figure.
travel.
Much of this is due
reduction in value
Increased
the inflow of capital I have al¬
jof nearly 20%
to additional supplies of food and
per annum
and in volume of
It is our unalterable policy, that ready mentioned,
secondly, the
Surplus Earned in Sterling Area fefedingstuffs from Eastern "Europe
nearly 25%. At the same time our
during the period of the ERP our emergence of a substantial surplus
I now turn to our experience and elsewhere, but much 'also is
exports have gone up from £164
reserves
of
gold
and
dollars by the rest of the sterling area in
million in 1947 to the annual rate with other parts of the world. due to the abnormal increase in should not fall
x:
It its trade with the OEEC.
any further.
These are divided into three main the price of certain raw materials,
of £234 million this half year,
is still true, therefore, that even
areas: the sterling area, the Eu¬ notably cotton.
In the event, our
Britain's "Extraordinary Outside
an increase in value of over 40%.
the maintenance of imports from
Assistance"
These
are
remarkable achieve¬ ropean countries which are joined deficit has risen from 15 million the dollar area at their present
together in the Organization for pounds sterling in 1947 to a rate
ments in so short a time.
I must make some reference to
level depends on the continuing
European Economic Cooperation, of 110 million pounds sterling in
The reduction in imports has
in our earnings the recent events at OEEC in
the first half of 1948. There are improvements
and the rest.
Paris.
The magnitude of the task
entailed some sacrifice to th*e peo¬
from the dollar area.
With the sterling area we have many difficulties to be overcome
which lies before us is emphasized
ple of this country who have foreThe figures given in The White
increased both our imports and in achieving a reasonable balance
rby the results of their work. Our
gone desirable goods, particularly
Paper show only the beginnings
our exports roughly at the same with the countries in this group,
share of the direct dollar aid for
those foodstuffs from the Western
but the most hopeful development of the assistance we are receiving
pace. On the import side the In¬
the year mid-1948-1949, is 1,263
Hemisphere which provide variety
under the ERP since up to the
crease fefled^ the success of our would be to bring about a sub¬
million dollars. That is a measure
for the- diet:; but they have the
efforts to switch our purchases stantial increase in our exports end of what was the first quarter of
the
deficit
which ;lwe
satisfaction of knowing that by
must
and in those of other sterling area of ERP (June 30, 1948), all the
from the Western Hemisphere as
make good before we can, in the
their action they have contributed
well as the great efforts which countries and every effort is be¬ preliminary arrangements had not
words of the Economic Co-opera¬
towards the solution of our dollar
been completed and we had in
other
Commonwealth
countries ing made in that direction.
tion Act, be free of "extraordinary
problem and have strengthened
fact only been reimbursed to the
have made to supply us. We have
outside assistance."
the position
of sterling in the
Gold and Dollar Drain Exceeds
extent of 22 million pounds ster¬
likewise done our best to supply
world.
The increase in exports
It is a very large sum of money
ERP Aid
ling for a volume of actual ex¬
them with what they required,
has meant breaking entirely new
Honorable
Members will
also penditure which was very much and let us remember that it is
for their markets are by tradition
ground in markets where compeonly made available, in addition
be interested in the drain on our larger.
among our most important.
tition is very severe.
to the very large dollar aid to all
There will, of course, always
Between 1947 and the first half gold and dollar resources since
the other participating countries,
Of 1948 the value of our exports 1947 and in the statement of the be a considerable lag in these
Increased Invisible Income
by the wise generosity and sacrir
has risen by nearly a quarter. The financial exchanges between our¬ payments, but we hope that as
fice
of
the
American
people.
As a consequence of these deselves and the rest of the world in the
technique of dealing with
parallel movement of imports and
y
velopments
the
visible deficit
terms of movement in capital as¬ them becomes more familiar to all Even this large amount is only
exports has meant no substantial
with the Western Hemisphere has
sets and the change in sterling concerned and more settled, the what the OEEC have decided is
change in our visible balance with
; been reduced from
£552 million
to .cover
our
most
'
amounts outstanding, represent¬ necessary
the rest of the sterling area but liabilities.
^
,
In 1947 to an annual rate of £354
pressing needs of food, raw mate¬
In 1947 the deficit of the United ing expenditure which has not yet
our position on invisible account
million in the first six months of
rials, equipment and petroleum
has improved. This is particularly Kingdom
with the dollar area been reimbursed, will gradually
products from the dollar area.
the year—a reduction of one third.
But we are primarily
due to the falling off of Overseas amounted to 657 pounds sterling diminish.
There is no margin for improve¬
Simultaneously, we have cre¬ government expenditure. The re¬ million. This had been reduced to concerned with the result of our
ments of consumption which are
ated and we have greatly im- sult therefore is that we come out 186 pounds sterling million in the own efforts and it is encouraging
proved our position on invisible with a surplus on current account first half of 1948. The rest of the to know that, despite the continu¬ clearly needed and which would
account.
As a result of sympa¬ at the rate of 140 pounds sterling sterling area in 1947 showed a ing rise in the price of many of help production, nor is there scope
to accelerate our investment pro-*
thetic cooperation by the United million a year in the first half of deficit of 204 pounds sterling mil¬ oiir imports and the worsening of
These extras must come
lion after taking into account pur¬ the terms of trade against us, we gram.
States, our dollar expenditure on 1948.
.come

,

.

i

„

.

.

"

'

~

.

,

.

,

.

■

■

.

,

-

.

'

.

.

•

•

.

.

I

.

*

is

This

the

than

actually a little larger
economic survey fore¬

cast which

was

the

question of price increases which
I have already noticed there are
C With the European countries the tribution which the rest of the haven taken place in 1948.
one or two special factors which
As I
have affected the Western Hemi¬ pattern of our trade presents some sterling area as a whole has made have
explained
before, capital
in helping to relieve the problem movements to the sterling area
sphere position. For example^ we striking changes. In 1946. when
pf
spent £11 million-on tobacco as European recovery from the war of the drain on our gold and dol- consist of a large number
»•!

s

•

i

i

-i i

>m

?

,K

I

)




;■ i

i

i

out of

our

own

added effort.

OEEC's Remarkable Feat

.

,

£ 183 million for

the half year—-but apart from

have, with the help of ERP, beeh
able substantially to reach a point
where there should be little or no

My Right Hon.
Friend the
net drawing upon our reserves.
It
Foreign
Secretary
pointed out
is not possible at any given mo-4
yesterday by what a remarkable
ment to say exactly how far what
feat the OEEC—a young and com¬
we are -owed under ERP will bal¬
paratively untried organizationance the amount which, since its
was
able to make proposals for
starting date, we have been ob¬
the division of aid. I fully endorse
liged to draw upon our reserves
all that he said on this subject
while
awaiting
payment,
but,
matter.
I
am
glad
that
our
very roughly, the indications are
anxieties as to the possibility of
that the deficit which the rest of that for the time being these two
sources of both the colonies and
this job
being done by OEEC
the sterling area
has with us figures are about balancing each
the Dominions. It therefore con¬
have
proved groundless; the
i
tains much that will be of help may at least in part be offset by other.
agreement
reached is a great
their net gold and dollar earn¬
Export of Capital
in the future.
tribute to the vitality of the or¬
ings.
That covers the dollar side of
ganization and to the spirit of co¬
Sterling Area Aids QEEC
Meanwhile, however, we most the picture. We now turn to the
operation among the participating
Countries
fully acknowledge the great con¬ other capital transactions which countries.

half of 1948.

.

,

-

maintaining our zone of Germany
In the
This is a useful surplus, indeed chases by us of new gold.
first half of this year the com¬
has been largely reduced and we it
repeats the normal pattern of
have earned a good deal more in
our trade before the war.
It has parable rate was only 38 pounds
dollars
from shipping,
tourists, assisted to reduce the drain on our sterling million. So we still have
some
oil and a number of other sources.
way to go before we get
gold and dollar resources by mak¬
This was forecast in the economic
back to the 1946 position .when
ing possible the switching of pur¬
the
rest, of
the
survey
and the forecasts have chases
sterling
area
by fellow members of the
largely been fulfilled. The result sterling area from the Western showed a surplus of 45 pounds
is that our Western Hemisphere
Hemisphere and it reflects, and is sterling million on gold and dol¬
deficit of £670 millions in 1947
lar account. We greatly hope that
in a sense a measure of, the con¬
has been reduced to an annual
tinued investment by this country something like the 1946 pattern
rate of £390 million in the first
and
in developing the productive re¬ may be soon reestablished

.

Kv'j,;''VV •*!. J ^ .i *

tent:
■

.

'.i-*.?. V--'

A 5, • •'», • # « >/;

-•

.if U'-'i ;f>r

S

•

v>%

XrXvi -:i

X

;

The
course,

division

of

aid

(Continued ©n page

■

i

c>

has,

finally to be confirmed

32^

of
by

_ #

32

THE

(1228)

COMMERCIAL

(Continued from page 31)
well.

FINANCIAL

CHRONICLE

(Continued from page 15)

We have made

—to you, and

in cities and

position —the notorious "do nothing" Re¬
phasize at the outset that our ac¬ on this point quite clear in OEEC publican 80th Congress.
ceptance of the proposed division and we cannot depart from it.
"A Pitchfork in Farmer's Back"
of aid is subject to satisfactory
The
other
vital
factor
asso¬
em¬

our

arrangements being made for the

is

C

ciated with the payments scheme

European

scheme

payments

and

for the associated European trade
rules.
Provisional agreement has
also

the

establishment

factory
rules,

as

set
to

of

.

Let

Dishonesty
When

of European trade
which we took the
.

they

trying to stir up the city
against the farmer by
downright dishonesty.
<

been

to be solved is shown by the

has

prepared in Paris that, if
trade is to be kept moving within

been

now

rules which

reached

will,

hope,

we

these

on

tration

ensure

had

face

to

this

are

,

The truth of the matter is that
by encouraging the record pro¬
duction

to

in the past

last

few

who

the

discredit

the

'

'

'

dollars

or

Our

more.

;,

•

extreme sacrifices in our standard

to the farmer.

They

full

killed

wheat

have

contribution, therefore-, meas¬ of living which would otherwise
The Price Support Program
immediately un¬ have been inevitable. A year ago
requited exports to participating we were in the midst of an acute
The Democratic party originated
counties, will be to the value of and dangerous economic crisis. the farm support program. We
500

seme

million

dollars

for

the

We had to take
and

firm

number of quick
which
were

a

built

decisions

not

wholly popular, ,t>ut the House
participat¬
from
this
White
ing countries to fip^acp their will observe
Paper and my comrnentary upon
requirements from the sterling
it that we have made some
area as a whole
and represents a
good
This will /enable all

of

the

hard

price

plan

support

experience.

We

out

built

it

for the benefit of the entire nation

not

only

consumer as

the farmer,
well.

the

but

But

J ets,

Commonwealth.

In

this

gesture

Australia

generous

of

of

gift

a

Us

10

rounds sterling to help

charging
most

the
v;,

this

the
in

million

in dis¬

us

liability.

This

to

effort.

M

There

is, as I have said, rne
important point still outstanding*
the

concerns

sterling

grants

countries

to

use

by

of

ments it

might well involve

part

the

of

arrange¬
i»s

in

of gold to those Euro¬
countries whose currency is
a

v**ple

any

is

to

to

be

lave

countries

and

a

are

to

of
we

'

in

making;
lj
the

cover

participating

cannot

indi-

their p«~ds oe other

European.

currencies!




im Drove

somewhat

That

is

12

based

but upon
to deal

view

months

not

cheerful

' more

a

heartening

than
mere

guesswork,

proof of our capacitv

a

successfully with

lems.

V.

1

-

.
.

4

our

prob¬

*

to

The

Fin^ncim,

MILWAUKEE, WIS.

National

Bank

Bank

of

asi

meats, dairy prod¬

The government has j ust begun
support the price of wheat,

$3

has dropped from
bushel to about $2.

a

around

you

terrible

nature

out. You all know
these

disasters

of

be.

can

of

faced with the
kind of dis¬

are

you

another

aster—a man-made disaster bear¬

ing

the

For

16

Republican

years

trademark.

the Democrats have

been working
perity for the

on

of pros¬
have

crop

a

farmer.

We

been

plowing, seeding and cul¬
tivating the soil of the American
economy in order to get the crop
of prosperity that you have been

enjoying for the last several
The question is:
to

let

another

wipe out

years.

Are you going

Republican

blight

prosperity?

your

I have reminded
you
of the
evils wrought by Republican Ad¬
ministrations in recent times. But
my

purpose

has not been merely

to

bring up the past. I am trying
to point the way to a healthy fu~
ture.
The
Democratic
party
is
looking forward, not back. We
planning to aid the farmers
America

meet

are

of

their

pressing
problems and avoid catastrophe.

—

When

John E.

Milwaukee

Now

and

wheat

dollar

a

prices

bushel.

have

But

of bread has not come
cent.

fallen

the price
down

one

'

'

,

Two With Merrill Lvnch
t0

Financial

WTLSON,

N.

C.

—

McElroy, Jr. and Jack
°re

with

termer

Street.

&

Merrill

Beane,
,

'

Richard
P.

Lynch,

113

There

C.

little

Fairley

and

Pierce,

can

East

have

you

the

policy

reactionary big business.

CHRONICLE)

Nash

as

you

charge
bear

can

the

to

the

consumer

That is

a

Pay

a

threat

keep

that

faced

are

markets

with

will

fail

with their production.
The reactionary Republican an¬
swer
is
to
let prices
crash to
the bottom. But the
Democratic
up

party has a constructive way of
preventing such a collapse.
We

reaching out to develop

are

world

markets

production
needs.

that

above

will

absorb

America's

own

Scientific research is dis¬
more and new uses for

farm products. We know that the

world

absorb

can

the

farmers^

export

at fair prices.

years

They ruled out the grain bins
help make the ever-normal

that

And

now

they

are

attacking ths

farm support program.
The
Wall
Street ~ Republicans
are

not

you

like it

worrying about whether
or not.
Their political

wiseacres have assured them that

the

farmer

fallen

has

back

into

his old habit of voting Republican,
whatever happens.
The Republi¬
cans

are

The Democratic party is fights
the farmer's battle. We be¬

ing

lieve'that

effppfjyp." *

They have invited a depression
by refusing to curb inflation.

saying:

"Don't

worry

sh are
in

farmers

are

equally with

our

national

lieve that

entitled to¬

other

income.

peopleWe

be¬

and pro¬
ductive agriculture is esential to
our national welfare.
But the
not stand

a

prosperous

Democratic party does;
in defense of the farmer

alone. It stands for the people of
the
United
States—the
farmer,

the

industrial

workers

and

the

white-collar worker.
Our

intentions

are

made

clear

by our deeds. In this twentieth;
the bag."
"°ntury, every great step forward
has come during Democratic Ad¬
So long as you had a good year
ministrations of the national gov¬
once
in a while, you would be
ernment. Every movement back¬
satisfied.
So they thought.
So
ward has come under Republicanthey think today.
auspices, and it is the people who
have paid dearly for these reac¬
"Slick Propaganda of Wall Street"
about

the

farmers'

vote.

It's

in

mak¬ tionary/moves.
Too much is now at stake —
From what
I have seen, the farmers of this here and throughout the world—•
country have their eyes open. to take the wrong path now.
There is one way to stop the
You're not going to be fooled
ayain by the slick propaganda of forces of reaction.
You

ing

.

I

and

big

a

know they're

mistake.

Wall Street.

Get every vote out on Election

only two years, with
the
Congress under their
trol, the Republicans were
to weaken your

only

Day,

and

con¬

can't

afford to waste

able

this year.

position gravely.

farmer,
all

he

reaction has

in the last two years

make

it

count.You
your

votes

I'm not asking you just to vote
me. Vote for yourselves! Vote

for

for

your

farms!

Vote

for

the

Presidency for standard of living that you have
What they have taken won under a Democratic Admin¬
away from you thus far would be istration! Get out there on Elec¬
only an appetizer for the economic
tion Day, and vote for your future!
tapeworm of Big Business.

Congress and

the

four years.

of
as

fair sample of

what t^e Republican
meant to you

large

Today farmers
the
to

market output, - if the
right conditions arecreated, and we are working to
They started a move to put a insure continued prosperity for
death-tax on farm cooperatives.
American agriculture.
growers

for five

Well, imagine what would hap¬
pen if they were to get both the

to 14 cents.

a

would
wheat

In

It went up from 10 cents a loaf to
11 cents—to 12 cents—to 13 cents

Ex-

which

American

a

Collapse

"

wheat

prices were going
the price of bread rose steadily.

up

He
Heronymus

Loewi & Co.

/•ounM*!

Democrats Can Prevent

,

paying for his bread.

Chrontci.e)

previously with
Co., the Marine National

"harwe

as

poultry.

which

Building.

was

&

to

is

Miles has become associated with
Lon L. Grier & Co., First Wisconson

items such
ucts and

This support price f has
nothing
to do with the price the consumer

With Lon L. Grier Co.
(Special

The government is not now sup¬
porting the price on major food

because it is

ago

upon

and

,

could

we

should realize that these

supports apply only when farm
prices have dropped below parity.

inde¬

and

economy

consumer

re¬

standard of living.,1, ;

our

The purpose of price iupport is
to prevent farm prices from fall¬
ing to ruinously low levels. Every

Plan

without

contr'b"+;op

mentioned

r*pover

on

settlements
We

larpp

needs

&9rce

to

the

nayments
Eurooean

enable

dollars.

verv

Indeed,

carried

recourse
or

cannot accent

the

of

purpose

scheme
trade

we clearly
possibility.

Marshall

by our efforts

our

-payments

such

our

on

the

of

years

pendence and

particlpatmg

as

press

we are

establish

payments to
If this were to be

allowed

frprd and

four

make

i^eir creditors.

pean

must

are over we can

take

Two Points Outstanding

ths

prices.

We

dent that

is

contribution

valuable

common

/.

connec¬

refer to

making

a

total

should like to

I

We have still

forward confi¬
the right road
mar- and
encouraged
by
the
clear
to the countries of the knowledge that by the time the

and

tion

progress as a result.

must do this while still

we

continuing our expansion of
exports, especially to dollar

how

international covering

the

agreement,
assured

granary

Republican spokesmen are now
complaining that my administra¬
a
long distance to travel and tion is
trying to keep farm prices
there are many difficulties in our
UK will be
supplying machinery
up.
They have given themselves
and vehicles to
way.
The hardest and most stub¬
Europe at a rate
away.
They have given you a
mot far short of that at which born parts of our problem remain
plain hint of what they have in
But we recognize
Europe will be receiving them to be solved.
store for you if they come into
from the USA and large amounts and pay tribute to the great and
power.
They are obviously ready
f>? raw materials will come from successful efforts
that have al¬
to let the bottom drop out of farm
the rest of the
ready been made by our people.
sterling a tea.
major contribution by the sterling
area to European
recovery.
The

wipe

can

_

ured in terms of

year 1948-49.

work a
year,
plowing and
cultivating, and then at the last
minute, a sudden drought or flood

*

-

200 million

f

how

you

long it takes to get a good crop,
big the dangers are. You

Now

the government set up
contributions made by
system don't want farmers to be
grain bins all over the wheat and
>
Europe this year at the level re¬ creditor countries are not wasted,
prosperous.
They believe in low
corn bells to provide storage.
quired to promote th£ maximum but are used to promote lasting
prices for farm ers,. cheap wages
Now the farmers need such bins
degree of recovery, .upwards of recovery and equilibrium in the
for labor and high: profits for big
i 800 million dollars' worth of goods debtor
again.
But when the Republican
countries.
Full details of
corporations.
would haye to be provided by the these will be made available as Congress rewrote the charter of
These are the facts the people
the Commodity Credit Corpora¬
supplying countries in excess of soon as the final agreement is
need to know.
I am going to keep
tion this year there were certain
what the recipient countries could reached.
Our acceptance of the
hammering away at the facts un¬
pay for out of current earnings. payments scheme and of the UK lobbyists in Washington represent¬
til the whole country rings with
It is to be remembered in this contribution to this is of course ing the speculative grain trade.
the truth about these gluttons ■■ o|
jnespect that for this purpose the subject to the authority of Par¬
These big-business lobbyists and
privilege.
assoc'ated monetary areas of the liament
being obtained for which speculators persuaded the Con¬
The record of the Republican
European powers are dealt with legislation will be necessary and gress not
tq provide storage bins Eightieth
Congress is one long
v.as part of the European problem. will be introduced
in the next ses¬ for farmers.. They tied the hands
attack
on
the
welfare
of
the
sion.
Meantime, if it proves pos¬ of the Administration.
They are farmer.
V, K. Is "by Far the Largest
sible to inaugurate the scheme on preventing us from setting
up the
Contributor"
Under the Democratic Admin¬
Oct. 1, as is the present hope, I storage bins that you will need in
It is a great European achieve¬
istrations since 1933, the govern¬
propose to arrange that any init¬ order to get the support price for
ment that this problem has come
ment
sponsored
the great
soil
ial
advances
that
may
be
re¬ your grain.
so near solution and we can claim
conservation program that helped
quired of us are duly made on
When farmers have to sell their
credit for the fact that in spite of
to
lay the foundations for the
that date in anticipation of Par¬
wheat below the support price be¬
our difficulties and
the sacrifices
present prosperity of the Ameri¬
liamentary approval.
cause they have no place to store
: that our
can farmer.
But the Republican
"3'iyf 1v
/
people have already had
' *•
it they can thank this same Re¬ 80th
to make the UK is still
Congress, under the false
by far the Confident We Are on Right Road
publican Congress—the Congress mask of
largest contributor under the
economy, cut and threat¬
To sum up—our policy remains
that gave the speculative grain ened to kill
the soil conservation
scheme.
'
as it has been—so to
organize our trade a rake-off at
your expense. program. You people here know
V, We shall be contributing in two affairs that, within the shortest
But
the Republican reaction¬ the importance of soil conserva¬
ways.
First, we shall be making possible space of time, we shall
aries are not satisfied with that. tion to American agriculture. You
a
net contribution in
sterling to have reached a situation in which
Now they are attacking the whole know what the reactionary attack
the value of 282 million dollars in we cap be independent of
any
structure
of
price supports j for on soil conservation will cost the
the
form
of
Un¬
grants
under
the special external assistance.
farmer if we let the Republicans
-scheme to other European coun¬ der
the
ERP, we are " given a farm products.
have their own way.
tries. Secondly, we have under¬ breathing space during which the
This
attack comes at a time
At every point the Republican
taken to allow European countries necessary
reorganization in our when many farm prices are drop¬
to rim down their
sterling bal¬ pattern of production and trade ping and the price support pro¬ 80th Congress did what the specu¬
ances to an extent
equivalent to can be achieved without those gram is of the greatest importance lative grain lobby wanted it to do.
that

tell

to

and
/

can

danger

wilfully trying
price
support

living

over.

and how

the

are

of

cost

need

don't

actually
prices down.

years

has

program

consumer

Those

problem

the

of

support

kept

When the Democratic Adminis¬

esti¬

mates

claim

consumer

pean

the

something left

I

the

are to
blame for the high price of bread

the farmer's back.

make

meet

have

/

Republicans
that wheat price supports

satis¬ change. This Republican Congress
has already stuck a pitchfork in

a

production and help the
enough on his crop

courage

farmer

Accuses Republicans of Downright

look at the results of that

us

to every consumer,
farms alike. :

on

to

reached on the Euro¬ initiative
in
Paris.
We
are
a
They have already done their
payments scheme.
Certain major creditor in Europe and we best to keep price supports from
points still remain to be settled, must, therefore, ask that effective working. Many growers have sold
including one important issue of rules should be laid down which wheat this summer at less than
principle to which I will refer in w.ll make effective our contribu¬ the support price because they
a moment.
tion to the
European payments could not find proper storage. \
The magnitude of the problem scheme.
Substantial
agreement

•

Thursday, September 23, 1948

Truman Attacks Republicans as Gluttons oi Privilege

Britain Hits Target
the ECA and I would like to

&

Your
a

best protection

Democratic

President
with

the

tration

that

conservation,

storage

will v

farmer

that

is to elect

Congress

will

—

an

a

soil

adequate

for^ ferain,''

Again Scores "Wall Street"
in Denver Address

fair

adminis¬

reinforce

provide

facilities

and

play

en¬

Following

up

the foregoing ad¬

dress, President Truman in Den¬
ver

on

tack ori

Sent. 20

reviewed

his

at¬

<?W&11 Street!" afcd accused

Volume 168

Number 4736

the Republicans

of trying to sab¬

THE

otage the West.
The text of part

of this addresi

follows:

:*.•

'

Republicans, I am talking
about the party that gets most of
•its -campaign funds
from Wall
Street.
I am talking about the
party \ that

gave

the 1 phony

us

1920s and the Hoover

boom of the

(Continued from

/

about

&

FINANCIAL

CHRONICLE

Industry

Cash

5)

page

Sheet steel

inventories

are

months ago and the threat of

better today than they were

no

channeling

six

steel for essential,

more

voluntary allocation purposes, is more than a possibility.
stark fact that keeps the
regular, normal steel user in a
state of anxiety.
: *
;
;■
-v.

or

that gave

followed.
I am
the party
the Republican 80th

that

a

us

Congress.;.
The Republican party today is
controlled by silent and cunning
men
who have a dangerous lust
for

are

men

These

privilege.

and

power

for

out

reaching

now

control of the country

and its re¬

It is

votes which will de¬
or
not they have

your

whether

That is why I have
here today. I want you to

their

way.

come

know the facts.
I

in

he. has to get them somewhere else.
fancy price if he wants plates badly.

in

backing the Republican party
its effort to take over your

*

conservation

*

*

.

be

to

of

vided.

Early in this century a unique
Republican
President, Theodore
Roosevelt, fought for conserva¬

tion, only to be repudiated by his
party.
.%)AH:" through
the rRepublican
own

1921

to

1933

big business pressure groups pre¬
vented
adequate
conservation
measures
from
being put into
effect.
They wanted quick prof¬

off

And

so

Westeiri

logged off and left
Range lands were grazed
ruined.

and

land

Farm

point where its
fertility was gone. Precious water
ran
unused
past
barren
land.
There * was no soil-conservation
program,

range-conservation

no

program.
The
nation

,

.

lost

tremendous
quantities of its most valuable re¬
,

bow

to

.

West

Wall

continued

Street

The

sources.

raw

—

buying back finished
high prices. /
Then in

1933

came

to

and

goods

at

the Demo¬

cratic Administration of Franklin

Under

conservation

reality.
any

was

his

leadership,
made aliving

than

know, better

You

:,:;'y./:yyy\yyyy^;'-.;;'y. '■*yy^yy:/

getting to be

cost

the

of

;a;

big item in

conversion

steel for

more

"The

more

is

than

Iron

quite

a

is

route

Age" concludes,
difference.

purposes

prevailing high level of last week,
rate

a

oil

company

high, but it i

before.

ever

with gray

It is

The

market displayed a heavy undertone.
Prices sagged
during most of the period but made partial recoveries at the ciose
Coffee prices remained steady.
Demand for actuals in the spo*.
;■

coffee market broadened, aided by buying for the account of West
Coast interests where deliveries have been delayed by the long¬
shoremen's strike.

Business
tured
cash

:

of the output reported for the corresponding

period two years ago.
CAR LOADINGS FOR WEEK OF# DUE TO LABOR DAY HOLIDAY

Loadings of
included

Which

Association

This

was

a

decrease of

it

represents

decrease of

a

118,469 cars,

and 1946 periods did not include

a

13.1%.

or

106,579
14,5%

or

the

under

week

The

"

:

showed

prices

and offerings in spot mar¬

more numerous

steady but

a

gradual

during the

uptrend

in

stocks.
Reported sales in the ten spot markets
holiday week to 107,500 bales, from 126,000 bales

loan
the

entries

137,900 bales in the same week a year ago.
to increase and total entries into the 1948

were

continued

placed by the CCC at 42,802 bales through Sept. 2, witfe
repossessions reported.

Trading in the Boston wool market during the past holiday
period remained very quiet.
The opening of the Australian woof
sales

5%

was

marked

those of

over

a

in

1947

holiday.

by

good

,

,

demand with prices averaging

English and European buyers

ago.

year

r

•

,

,

*

'

RETAIL AND WHOLESALE TRADE HOLDS ABOVE 1947 WEEK
AND

YEAR

y

:'vVV•' v'

•

.•>.. ■' ■ ■;;

v

With the continuation of seasonable weather in most localities,
the volume of retail trade

rose slightly during the week with dollar
moderately above the level of the corresponding week a
year ago, Dun & Bradstreet, Inc., states in its current review of
trade.
Consumer response to promotional sales of Fall merchandise
continued to be favorable.
The demand for moderate-priced items

volume

of good

quality also remained large,

"

.

>

Consumer interest in Fall apparel was

freight for the week ended Sept. 11, 1948,
Day, totaled 788,700 cars, according to the

American Railroads.

were

active.

more

week, aided by the prospect of government control over cotton crops
next year and expectations of a heavy movement of
cotton into

revenue

Labor

11.9% below the preceding week and 133,679 cars,
corresponding week in 1947.
For the similar

cars, or
1946

:>f

Spot

increase

over

excess

Inquiries

were

dominated the bidding.

output in the preceding (Labor Day) holiday
week, and an increase of 449,106,000 kwh., or 9.0% higher than the
figure reported for the week ended Sept. 20, 1947. It was also 919,-

259,000 kwh. in

kets

auction

The amount of electrical energy distributed by the electric
light
and power industry for the week ended
Sept. 18, was 5,426
247,000
an

.

Cotton ginnings through August this season were reported at
1,473,200 bales, against 682,100 a year ago. The Sept. 1 government
crop estimate of 15,210,000 bales was only slightly above the August
forecast and was in line with trade expectations. I ?

ELECTRIC OUTPUT RECOVERS FROM HOLIDAY SLUMP

260,121,000 kwh.

week.

about

was

with trading fea¬
Domestic demand for

the

Comparative steadiness featured leading cotton markets this

no

prewar year.

This

futures expanded last week

in

near-by months.
lard remained only fair.

stock

A month ago the indicated

kwh., according to the Edison Electric Institute.

in lard

by strength

Loan

Monday

and 1,281,210 tons for the average week in

year ago

Activity in the domestic flour market remained

slow, but mills continued to receive active shipping directions against
previous contracts.
:
'
:

the previous week and

........

94.1% of the old

capacity one
1940, highest

cocoa

declined

95.9%.

was

reported paying premiums as high as 35 cen.s

were

in wheat was comparatively
during the week.
A laige
Spring wheat was reported going into storage for govern¬
ment loans.
Oats prices also averaged somewhat higher m slow
trading.
\ •„'
■

government

no

market sale:

on

.

volume of

y.-'y

■

This, week's operating rate is equivalent to
1,732,200 tons of
steel ingots and castings the same tonnage volume as last
week,
1,728,600 tons a month ago, 1,646,700 tons, or

AUTO OUTPUT HIGHER FOR: WEEK DESPITE SHUTDOWNS BY
CHRYSLER AND PACKARD
Production of
increased

level of the preceding week

as

and suits advanced slightly.

t

.

moderately above the

demand for women's Fall coats
* Vr\ i-vv ^. 0'v'.^
/

Gabardine suits and coats and

jersey dresses were popular. Pur¬
continued to be at a high leveL
Boys' wool and corduroy trousers and girls' plaid dresses and
corduroy jumpers were in large demand.
The consumer demand
for men's wear rose fractionally.
Shoes and accesories sold well.
chases

back-to-school

of

to

cars

93,119

and trucks in the United States and Canada

units

from

78,677

(revised)

units

the

Reports."

increased

seasonal

meat

apparel

This week's output consisted

of 61,465

made in the United States and 3,751 cars

25,801 trucks
and 2,102 trucks made in
cars

and

y;-%-yivy::

y:y"y

in

food

fresh fruits

rose

and

moderately

in

home-canning activities.
was

some

continued

consumer

resistance to high
rose

in many regions.
was

substitutes.

btitter

;j
continued

a

localities

many

vegetables up slightly, reflecting

prices, the dollar volume of meat purchases

There

a

for

While there

.

Output in the similar perlbd a/ year ago was 109,734 units
year ago and 60,615 units in the like period of 1941.

Canada.

demand

previous

.

interest

Consumer
with

week, notwithstanding shutdowns by Chrysler and Packard because
of the Briggs plant guards strike,
according to "Ward's Automotive

Retail

slightly
-

and.
foods decreased
the other hand, sold well.
•
~

large consumer demand for' fneat

volume of many canned

slightly, but canned citrus juices,

on

for furniture

Consumer demand

improved a bit in many parts
The volume of instalment purchases of consume**
Hardware and small house¬
hold
appliances sold well.
Automobile supplies and accessories
remained in large demand and consumer purchases of paints and
building materials rose fractionally above last week's high level.
the

of

country.

durables displayed a moderate advance.

BUSINESS FAILURES HOLD STEADY. IN LATEST WEEK

industrial failures in the week ending Sept. 16
than in the previous holiday week, Dun &
Bradstreet, Inc., reports. This compared with 73 in the corresponding

Retail volume for the country in the period ended on Wed¬
nesday of last week was estimated to be from 5 to 9% above that «f

week of 1947 and with 19 in 1946.

a

Commercial and

numbered 84

how much it has meant
West.

one

to the

paying

having 94% of

furnishing

materials at low prices

Roosevelt.

The

is

■,

was

the

to

y._,

<

.

active and stronger; there was good demand from

the September contract.
Trading
small and cash prices rose moderately

same

-

steel

confused,

were

worked

is

the steel-making capacity of the industry will be
96.1% of capac¬
ity for the week beginning Sept. 20,-J948, unchanged from the

of

easy way.

And he

;

The American Iron and Steel Institute announced
of this week the operating rate of steel
companies

economic

our

Administration from

is.

.V

-

>

of the West. You live in i
region whose whole future de¬
pends on its wise use of the rich
resources
that nature has; pro¬

barren.

y'-

of steel—there

talking about the

you

forests

product,

producing

well-being. Now I come to a par¬
ticular
phase of that conserva¬
tion that has special interest fpi

its, the

offering the

Conversion

-

they will turn back the clock to
the day when the West was an
economic colony of Wall Street.
have been

cases

steel

;

I

'

'

over

kind of plate for $250 a ton. This does
not mean, says the trade
paper, that a large tonnage of plate is goin£
at that figure—it is a trend that shows what
tightness can do to i

government on Election Day.
If they succeed, I predict that

;

He

Three months ago some types of carbon
plates were bringing $llf
to $140 a net ton on the
gray market.
This week, brokers were in

requirements.

■

The most reactionary
the
country
today

repeat:

elements
are

stay that way as long as someone has something the
other fellow wants bad enough to
pay a price.
The heavy allocation
of plates for essential business has
zoomed the gray market prices
on
plates.
If the manufacturer can't get them, from the mill then
n?ues'j!

some

sources.

cide

This week the steel gray market is still
active, "The Iron Age"

about

you

•

,

It is

constant

,

depression
talking to

who

processors

hard-earned cash being spent by steel companies to increase
produc¬
tion.
Some headway has been made.
But it is slow business.

;

was

corn

contract in which there is said tp be a large

corn

interest.

open

tt

(1229)

tlie September

The State oi Trade and

Wv;..'

"When I talk to you here today

COMMERCIAL

or

one

Total failures

more

were

one-third

When 239 businesses failed, y.

as numerous as

,

in prewar
'
....

1939
...

year ago..
^

'

,

'

:

'

,

-

.

by the fol-l
l; lowing percentages: New England, 7 to 11; East and Middle West,
4 to 8; South and Northwest, 3 to 7; Southwest, 9 to 13, and
Pacific Coast, 8 to 12. ^
v
* '
"
5
, '
V 1
Regional estimates exceeded those of

a

year ago

.

Failures

Sutton and

CompanyOpens

involving liabilities o| $5,000

or

more

totaled 71 And

comprised the; greater fiumber -ol casualties in the week.
The Middle - Atlantic States

;i KANSAS

reported 20 casualties, the largest
Pacific failures numbered 19, about twice the nine

GITY, MO. —Joseph
H. Sutton is engaging in the se¬

in

any

region.

firm

of

last

week, but below the 28 of the comparable week

curities

business

Sutton

of

under

the

•

and

Company
from offices at 316 East 69th Ter¬
name

race.

; rick;;

He

New

a

year

ago.

England failures dropped to 18 from the 28 of last week, but

exceeded the three of the same week a year ago,

•*.

formerly :with Her-

was

WHOLESALE FOOD PRICE INDEX MOVES MODERATELY

WaddelbfA^

Christopher

■

.&lCq.-v^'A;

fractionally during the
slightly above that of a year age.
While many buyers continued to be cautious of future price develop¬
ments, they were somewhat less hesitant last week to place large
orders for future delivery.
The number of requests for accelerating
shipments on current re-orders increased considerably.
However,
deliveries in some localities were hampered by shipping strikes. ;
Total

•

week.

UPWARD

i '■

There

was a

wholesale order volume increased

Dollar

•

volume remained

Department store sales
noticeable increase in the Dun & Bradstreet whole¬

on

a

country-wide ba^sis, as taken from
ended Sept. 11, 1948,

the Federal Reserve, Board's ihdex for the week

sale
(Special

to The- Pinanciai

DETROIT,

Chrontcxe)

MICH. —George

the staff of Baker,

Simonds & Co.,
•Buhl Building,
members of the
Detroit Stock Exchange.

With Harriman Ripley Co.

1

(Special

to

The

Financial

Chronicle)

BOSTON, MASS. —Edward

decreased

This compared

the

with

the four weeks

on

E.

Potter, Luther M. Sandwick, Jr.,
John H. Stephenson, Jr.,. and Mar¬
vin H. Swift have been added to

;

food

over

Four With Baker Simon

H.

price index last week, following a decline that extended
preceding eight weeks.
The index rose nine cents to $6.95
Sept. 14, but it remained well below the $7.12 that was reached

in the

corresponding week of. 1947.

WHOLESALE COMMODITY PRICE INDEX IMPROVED BY

year ago.

Grain

'

.

prices

as

a

whole registered moderate advances last

with

has

become




11,

1948, saies increased by 4% and for the year to

7%.<

*

.

'

'

*

''

marked the course of retail trade here in'
New York the past week as dollar volume expanded, reflecting V
Continued activity

v

an

estimated rise of

store

sales

8%

over

the similar week of 1947.

Federal Reserve Board's index, department
in New York City for the weekly period to Sept. 11,

According

to

the

1948, decreased
below the same period last year. This com¬
pared with an increase of *6% in the preceding week.
For the fourweeks ended Sept. 11, 1948, sales decreased by 2% and for the year
to date increased by 5%.
•
,1

week as activity on the Chicago Board of Trade declined slightly.

*In

affiliated

Harriman

by *2% from the like period.of last year.
increase of *16% in the preceding week.
For

Sent.

date by

The

Daily average sales of all grains for the holiday week ended
last Friday totaled 30,400,000 bushels, as compared with 32,000,000
Ripley & Co., In¬
bushels for the previous week and 63,000,000 bushels in the same
corporated, 30 Federal Street. He
a
year ago.
'
*
•"
,
'
was formerly with Paine, Webber,: week
A feature of the week was the wide fluctuations in prices of
Jackson & Curtis. >
Bradford

ended

FIRMNESS IN FARM COMMODITIES

daily wholesale commodity price index, compiled by Dun &
Bradstreet, Inc., moved mildly upward last week as the result of
firmness in leading farm commodities.
The index closed at 280.78
on
Sept. -14, compared with 277.97 a week earlier, and 287.05 a

an

and

using

year-ago

comparisons for the weeks ending Sept. 11

Sept. 4, allowance should be made for the fact that in

observance

holiday stores in many cities were closed this
year during the week ending Sept. 11 whereas last year they were
closed during the previous week.
of

the

Labor

Day

34

(1230)

THE

mittently

sagging

lasting
of 1946 to the

Third, there has been

of

aggressive

price

period
that

a

has

now lasted 10
months, during
which the Federal Reserve
banks,
and to a lesser extent
Treasury

trust

funds

and

agencies,

combination

have

to

bought billions of dollars of longterm

bonds to peg prices

rather

forces

have

than

free

Prices

During Three

the

first

nounced
chief

market

point

influence

ment

bond

of

the

on

market

treme e£sy money policy
war

period,

the

the

rate

banks

ex¬

of the

represented

under

could

which

borrow

at

securities

of

less

with

than

1

occur

quoted in the lower

of

long-term

of

raised,
New

reserve

York

and

were

Chicago member banks

lift¬

In the

current third period of
pegged prices, the authorities have
ceased to be squeamish about
the
fact that the market for
Govern¬
ment bonds is an artificial market.

They openly avow the fact that a
floor has been placed under
gov¬
ernment bond
prices, just as floors
have

been

prices

of

placed

wheat,

openly

and

Inflation

Market

Should

I think

we

Be

that

agree

is, and for

past
character.

has been,
I

now

go further and say
is much more

would

like

to

something that

controversial;

ly, that the

some

artificial in

market

for

ment bonds under

existing condi¬
tions must be artificial.
I do not
believe it is realistic to
expect
that anything like a
really free
market for government bonds
will
be

or can be
restored, at least for
long time to come.

a
-

The

primary

market

for

reason

why

government

must continue to be

the

bonds

artificial,

re¬

gardless of the political
party or
of the individuals
that are re¬
sponsible for public debt

manage¬
ment and credit
control, is the fact
that commercial banks
and the

Federal

Reserve

banks

hold

up¬

ward of $85 billions of
the public
debt. Whenever inflation
or

becomes,

threatens to

become, rampant,

it is the

duty of the Fedeial Re¬
authorities to restrict
credit.
For if they do not
make
money
more
difficult to borrow
by re¬
serve

ducing member bank reserves and
lifting interest rates, fuel will be
added

to

the

inflationary

fires

through a further increase of the
nation's money
supply caused by
expansion of bank loans and in¬
vestments.
•.
But

restriction of

liquidation of

credit

forces

government securi¬

ty holdings by member
banks, as
well as by other holders
who be¬
come

unable

to

borrow

at

any

possesses

levels

sound

financial

national

for

government

a

ever

se¬

capital. Industry is spending
$15 billion a year for new
plant and equipment, and in the

than

sums

before.

ever

of

Life

as

or

by

a

of

funds

They
fore,

under

are

to

bonds

these

liquidate

in

order

to

in¬

If

had

we

which

free

a

commercial

dated

government

cause

they

strictive

vesting

were

banks

ments because

liqui¬

securities

be¬

subj ected to

credit controls,
institutions sold

in

re¬

the

and

Now if
ket

for

we

problem
of.

care

could

by

using
listing
government security holdings on
"convention

values"

balance sheets.

I

am

to remember what

an

in

old

unfavorable

impression that kind

of

hocus-pocus

the

can

do

made

on

enough

financial
Ameri¬

public in the early '30s, and I
we want to live

pqt .believe

through that
Furthermore,

experience

again,

the
international
political situation is too tense to
permit the Treasury to jeopardize
its

ability to

carry

out refunding

and new

to

market prices of

money

long-term
depreciate

sub¬

securities to levels that could un¬
dermine financial confidence
to a

orderly. And with the public debt

stake

to

bonds to become erratic and dis¬

large,

the

government

bond

controlled

a

stil)

market,

but

But, if inflation is going to

the fiscal year 1949,
higher for the following fiscal

and

for

year.

prices, then there is good

which could attract

run

bases predictions on

supply

and

expected to rl$er
prices, whenever

that

to

But

mar¬

in

a

controls

and

in

the

in

factories

and

.

influ¬
is

the

produc¬

farms.

In¬

production, as measured
by the Federal Reserve index is
almost twice

of

age

as

the

aver¬

1935—J
index, it is important
measures the
physical
pre-war

years

This

1939.

to

large

as

the

note,

dollar value—of

the output of industry.
And the
record
expenditures industry is

making

plant and equip¬

new

on

ment are bound to-swell this out¬

will

for

period- ahead.

.cohtroi

the

savings or outside aid, shows that
this resistance is bound to grow So

first

place,

let

me

since

V-J

methods

of

credit

out of taxes and

having

interest

member

time

increase in the public
debt,
tripled the money supply in
country.
But since 1939 the
wholesale price
level has more
than doubled, while the volume
this

production of goods and
has increased by over

In

com¬

by

has

as

servr

50%.

to

deposits

to

thai

finance

been

deliberately

facilitate

artificial

war

designed

control

of

the market; for government securi¬
ties. ' v• ■

in the form of currency and
bank

demand

made easier

changing

pursued since the end of the
have

dollars

many

the

character and
distribution of the public dept.
For the debt management policies

services expressed in dollars
more
than
tripled, and we

have three times

increases
ii>
requirements
of
so long as infla¬

and

term bonds has been

short, the turnover of good?

and

banks,

as

It is my judgment that these
forces, particularly the high level
of production, will bring infla¬
tion to an early culmination. Jn
the
meanwhile,
the
Treasury's
task in pegging prices of its long-

com¬

we

of

rates

reserve

such

short-term

tion proceeds.

mercial banks absorb nearly twofifths of the astronomical war¬

ices

as

in

con¬

spending
additional

measures

increases

legal

that were, pursued,
notably der
fraying only 40% of the cost of
war

well

as

control

further

now

more

government

policies,

finance

war

also anticipate that the
public opinion will

of

servative

largely spent itself. Because

the

Continue to

costs

force the adoption of

say

Day, has

living

as

We may

supply, which has been
primary force making for in¬

very

would

compe^

that a quarter of the American
people currently live beyond their
means,
and must draw on past

'

..

pressure

of

period

export de¬

of our" products

"

money

are

the

lessen

many

ticMTof foreign' buyers,
'
Another factor checking infla¬

long

flation

lower, capital require¬
sources

inflation

f

rise.

the

an

are

these

the

of

check

thathave.b^

be
floor

may

credit

that the wartime expansion of the

from

from

to

dustrial

of further inflar

In

modity prices and wages to a very
large extent. Had the price level
ments

tion

1

Inflation

record level of peacetime

government bond market.

corporations, the
building industry and municipali¬

remained

tend

!

to

important

that

which

'

credit

ties has reflected the rise in

Most
ences

tion, which I believe offer the key
to appraising the future
of the

been pursued since the summer
of 194§ has been dictated
by the
desire
to combat inflation. The
great expansion in the demand
credit

that

.

the prospects

to

going to be
shaped primarily by the course
of
inflation. Every step in the
restrictive credit policy that has

for

Checks

mand

will attempt only to summar¬
briefly my views with regard

I

going to do.
management

of
hpldefs.

above the

follow inflation.

ize

market, we are con¬
primarily with what those
the

forces

check inflation.

Agricultural ' product^

Prospects pf Further Inflation

artificial

exercise

fundamental

are eased to cope. .with tion is the growing consumer re¬
threat of deflation that is likely sistance io high; prices. The fact

policies
a

forecasts of

demand.

and in time perhaps
counterbalanced, by the

than

put further in the -

reason

waves

by? nervona
government bonds

And

policy decisions of the

upon

new

liquidation

more

for

Decline in Volume of Marketable

have been far smaller.

turnover.

On the other
hapd, were infla¬
tion to come to'an
end,-* and a

yfgrtjiue inflation of the mppey
The most important single
supply has now been. virtually
fac-^
digested by the American ©con4 tor in this connection bas beeii

cession

sure

in

occur

commodity
that

business

and

prices,

we. may
be
control policies

credit

deflation, and

want to

easier

cies
provide
a
method of doing

legal

member
rates

reserve

banks

could

off

poli¬
time-honored

so.

Reductions

requirements of

and

then

in rediscount
be

leading to lower interest
a

head

credit

expected,
rates and

stronger market for government
J, ' '
1
■
m <
• < •' '

bonds.
As

a

.

practical matter, therefore,

I

for long-term bonds- will not be reaching new peaks - Under tfie
changed.? If inflation isv going Xq stimulus of high prices! ; It is very
end soon, .there would ibe
significant, fiifthefmpr^^Thkl the
sense
in assuming the risks that
Cexpa nsipu of production; is going
attach to lowering the price pegs,
,pu abroad, as .well a?;.;at home*

public

bonds

tne^e torces are,;

volume—not the

<

td expect that present price, pegs

Treasury and the Federal Reserve
authorities. In a free market, one

in

permit the market for government

at

We would

par.

support prices would be lower.

prima¬

rily

thorities would

mar¬

Too IVfuch At Stake

There is too much

so

the

financing as required, or
would
quickly be changed.
In
precipitating a rush to
that event the Federal
Reseive. au^
savings obligations by letting

ketable bonds
stantially.

have

and

risk

cash

purchased at

free

a

before

government

ahead

sug¬

to

agree that the

policies

this

•

free

wise.

or

directly

ously impaired. It has been

bope

of

banks,

control

gested that
be. taken

government
securities
would be less likely to sell if
they
had to take some loss on bonds

that predictions as to how
this market is
going to behave in
the future must be based

who

nancial institutions could be seri¬

of

ers

dent

cerned

pleasant. With government
selling at large discounts
par, surpluses of some fi¬

all

size

estate mortgages, the
consequences
for our financial
system might

bonds

the

On

particuarly shift

Debt

from

already being argued in many
quarters, as you know, that hold^

long time to come is bound to be
artificially controlled, it is evi¬

govern¬

not be

is

Debt

return

a

in other bonds and real

more

a

Dependent

we

that

reduce

and in*

they wanted to in¬

Market

Will be feasible

addi¬

market

from

to restore

now

commercial

there¬

tional funds with which to satisfy
these urgept demands for new
capital.

message at almost $20

4

f

balanced,

somewhat below par, as an addL
tional anti-inflation measure.
It

prematurely.

debt,

con¬

obtain

ex¬

of the debt into the hands of ulti¬
mate
investors and out of the

government

to

are

government bonds!will
be practicable. But we shall have

institutions.

pressure,

labor

aggressive
■•••

billions

more

will encounter mount¬
ing criticism, and that the support
prices would eventually have to
be
reduced, at least to level?

market for

wide margin the current flow
into

and

high rate of military and
foreign aid spending, estimated
by President Truman in his mict-

long believe that they will be counter¬

on

above par

eco^

huge size of the

inherited

go

evitable that the program of
peg-»
ging government bonds somewhat

anything else
economically

are

the

Eventually,

result, with a de?
capital that exceeds

a

new

strong

won

The

r'S.

inflation

enough, therefore, I think it is in-:

debt, I do not believe that

believe

mainly

are

by

*

increases,

Inflation

group of
the wisdom to fix

Reduced

companies and other in¬
institutions

are:

unions'.

new

restrict

Should

not

or

ever-changing

debt

Free

from higher prices, Real estate
mortgage financing is going on at
a record
pace. States and munici¬
palities are borrowing far larger
surance

Successive wage

directly with a
restriction.
You

credit

the

in

temporarily, public faith in

back

expansion of inventories and

vest

cannot

price systerh much good by gojng

past two years has required $10$12 billion more yearly to finance
results

of

The

economy.

Inflationary Pressures

.

steps to curb

its course in the next year or so
the whole principle is
undermined,
and be followed by a period of
and
you
do not do the cause
stable if not declining
commodity
of an eventual return to a free

over

that

take

:

.

conflicts

policy

market for government securities.
And let us remember that when
free markets fail to
work, how¬

inflation has swelled the demand

receivables

Ponds

our

important of these

more

For the policy of
pegging the markets for long-term

be¬
of mistaken decisions of the

of that

for

the

credit, including a lowering of the
pegged prices tor long-term gov¬

and the peculiar distribution

war

econ¬

Demand

dramatic

supply that make for fur¬

money

ther inflation in

If the spiral

to

pressure

more

ernment bonds.

past, free markets will not"work.

curities at the present juncture is
far more difficult because

the

man

that

under

cause

away

they need from commercial banks.
Such forced liquidation in
heavy
volume will, if the market is left
free, depress prices of government




men

made

name¬

govern¬

the

Swells

market

fronted,

the market for United States
gov¬
ernment bonds
years

free

other

Controlled

all

on our

and

106.

believer

prices of bonds

Capital

mand for

can

bonds

Moreover, reestablishment of

vesting

and

corn

that

it is feasible

under

farm commodities.

tirm

think

for

ed, and the Treasury increased the
interest rates paid on new offer¬
ings of its short-term obligations.

growing

change

principle of free markets. I do

omy as a whole.

tion shifted the shoe to the other

requirements

above

of

were

Because

prices,
restrictive
credit
measures adopted to combat infla¬

were

the

scale that would force

a

structure

rates

risen

view

Con¬
credit
More liberal mortgage lending
drastically
investors to believe it you take steps to cut down bank to finance home
construction, au¬
today tnat governments would bo reserves with one hand, while with
thorized by the special session of
permitted to decline sharply be¬ the other hand
you give commer¬
Congress iast month.
low
par, as they did in 1920, a cial banks more reserves
through
Record capital expenditures by
temporary excess of supply over purchasing government securities
industry.
demand could
precipitate panic at the floor prices in order to peg
Support of farm prices by the
liquidation that would make for quotations.
^
/
government, in the face of peak
disorderly unstable markets.
agricultural production.
I am a
Effects of Continued

public

bond

count

nad

versely,

down to levels that would produce

second period of sagging

foot, so that artificial influences
depressed
government
bond
prices.
During this phase redis¬

2V2S

one's

on

of rising wages and
prices should
continue long enough, the
authori-,
ties will be under
persistent and
j

as happened in tne
1946 after the Victory

of

disturbing effects

collateral.
In the

on

prices

as

sudden

a

applied in 1920, with a nomic conditions. But there
market restored for Treas-, times when, either because of
securities.
Liquidation could traordinary circumstances or

ury

ma¬

year

of

cased

as

outlook for inflation.

conditions,

spring

must

we

face

was

free

Fed¬

extremely low cost of
% of 1% per annum by pledging

government

were

that

eral at the

turities

bonds in

to them

that

.

the

in

of government securities were put
under the kind of drastio pressure

member

the

iree

80's.
It does not require a great
effort of the imagination to vis¬
ualize what would happen if com¬
mercial banks and other holders

by a
Treasury bill buying rate at the
Federal Reserve banks of
only %
of 1%, and a differential redis¬
count

out

Bonds

pro¬

govern¬

was

a

public debt
in 1920 was only a tenth as large
as it is today.
Furthermore, long-^
term Treasury bonds in 1920 bore
coupon rates up to 4%% and were
tax
exempt.
In
1920,
Liberty

Periods

strength,

for government

But in answer

market

period

and

in

1920, and the consequences, while
were not catastrophic.

plain briefly:

In

restriction

rigorous,

determined prices of
bonds.
Let me ex¬

government

credit

of

inflation

combat

market

some¬

what above par.
In each of these periods, arti¬
ficial

be

.

support

Thursday* September 23, 1948

to the future trend
government bond prices must

of

extent, make new fK market can be kept
orderly only
nancing by the Treasury far more if investor confidence is main¬
difficult, and threaten the stability tained at all times, both in
periods
of pur wltole fin^pcial stydctuirc. of
rising and in periods of tailing
prices.
Snould
Treasury
bona
Comparison With Post
'
prices be permitted to rise unduly
World War I
when demand happens temporar¬
Critics of the price pegging pol¬ ily to exceed
supply, the market
icy will say we had just such a would become
highly vulnerable

Autumn of 194/.
'

CHRONICLE

Treasury Bonds

dangerous

prices

from the late
bpring

&. FINANCIAL

predictions

The Outlook for
(Continued from first page)

COMMERCIAL

This

means

that

the

Boqds

6

the

complete absence of new is¬
:; of
marketable - / Treasury
bonds.
Over the past three years,
some
$10 billion of marketable

omy.
•

It is

a

future
count

sues

fallacy, in predicting' the

action
the

-

of

same

any

market,

to

twice.

In

force

appraising the future
modity prices, which

of

in

analyzing the. prospects for jhflation, it is fallacious to stress the
expansion

of

after

Treasury bonds have become due
or
callable.
These maturing or

com¬

do

we

called

term

has

the

money
supply
already been re¬
flected fully in higher commodity
prices and increased turnover of

that

goods and services.
Yet

I

.

<

powerful forces

have

been

paid

off

refunded with short-

As

clining

proportion

of

the

public

debt consists of marketable bonds

that
in

are

a

gram.

are

other than fbe

or

non-marketable obliga¬
a result, a
steadily de¬

or

tions.

^

recognize that there

issues

with cash

:

alone

market

directly involved
price pegging pro¬

'Y

VAt the

same

"'■>

-

L:

' •

;/Y

Arising, prp-

Volume IBS;" Number ;4736;

THE

..r..jii.i ii a."

portion

of

marketable

the

bonds

COMMERCIAL.! &

FINANCIAL

CHRONICLE

the

certificate

v

rate

without

Federal

whole

banks

Reserve

and

public debt

Andifwede-I
(3) Intermediate rates would
billions held by the' be adjusted upwards although to
Federal Reserve banks and the
a
proportionately lesser extent
Treasury trust funds, there are I than short-term rates. Banks and
less
than
54
billions
of
these other holders of
duct

the

10

Treasury obliga-

.

bonds

held

that;

measuring

the

magnitude of the
support problem.
"Moreover, the average maturity
of
the
long-term • marketable
bonds

steadily snorter,
sues

is

outstanding

since

The

marketable

issues.

issue

with

a

do

of

but

also

for

compared

as

ernment securities.

liquidity
securities

shifts

to

.

is

with

fluctuating

to the point

on

The Outlook for

of

market

ings ratios

not

marketability in the usual

sell

bonds

the

;^eii ;thdse;; ratios^; will^iJif :>u£;te advantage? derived by
has existed just

5

growth, which is one of the big
safeguards of the industry.

gas
mounting
prices of fuel, especially oil and
companies

from

the;

government
de¬

apparent

mand for them, the authorities re¬
the amount of these bonds

outstanding in the hands of the
public by having the excess that
do

not

absorbed

want

by the Federal Reserve banks and
Treasury agencies.
The support
policy tnus adjusts "the structure
of the public debt to the needs of
the

;

classes

various

of

investors"

these "shape uf>.

as

Let

me

facilities how in progress contem¬
plates an increase of 35% in four

There

years.

host

of

small

in the
I

of

is likely to run its course, over
the next year or so, and that the
forces

making for stable or lower
commodity
prices
will
assert
themselves #nd • win < the/battle
against inflation. This expectation

assumes,
of .course, that there
will be iio tfiajor war, and that
relations

will

not

total

pre¬

(now before the SEC, but
a Supreme Court

is

not

a

budget

in March, 1948 should
effective, annual income

Domestic
about 35%

conditions

deteriorate.

Increases in this business

pected to continue
be

a

users.

last year and their
bill was only $44. This
big item in the family

business

In

seen.

deteriorate; to the ( point where a

average

vast further increase in armament

all

as

far

recent

are

ex¬

as can

years

the

tomer

usage

per

than

it

to

domestic

cus¬

has. increased, except in
year, 1933, when the drop was

that
are

much

is

The market

1$

than to earnings, so we find that
price-earnings ratios tend to fluc¬
tuate somewhat with
tion of earnings

dends.';/,/

the propor¬

paid out

divi¬

as

.

&°UM1fo iddulof if
Utilize cash rlalized

Great

other assets

of

in

nonutility
has

nrrwress

activitfes
which is
not

onlv
oniy

E ecMc

of

p^r

made

sSvices j

comnanies
companies,

hut
dut

serviced

are

Moreover,

it

fields such

as

approximate $1-50 and $L6° per
This might be enhanced,

!??

t o^

pu

dTwhich
c ^ ff. £
iSrfino?

miscellaneous

pffp*. rpnuvmpnt

nf

holdings,
hanlr

the

loan

atter rePaVment of tne under loan,
oanx the
miscellaneous
claims
various

reorganization plans,

etc.

cost.)

at

active

is

|

Foreicn

and

share"

major service and
th
organization servingj"\e

affiliated
amnaiea

Power

total share eamfogs might

a

nonaffiliated utility and industrial
clients, which now contribute well
over half its revenues.
(Affiliated
utilities

^er^than the dividend paid

lul1

for

enter,

been

Ebasco

of
now

construction

freely

sensitive to dividends

more

or
61
cents a
share after income tax adjustment.

inbroadenfosand^increasto^the i

be.

dividend increases

numerous

coining, along.

much

more

would amount to

source

$3,400,000

&

investment

conserv¬

used

about

the

proposes to
from the sale

available, and anyone who buys
a utility stock today can find
out:
everything he needs to know to
form a competent opinion about it.
Of course, one of the big ap¬
peals of utility stocks, as I have
already mentioned, is their good
yield, and it is reassuring to note

and
certainly
not
one
is going to be tlje object
substantial economy should

which
of any

basis

more

Electric

plan filed
from this

Power

Information

large

gross

average

much

a

in

paying
the $45

,

protection

in

contributed

customers

light of the above analysis.
think that the present inflation

ative

on

example,

$3,700,000. This is $1,100,000
of the common stock of Foreign'
or 21 cents a share more than the
Power; it has also indicated that; present income from
Foreign
it may seek to retain the stock of
power.
'
v
United Gas which it will receive i
««

a

ation is

For

large
capital

a

company's

investment

in

included.

were

The company should even¬
(excluding bonds to be received
tually emerge with full owner- under the plan) would
approxiship of Ebasco Services and 67%, mate

the

great

amounts of income derived from

present my conclusions,

international

is

investor

the

to

puts

the

of

about

or

equity

Power & Light yielded practically
no return in 1947 but if the
recap

preferred

over

claims for call

full

tems.

ceiling on earnings, but
the
compensating factor is that
Speaking especially of the elec¬ you also have a floor beneath
tric industry,. I would point out earnings, and many unregulated
that electric output of privately companies
would give a great
owned utility plants in 1947 was deal for this protection.
I think
we may well lay emphasis on the
5
times that of 1920, nearly 2Vfe
way capital structures have been
times that of 1930 and over IV2
limes the figure for 1940.
The strengthened and financial houses
Depreci¬
program for increasing generating generally put in order.

duce

investors

issue

the

share,

points out,

report

securities.

Settle¬

the

Light.
(3) Retirement /•;
Assuming that on a reorganized
$24 million bank loan
basis
(under the plan now ap¬
(4) Completion of reorganization
proved by the SEC and a Federal
plans of the sub-holding compa¬
Court) Foreign Power could pay
nies
(Foreign Power, American dividends of $1 a share on its new
Electric, and National). (5) Sale common stock
(out of estimated
of miscellaneous assets resulting
earnings of over $2) Bond and
from the breakup of these sys¬
Share's income from this source

come so

gap. Now, con-

long-term

exceeds

the

about

is invested in nondividend

become

of

the

trarily, when the volume of out¬

standing

of

(1)

are:

a

the

earnings

million

program

Power

much a part of our every¬ servative investor, although, obvi¬
day living as to make it almost ously, it precludes wide profits
demand, Secretary Snyder finally -unthinkable to get along without such as the speculator seeks. Many
offered a non-marketable Series them. Then we have the factor of people emphasize that regulation
supply of suitable in-

A issue to fill the

As

delays

>

in the Engineers case).
(2) Sale of stock holdings in Bir¬
mingham Electric and Carolina

-

of

and

at

last year, the amount
months ended June 30

if

decision

Utility Stocks

relatively; low. I has been phenomenal and has
stocks which today been limited only by the ability
times earnings AviU tp^get pipe and other equipment.
day be selling 12 to 15 times^ fn this connection I would point
what

running

cents

Ebasco

description

difficulties

stockholders'

are

within* the last few, years.

announced

short

excellent

in

as

12

amount

ment

I-/;

.

fell

rate

pany's

real

do

many
9 to 11

some

then

are

same

would apply to holding companies
in general.
The remaining steps in the com¬

their

to

or

that

Share's
these

in

325,000

///■ //:/' ' /:
Earnings of Bond and Share in

1948

Bond

and

reasons,

Ebasco

*

and

economic

by

with

compared

73

by Secretary Snyder shortly after ti ..Of Course, inpresenting utility coal.
Factor of Regulation
Stocks; you can talk about the-fact
tional investors repeatedly urged that .the companies offer ah in¬
In my mind, the factor of regu¬
the Treasury to sell more long^ dispensable
service.
Electricity, lation is an argument for the pur¬
term bonds In 1946 and 1947, be^ <?as and the telephone have be¬ chase of utility stocks
by the con¬
the

1946.

being 53 cents

with

report states,
—

sarily long and tortuous for legaJ

he assumed of fice.-Wheti institu¬

vestments

and

for the

of

the

paid

was

and

(Continued from page 8)

lower than

causue

involving hundreds ol

1947

government

markets

mortgages

possess

gov¬

As

when

pegged

a

in

Extraordinary

bonds,

corporate

estate

with

surrendered

made from

are

loss

and

property integra¬
tions. Its building was a
long and
complex process.
Its disintegra¬
tion is naturally not simple." The
integration process itself is neces¬

for differences in

sense.

bbinthuti: Is:$/con/ rthink

investors,''

a

only

a period oi<§>——
growth covering over 40 $500,000

possibly awaiting

the

of

seen

quality,
liquidity

limited

more

not

Treasury ? of "ad/
justing the structure of the public and
classes

where yield
compensate
them

done.

System has had
and

miums

srstent extension of the oft-stated

policy

have

when

not

permitted to go

-The market"kippoi't' policy/ I
would like to

corporate

believe that the readjust¬
ment in intermediate rates will be

maturity has been put out by the

/

types of bonds only

longer
distant

long-term
commercial bank eligible bonds. I

Treasury.
>
Thus, both through reducing the
volume and shifting the distribu¬
tion of its long-term marketable
bond / issues,
the
Treasury
is
facilitating the tasK
market support for itself.

We

no

market for medium and

longer

greatly

maturities

return

degree of freedom restored to the

Victory '*■ 2 Vfes/ are
years now, and no

callable In 19

shorter

additional

justifies holding the

forth¬

are

the

the

becoming
no new is¬

of these securities

coming;

years

fully

into

Company Act, but much remains to be
"the

of real estate mortgages
and other

differentials

maturing in two to five
constantly compare yields
on these maturities with those on
short-term issues* and will switch

made

/long-term
provide
a

bonds

Bond and Share for 1947, was re¬
The company and its sub-holding companies have
considerable progress toward complying with the
Holding

cently published.;

life

tions

in

be ^considered

government

Electric Bond and Share

.

The annual report of Electric

valuable yardstick. Savings banks
will want to add to their
holding?

years

other holders

by all

to

arc

market

*

35

::of

indebtedness where the .2 y?% long-term sup¬
gradually J raised to
1 %%" port pqint would be jeopardized.
a
change in .• long-term
Savings banks should find the
Treasury trust funds and agencies. ^Treasury
bond
yields.
In
the government market favorable to
These bonds have thereby been past, short-term rates often have the
conduct of sound investment
shifted to "strong hands," to use been as high, and sometimes even
portfolio
policies.
Government
market parlance.
r
higher, than long-term, especially bonds provide them with an in¬
when
restrictive
.Marketable Treasury bonds ma¬
credit
control
vestment that is not only of the
turing in more than fives years policies were being applied, and highest quality but that
possesses
are
now
outstanding.:.uin»!: the when the market ; is convinced the extraordinary degree of
liqui¬
amount
of only 64 billions, or
dity provided by a pegged mar¬
t that long-term interest rates will
little more.than a quarter of the
not rise.
ket, Yields on pegged
outstanding has been acquired .by

the

*

(1231)

1

in

new

labor relations, ac

counting appraisals, budgets, busi¬
ness
reports and surveys, insurance, purchasing, rates, research.
sales, security valuations, taxation, and financial plans and pro¬
grams.
Nearly one-fifth of the
present huge utility construction
program in the United States is
being carried out under its super¬
vision. The company's backlog of
uncompleted construction at the
end of 1947 was $232 million, an
increase of 118% over 1946, and
the present amount is still larger

FIG Banks Place Debs.
A
sue

successful

offering of

of debentures of the

an

is¬

Federal

I Intermediate

Credit Banks was
made Sept. 20 by Charles R. Dunn,
New York, fiscal agent for the
banks. The financing consisted of
$62,430 000,
1.65%
consolidated
debentures dated Oct. 1, 1948 and
due July 1, 1949. The issue was
placed at par. The proceeds, to¬
gether with $7,785,000
cash in
treasury,

will

be

used

to

retire

$70,215,000 debentures maturing
spending; ?wUi become necessary. one
/ To my mind there is the most
Oct. 1. As of Oct. 1, 1948, the total
I do
not see any; reason for pnly 1 kwh. Commercial business appeal in the; electric and natural Since Jan.
1,
1944 Ebasco has amount of debentures to be out¬
modifying the present pegs on does not hold up as well in bad gas stocks.
1 have consistently aided the utility industry (includ¬
standing will amount to $534,long-term government bonds if times but, nevertheless, has given recommended the sale of telephone
ing its own associated companies) 110,000.
'
/
•
further inflation is to be short¬ a good account of itself.
Less de¬ stocks, especially the American in the
raising of over a billior
,

,

lived.

/.'/

,

l $6 JpngCgs
I

think

business

is

industrial

and, interestingly, that is the least
profitable, so a drop in this load
inflation continues; does not do drastic damage,; Qn

-Futhre Treasury
■

pendable

that

the

Policy

Treasury

debt

the other hand, new uses for

elec*
being

management and Federal Reserve
credit control policies will give

tricity

in

industry'; are

worked

out

all

the following results in

Telephone & Telegraph stock, in
favor of natural gas and electric
shares. Of course, the transit busi¬
ness
is the stepchild of the in¬
dustry, and in this field there is

industrial companies are abandon¬

little which has appeal.

the time and also

ernment

,,

could the government bond mar¬
ket be kept orderly with support

purchases
amounts.
;

pf

only

moderate

(2)

are

of

;

Short-term interest -rates
likely to rise further, as part
policy of mild credit re¬

the

striction to combat inflation. As

a

matter of fact, short-term interest
rates have

been too low

in

industry.

-It

is

familiar

about

from

betterment

of

country

well

as

the
as

the

economic

people
from

in

the

normal

rela¬

Rising prices of competing fuels
brought new loads to the

have

view

gas

of

the

fact

that

long-term
been stabilized by the
price support policy. It would be
reasonable, for example, to see




ed

but

ness

have

companies, almost in unwant¬
amounts,

and

are

about the prices

of

the

natural

gas

industry

benefits

therefore free from

There

which

are

are

of

line

for

companies
increased

dividends when specific problems
on
which they are working have

working

on

Some companies are
or

com¬

newspapers /

and

the

the rapid growth of
detailed financial state¬
for this subsidiary are ye'

Despite
Ebasco,
ments

no

However, net earning?
ending June 3(
as follows:

published.

for the three years
are

reported

*

1948
1947

1046

—

have just received

ROCHESTER, N. Y. —H. Dean
Quinby, Jr., is engaging in the se¬
business from offices at
East"Main St. under the firm

curities
183

name

he

of Quinby & Co. In the past

was

and

with Foundation Plan, Inc.

George D. B. Bonbright & Co.

Joins Herrick. Waddell Firm
(Special

to

The

Financial

Chronicle)

M.
Thompson is with Herrick, Wad¬

983,000

—

—

Quinbv Co. in Rochester

KANSAS CITY, MO.—James

$1,522,000
308,000

dell

& Reed,

Inc., 1012 Baltimore

Avenue.

for the latest 12
months' period were equivalent to

.

/ /

•/,'

Earnings

about
and

29

cents

Share

a

stock.

share
A

on

Bone'

dividend

of

wor¬

of coal.

some

in

especially
in
the
house-heating field. The expan¬ been solved.
sion

the

cheap natural gas for boiler fuel
ries

growth in communities.

tion to long-term, particularly in
rates have

lications,

that the number of

comes

The

has embarked on an aggres¬
sive but dignified program of ad¬
vertising in national business pub¬

fact

Independent of general market
telephones in moves. For example, there are a
use
is growing rapidly and most number
of
companies
in
the
telephone companies have a back¬ Southwest which not only are en¬
log of unfilled applications. This joying spectacular growth in busi¬
a

quarter dollars.

a

trade press.

In
picking stocks for recom¬
mendation, I like those which are
security -markets:;; .' , ing their isolated plants for cen¬ soundly financed, serving territory
/, (1)
Long-term bonds will be tral? station service.
with good growth, having ex¬
supported at or quite close to
I will not prolong this part; of penses under satisfactory control,
present floor prices; Only by con? the discussion to cite statistics of and, if possible, having some fea¬
ti,nued pegging at fixed prices growth in other branches of the tures which will attract interest

the gov¬

and
pany

rate

increases

which

will

With Rishon Wells Co.
ROYALTON, VT.—Daniel Ab¬
bott ; has
joined
the
staff
of
Bishop-Wells Co. of Boston.

help

their earnings

picture. Thus, there
approach which
will help discover individual op¬
portunities but, by and large the
field as a whole looks good from
the standpoint of the investor.
are-avenues

of

With Homer C. Denison
/Special

to

The

Financial

Chronicle)

— H.
F.
Huibregtse
is
with
Homer
C.
Denison, Security Bank Building.

SHEBOYGAN,

W I S.

36

COMMERCIAL

THE

(1232)

Conflicting Views
of

Several

1947.

conn-

tries,
Belgium,
Denmark,
the
Netherlands, Sweden and Britain,
have

of

.

People's Real Control
Representatives

;

passed the prewar
industrial production.

There

Resumption Impossible in Europe
For most of Europe there is no

•

possibility of immediate resump¬
tion

of

with

aid

The

the

the United

even

States.

assertion

published

recently

that

standard,

gold

from

billion dollars in gold given

a

is

strange

contention

standard
trol

optimistic.

too

1931

In

Britain had reserves of more than

$1,250,000,000.
were

they

though

Yet

quarter billion larger than

a

the above estimate, they were not

to keep the pound from
forced off gold. But this

enough

being
billion

dollars

is

supposed to be
single country,
Europe!
The United States, on the other
hand, undoubtedly could resume
a gold coin standard.
The current
gold reserve of $23,500,000,000 is
not only by far the largest held
by any nation in the history of the
world, but it is probably also the
largest in relationship to notes
and deposits covered. If free con¬
version and free exportation were
restored, it is unlikely that there
would be much demand for gold
from the treasury. Unquestionably
we cart have a gold standard if we
want
it. The question is,
what
enough, not for

but

all

for

a

western

'

on

that

the

gold

"return

would

the

con¬

people, for if they do not approve
in which the public

of the way
finances are

being conducted, they
always make
their disap¬
proval effective by withdrawing
gold."; Aside from the obvious

government which has
for public opinion can
suspend the gold standard when¬
it interferes with its

i-Vl: ,-A

' •

1

projects,

standard

currencies

it

would

was

were
again restored as
in 1929 and there were an¬

were

pay

tranquil

more

,

than

they

Fluctuations Disrupting
A

is

3ound

best

currency,

suited

to

free

a

is

economy,

were

in the early '30s. ministration.

Competition

which

one

market

a

concern

ever

•

trusted, no one
a black market pre¬
than other such panic, the results would mium to obtain
gold.
The real
they are today. We may hope for not be much the same. But once criticism of the fund is that it
a
return of such tranquility, but
having had the precedent of de¬ does not go far enough, and this,
we would be foolish
to base our valuation
set
for them, nations is inherent in the nature of
the
plans on the assumption that it would be much more quick to charter and not in
organizational
must return.
abandon gold and to
devaluate details or their subsequent ad¬
much

were

can

no

,

as

suited to its age, an age when po¬
litical
and
economic
conditions

the

seen

of the public finances to the

by the United States would be
enough to restore convertibility
fact that
throughout western Europe is en¬

tirely

sometimes

J ' *1

country trying to improve its em¬ overvalued. But the valuation is
of money-is' ployment position at the expense set by the member nation in
ques-:
it was a of the rest of the world. Foreign tion: the fund has no more
than
generation ago. That system was trade:- degenerated into economic
advisory powers. It has been criti¬
itself a product of long evolution warfare long before the
cized because there are black mar¬
shooting
from the systems which had pre¬ war began. There is no reason to kets in
gold. But this again is the
ceded it. It was particularly well think that if the international
gold fault of member nations. If their

not be, met by .most of the other
governments of the world.

already

level

Thursday, September 23, 1948

the Gold Standard

on

only proper system
the gold
standard

(Continued from page 2)
ahead

CHRONICLE

capitalism must also feel that the

Gold Standard No Panacea: Bcrdwell
is

FINANCIAL

&

One

must

for

Gold

What is needed is an interna¬
tional monetary authority power¬
ful enough to prevent the over¬

t

emphasize here

that

which fluctuates what caused the trouble was not
value, which is not the principle of gold redemption

one

very little in

subject

to either uncontrollable
inflations or uncontrollable defla¬

was

tions.

a

issue
with

in itself. The source of the trouble

the

of

national

resources

currencies,
enough to supply

ajl the needs of normal interna¬

the

competition for gold by tional trade
and
with adequate
of independent na¬
reserves in addition to check
any
market is the comparison of the tional
central
banking systems
constitution. If the people do not
panic so serious as to affect inter¬
value of one economic good with which increased the value
of gold
approve of the way in which the
national economic relations.
The
another, and sudden fluctuations and correspondingly reduced the
public finances are being con¬
International Monetary Fund as
in the value of .the unit of meas¬ value of all other
commodities. It it is
ducted, they can petition their
now
set up does not meet
ure disrupt altogether the normal
was
the
fear
of
"losing gold" these standards.
representatives. If the petitions
Its position
as
functioning of the market. Fur¬ which paralyzed all efforts by
are not answered, after the next
against the old international gold
election there will be hew repre¬ thermore, a sound currency should governments to combat the defla¬
standard may be compared to the
operate in a manner prescribed by tion so long as
sentatives.
This
is
the
they remained on position of the United Nations as
proper
•'control of the public finances" law and known to everyone who the gold standard. In the panic,
against the old international law.
this

statement

peculiar

shows

idea

of

most

a

the

American

provided for under the constitu¬
tion.
an

Any "control" by means of
organized run on gold is fiscal

sabotage by an irresponsible
minority. It need not even be
sabotage by citizens, as heavy
withdrawals of gold by foreigners
cause
as
much trouble or

can

than

more

domestic

any

gold

drain.^Iir the .present state of in¬

The

of

essence

the

free

does business. Its operation should
not be dependent upoh the
per¬

the different

in

sonal judgment; of any group
officials or subject to pressure by
private interests.

The gold standard met the
ond

these

of

well,

it

and

protection

sure

limited

Except

a

There

ank.

met.

were

The old international law

was

central

no

consistent; it

re-

extent each central

some

meet demands by do¬
mestic banks for its own currency,

a

but

it

gold

from

had

rio

when

its

to

means
reserves

ad¬

simply

a

codifi¬

and order among nations. But for
what it was supposed to do, it

worked.

obtain

a

The United Nations has

far-reaching and rational
It has the ; mechanism to

more

in¬

were

was

was

and often in¬

cation of various customs; it made
no claim of
maintaining real peace

from which drains could be
To

imperfect

mittedly

bank could

very

inflation

banks

position of private bankf
country which has no centra1

si^ve

reasonably
against inflation.

gave

central

the

in

sec¬

requirements

multitude

plan;
gold discoveries.) adequate; For at the same time deal with problems which the old
problem we all the other central banks were international law
frankly left to
at the mercy of any foreign coun¬ will have to face
in the next few feeling similar pressures. Further¬
It would
not prevent further;
the judgment i of the strongest.
try which could build up a large years, barring the
credit
inflation
in
the
United
possibility of more, to lend gold was highly But the United Nations does not
American demand balance, /'es¬
war, is not that of inflation but dangerous.
The borrowing coun¬ work.
States, for gold reserves are much
pecially as the gold reserve next of deflation. The wartime infla¬ try* might be forced off
larger than necessary to cover
gold any¬
largest to our own is the one tion, except in countries such as way and there would be then no
However, this does not mean
outstanding
notes
and
Federal
that the old international law or
owned by the Soviet Union?
Greece and China where a war means to collect.
In a domestic
Reserve Deposits. -Even if
the^
the old international gold stand¬
is still going on, has almost run bankruptcy, creditors may at least
reserve requirements were raised
Long-Run Policy
ard can be restored at the present
its course. In the past, wartime recover something, but when a
to the prewar levels yof
for*
But ,ifl aiL international I gold inflations: havei
time. Their authority rested on
notes and 35% for deposits, there;
been, followed by nation decides not to pay its debts,
good would it do?

:,;

ternational

want

to

relations,

put

would we
public finances

our

unexpected

new

But the most

serious

.

r

,

would

still

be

excess

reserves

of'

$5,700,000,000. Gold redemption is
not. needed
to
strengthen
the

standard

is not

attainable

the-

at

present time, and if unilateral

ac¬

Opposite and equally violent' der there is as yet no authority which
flations. It is not enough to say can compel it to do so.
that these are "natural," except
International monetary confu¬
to the extent that it is natural for
sion, then," is only one aspect of

tion by the United States in re¬
storing a gold coin standard would
the
be
pointless, should an inter¬ men to make the same mistakes
dollar is already so strong that
the general international anarchy
national gold standard be the
during the past year $2,270,000,000
in similar .circumstances. Bid men. of
our time.
The powers of gov¬
;
worth of gold was brought
long-run;^
objecr cari also ieam
by the
;by; experience;fAs; ernments- to issue
world

rest

position of the dollar;

of

the

world

for

conversion

into dollars. To the gold-possess¬
ing nations of the world, the
dollar is

literally better than gold.

live of the different nations of the
world? Can it ever be

if

of course best for the reconstruc¬
of a vigorous' and

the trickle of black market trans¬
actions in gold at a premium is

economy
of
private
enterprise.
This objective is not shared
by a

to

-

be

curiosity % of

a

no

significance.

healthy

large part of the world today. The
Soviet Union is the most notable

example.

■

But

throughout

"

world,

Gold Clumsy and Inconvenient
r

? A gold coin standard would un¬
doubtedly be a convenience to

who

anyone
to

passionately desires
gold, but such people

hoard

form such

small

a

minority that it
appropriate to let
be determined by
them. Even when gold was
freely
available the average American
regarded it as a clumsy and in¬

hardly seems
public policy

convenient sort of money. In 1929,
for

instance, gold coin

$81,000,000
of

-

of

total

a

$4,460,000,000,

cents

of

gold

or

coin

circulation
about

two

hundred
Arid under

per

dollars of circulation.
the

only

was

present

regulations a man
who really wants to hoard
gold
only needs to go to the expense
of

melting down old gold

moral
out

inconvenience

of

or

the

making

false certificate.

a

And

if

there

is little popular
a gold coin stand¬
United
States, the

enthusiasm for
ard

in

the

including
States,' there are
men

in

positions

wish

to

reduce

the
a

the

effectiveness

ing of each individual
possible

under

the

standard

garded
for

so

the

would

much

rest

as a

of

of

gold

a

not

be

re¬

good example

the

world

as

a

taunt

against its poverty and a
conspicuous
flaunting
of
our
superior wealth. It would seem to
set up gold
test

of

which

payment as the final

public

we

solvency,

a

know in advance

Of

Such

time

when

,

so

far perverted

have

may

were*

i

•

is r




i

:

a

defense to adopt measures similar
to those of the aggressors. Infla¬

riot

on

mies

of
free
capitalism expect counterparts of the
destructive
great postwar deflation and wars, both international and civil
count on it to do their work for which
have convulsed the world
them. We must not have another
since 1914,
this

1932,

even

nor

another

1921.

world

nations

felt

that

will

not

As long as

their

national

honor depended upon

their main¬
payments, that de¬

been

monetary objective

gold

notably

standard

has

poor record in

deflation.
prevent
mistakes

No

money

business

had

a

preventing
system can

mistakes.

start

a

in

ternational

are

direction

the

establishment

It

of

an

the

of

effective

in¬

authority which shall
power to prevent the

large enough and if have the
enough occur at the same time, abuse of national sovereignty. Bu1
they will affect the welfare even like the United Nations, the fund
of people
who conducted their does not have sufficient powers
affairs

own

that the system will
work
well
without
any
direct
governmental control, but so as
to make it impossible to
work at

a

all

without

To

such

gold standard did not do all the economic-warfare devices
quite the contrary; Those of the '30s, exchange control, bi¬
who advocate the gold standard lateral agreements and multiple
without reservation seem to forget exchange rates.
But the nations

constant

men

system is

one

the

regulation.

best

currency
which has been in-

Hated to the point of
set

controls

cf

rationing

which

worth-

near

lessness, combined with
enables

ubiqui¬
and price
a

the

Jo divert most worthwhile
supporters.

Any

of precious metals is

reliable

own

coin

state

goods

circulation

naturally in¬

compatible with such policies; the
good money will be driven out
by the bad:
But

because

necessary

to

everyone

paper

the

who

money

modern

does not follow that
believes

in

a

free

quite

soundly.

But

to

a

minimum and

assure

that

J

>

i

r 'i

u

)i rV

make

to

sound money system should re¬
duce the effects of such mistakes

effective

£ '

r

t

announced

possible

one

supposed to make
stable
exchange
rates

multilateral clearing, free conver¬
sion of currencies and an end of

The

this:

the circumstances under which

individually

it

feel that their own
was abandoned.
Countries which domestic policies are more impor¬
abandoned the gold standard first, tant than the approval of the fund
such

Japan and Argentina, suf¬

as

fered the least from the effects of
the depression.
Those countries

which

maintained

such

as

and

least

The

France,

ternational

broke
was

a

race

criticism

point.

longest,

of the fund

slowest

really what they

recovery.

mechan'sm

supposed to adjust in¬

balances

of

payments

completely.

for

the

do not seem to know

They
maintaining rig:d
exchange rates, although precisely
criticize

that

it

would

.ft!

J'.t.vi

?-\v

I

>.

-;-r.

do want.

for

be

the

purpose

restored gold standard.

There

devaluation, each

thf

of

accordingly beside the
Indeed, some of the critics

the

it

satisfactory

down

of

is

had the

compensatory
was

Much
fund

been
the

criticized

I

Hi

currencies handled

t <■

Vl

■' »

of

a

It has also

because

iSvA&S":' *■.':;A
>

its

purposes. It was

disaster will not precipitate others.

is which

auto-

long :as^. the interna^
standard could be £
regulatingr force. That time; has
passed.
Nowadays there is no
more
possibility of reviving the
old international^ gold"'.- standard
than, there is of' reviving the Holy
Roman
Empire.
This does not
mean
that gold is finished as a
monetary metal or that there is
no
alternative to the anarchy of
so

gold

International

such

way

respectable nations from the

tiorial

sovereign states each trying to
rig its own currency and exchange
Monetary rates in such a fashion as to get
Fund, like the United Nations, is the
advantage of its neighbors.
The

is to handle public
finances not in
a

and

rRf-raff^

Help From Monetary Fund

Poor Record Versus Deflation

control

"preventing
inflation"
without
considering how many times over
currency
diluted. Their

men

was

the proper tion, restrictive trade measurer
functioning of the money system. and international cut-throat com¬
That is rio longer true. The ene¬ petition have been
the economic

as

the meaning of
money value that
they speak of -price control as

the

most

vitally dependent

The
have

men

But there

production.

'

?

the

in

have

and more- serious. De¬ ernments have also been abused
flation has '(always * caused unem¬ Nations which were
willing to co¬
ployment, bankruptcies and a loss operate have been forced in self

of the State.

test[cratic state, it
could;

much

as

direct

in the direction of its

adoption

who

money and the free market
and to
bring the economic stand¬

tunate.

Our

many'

power

of

tous

coin

the

United

great

of

of most of the world's
gold
stock, there is much less in other
countries which are not so for¬
owner

intentions

bring it back again.

so,

tion

seen

was

powerful. But now their au¬
thority has gone and all the good
very

taining gold
our
economy has
become more been abused, to the injury of both
valuation was an act of repudia¬
restored, industr.alized and
interdependent their own nationals and others
is it' the best system'
tion, that gold payment was the
the results of mistakesvhave be-- because the other
possible? By the "best" .we mean
powers of gov¬ mark which
distinguished solvent
come more

and

Beside this vast rush of gold into
the country at the

statutory rate,

money

custom, and for its time this

many

by it

of
are

:
t

y.

.

;

A project for an effective in¬

ternational

monetary

authority

(compared with such matters as
and

disarmament

atomic-energy

advantage that
it need not include the
Soviet
Union nor its satellites in order
control)

to

has

the

succeed.

They

have

been

largely removed from the sphere
or normal trade by the hard facts
of
contemporary
politics,
and
where they want to trade, we can
justly ask them to produce a
means of payment satisfactory to
ourselves.
The monetary field offers the
greatest possibility of sufficient
surrenders of sovereignty to make
international
cooperation effec¬
tive.

for

There

are

currencies

tender

across

many precedents
accepted as legal

national boundaries.

a
considerable
period
the
Spanish dollar and other Spanish
coins circulated as accepted coin¬
age
in the United States. The

For

United State's dollar is legal ten¬
der in

some

of the Central Ameri¬

can

states.

was

for many years the accepted

The

British

sovereign

Volume 168
coin

in

most

Number 4736

Middle

the

of

East

and Far East.

>■,

Limitation of National Currencies
The

most

which such

important

power

tari internatiional au¬
have is the power to

must*

thority

limit the issue of national

cies.; As long
free to pour

curren¬

governments are
new money onto the
as

market without

hindrance, efforts
to set and adjust permanent ex¬
change rates are futile. No coun¬
try will gladly accept in payment
the currency of any other coun¬
try so long as it knows that cur¬
rency
may
be
made
virtually
worthless through overissue. The
old gold standard regulated the
issue

national

of

effectively,
much

for

currencies very

if

a

nation

too

it.lost its
gold reserves. But that depended
upon the maintenance of a con¬
paper

vention

money,

which, like those against

submarine warfare and the bomb¬

ing of civilians, is

longer ob¬
served. A new authority cannot
rely an conventions. It must have
no

such economic and

behind it that

political

power

nation will risk

no

in

as

States

the power of issuing notes, which
was first given without restriction
to

state

to

the national banks and finally

banks,

was

next limited

largely restricted to the Fed¬

was

eral Reserve Banks

Government/

or

in

so

tional sphere the

the Federal

the

interna¬

time has

come

to transfer the power

to

a

not

of note issue
world authority. This does
mean
that
metallic coinage

need

be abandoned,

such

trary,
would

ment,

the

con¬

'authority

have

maintain
than

On

world

a

greater power to
convertible currency

a

would
as

the problem of external

national govern¬
it would not be troubled
any

gold

drains. Once confidence had been

that the

&

FINANCIAL

dollar

than gold.
In asserting

the

circulation

amount

needed

to

of

gold

maintain

'

gold

convertibility would prob¬
ably be negligible, as transfers of
money to any other part of the
world

could

effected

be

rriuch

ities

than

by

shipment

any

gold.
It

also

credit to the central
member

adequate

assure

nations

banks of

to

prevent

>

all

On

any

the
of

fact

that

why the people

only

hoard

>

this

point

Mr.

siderations.

of

stand

value.
If
people
their savings in
why should they
accept what they
might consider less valuable and

less

Fund

should

;.

now,

and

,

not
con¬

,..

inconvenient

sort of money.'1
Mr. Bordwell again con¬
the convenience of paper

Here
fuses

past,

support the

few people preferred gold

so

to paper money,

Monetary
press
for its

gold

System is ahead

coin

even

more

or

bullion.

Perhaps

common

argument that
not have

they do not need

our

today is the
people should

gold because the demand

for' it

may- exceed'the.supply
Either way, apparently, the
people
should not have it.

hundreds.

are mat¬

Bordwell,
passes

like

He

our

gold; it would restore to
people control over the public

purse.
These are basic matters to
which Mr. Bordwell
gives no im¬

that "Our adoption of
coin standard would not
be regarded so much as a
good
example for the rest of the world
as

portant attention.
As to what other nations
might

do, it would

seem appropriate to
suggest that they be permitted to

taunt against its
poverty and

a

a

conspicuous flaunting of our su¬
perior wealth." b I should like to
know
whether
Mr.
Bordwell,
when he

adopt

too;

sees

a

with

man

proceeds

to

silver,

or
a
paper
standard, that
auto, tainly should be for them to
too; or termine.
But should

his

wreck

any

good

that,

not

of

comes

as

currencies

should

we

not

and

expensive

other nations find
themselves '/with
cheap,' depre¬
ciated

should

standard

having a
is to the

system

currency

effect

argument

for

cies

the

are

have

The

;

r*

<

xiv

•

'

Price

•

.

be¬

against which the
the cheaper curren¬

measured.

'

.

most

standard

one

join
:

better

a

system.

metal

variations of

them in their miseries; we should
not "flaunt our superior wealth''

in their faces.

all

adopt silver or paper,
that would provide no reason
why
we

particular

Bordwell

de¬

or

them

of

amputates his.
That

cer¬

wrecked

a

whether he, when he sees a per¬
son with an
amputated limb, also

Mr.

monetary standard they

without any advice from
unless it be requested.
If they
wish to have a gold, or a
us

a man in
rags, dons
whether he, when he

or

any

prefer

sees

rags

put our own people on
with foreigners in
respect

par

to

•

says

Fluctuations

and

the

•;"r-\y:\Currency

i:Moreover, Mr. Bordwell seem?
to have slipped into an inconsis¬
tency by treating gold as supe¬
rior to irredeemable paper. Is i"
his

not

argument that the

is superior to-gold?

v

-

Mr.

Bordwell says:
"A sound,
currency, one which is best suited
to

As

to

that

and- Pressure

Groups

the.

restoration

a

standard!
people

would'

direct

of

the

return

price fluctuations

the
the

ican

and

fluctuations'
goods

and

the
can

of

causes

arise

services

pri^e

from

side

the

of

the

equation, from the monetary side,
Or
they may be a combination bf
people' both.
Mr.
Bordwell
is
recom¬

peculiar idea of the Am'er-;
Constitution since the

vote out their

can

ratio:

a

purse, Mr. Bordwell; say?
such
a
statement shows £

most

the currency.-

of money as measured
in prices of
goods and services is

public
that

on

The value

vgolc

to

one

responsibility for

I

over

control

is

little

very

uncontrollable deflations."
That puts the

contentior

common

fluctuates

in
value, .which is not subject-to
either uncontrollable inflations
pr

..

XI

Gold

free market
economy,

a

which

latter

.

i*

;„'V

v

latter

•

Representatives
not

are

mending

satisfactory

The Constitution would

Reason for Lack of
Gold Enthusiasm

a

!

gold

a

37

it would

the

over.

our

if the

IX

Mr.

of people,

X

money with the other basic func¬
tions
performed by gold.
His
argument here is that since, in the

of the wildcat banks of the early
nineteen

has

basic

very

vra5t|;JS75;,Ki'

strengthening into a true world
monetary authority, a United Na¬
tions Reserve System, which will
be as far ahead of our jumble of
competing central banks as the
Federal Reserve

Bordwell

these

"Even when gold was
freely available the average
American regarded it as a
clumsy

International

and

Mr.

with

3 He says:

have worked in its day—is
longer possible. The United

existing

safe?

that

mass

store up

fore¬

national

instead

to

dealt

for

may

States should

case

performed
its function

storing-up

wish

the re¬
gold coin
standard
by the United States
would be a step backwards. It
would mean attempting to restore
a
system which—however well it
no

has

the form of gold,
be compelled to

going unlimited national mone¬
tary sovereignty. '
,
::: <
a

Bordwell

convenience of paper
money and
bank deposits with
other basic functions

compensate member
their inconvenience

we

irrelevant.

the

by gold—in this

of

minority

a

seems

nearly two
centuries of central banking prac¬
tice. No country would need to be
afraid to take adequate steps to
alleviate a panic because of the
inadequacy of its gold reserves.
The advantages of such a world
monetary authority would amply
from

of

-

apparently confused the question
of

over

nations

protection:

gold.

might

panic from turning into a major
credit deflation. Again we have
the precedents built up in the in¬
tranational field

of

(1233)

gold standard to them

a

ters

<

.

should not have7 restored to them
the age-old right to hold

The
could

literally better

Mr. Bordwell has passed over the

property, and

of

CHRONICLE

that it is inappro¬
priate to let public policy be de¬
termined by i,a "small minority
who might wish to hoard
gold,"
question

cheaply by the monetary
authority through its branch facil¬
more

is
:

....

established,

storation

United

the

by

Where

violating its basic laws.
Just

THE" COMMERCIAL

seem

a

currency

so

managed

that the price level will fluctuate

tc

little.
Many, probably most,
experienced monetary economists

very

have nothing to do with this par¬
ticular matter.
The question, that

apparently would disagree with,
if Mr. Bordwell apparently has not him on
this contention.
A stand¬
explored is how pressure groups ard which is
a fixed unit of meas¬
for a gold coin standard in the are
now operating, how they con¬
(Continued from page 2)
urement
is not to be confused
United States, the owner of most trol
the use of the public purse, with a
IV
stable price level which
gold unless there is a system of of the world's
gold stock, there is and why. So long as the present is
a mathematical
indirect
conversion,
as
in
this much less
abstraction.
:
Gold Payment "A" Means to
in other countries which
system operates, every hew RepAgainst his contention. I offer
country, or unless some other most are not so
4Sound Finance
fortunate."
resentative
is
at
the mercy
of the statement of the Board of
unusual circumstance prevails. Vve
The general lack of enthusiasm these
Mr. Bordwell alleges that the
groups if he expects to be
Governors of the Federal Reserve
provided in 1375 for resumption for
gold in the United States reelected to office,
present campaign for a gold stand¬ of
"
System on "Proposals to Main¬
gold payments in 1879 when s^ems
ard
"makes
clearly to. be due to the
gold
payment the
tain
our Greenbacks were depreciated.
Prices
at
Fixed
Levels
fact t hat t he mass of
xn
means to sound public finance and
people
Through Monetary Action," made
Since all our money is main¬ confuse the inconvenience of
economic recovery, whereas it is
Mr. Bordwell says that "In the
gold
on March 13, 1939, in which the
tained on a parity with gold by as a medium of exchange with its present state of international
more properly the result."
re-,goard
jn parj. that "a steady
bas i c
and
1 do not make gold payment our system of indirect conversion, other
far-reaching iations, would we want to put our level
aVerage
prices is rot
the means to sound public finance i « would seem that Mr.,Bprdw?n> functions which few of them in¬ public Lnances at the nieicy o.
nearjv as important to the people
and econoni.ic recovery; I tnake it cohteittioh,;should, cause him to deed seem to understand—that is, any foreign country which could ^
aSia fair relationship between the
reach the conclusion that we
a means.
could, the functions of.gold as a stand¬ build up a large Americanr de¬
And.it is my impression
prices of .'the commodities they
if not should. return to direct reard of tfalue, as a standard of mand
that the experienced and careful
glance, especially as 'the, produce and i those which
they
deemability—to a domestic gold deferred" payments, as a store¬ gold, reserve next,,largest to our
students of money do the same.
must buy."
::■
: r,
,!,
coin or gold bullion system.
of
He house
value, as a reserve own is the one owned by the
The Board's full statement was
reaches the conclusion that we against other money and deposits Soviet XJniop?"
\
■ '
endorsed by 66 experienced and
The
f Mr. Bordwell -says "Gold pay¬ could have a gold coin standard, as a final clearing agent."
Under our present international reputable
monetary economists as
but for another reason.
mass of people need good leader¬
ment
caiinot
be
restored, even
gold bullion standard a foreign being "in
harmony with wellship in monetary affairs.
The country can demand
where it may be desirable, to do
payment of established
economic
princinles
VII
subject is too complex for many its balance in
so, until production has revived,
gold and get it if and the facts of monetary his¬
a Further
them
to
on
understand.
The
in his article Mr. of
budgets have been balanced and
our Treasury'g requirements are
tory."i:
:
Bordwell4says, in?respect to the guidance of specialists is needed. met.
confidence has been restored."
size of our gold reserves: "Un¬ Response by governments to pop¬
Has not our production been
How would the resumption of
ular notions
regarding money is
revived and the' Federal budget questionably v^caiv have h gold
Mr. Bordwell states that "sud¬
not likely to produce good re¬ gold redemption domestically
standard if we want it. The
balanced?
~
ques¬
change that picture?
It would den fluctuations in the value1 of
tion is, what
good would it do?" sults.,:.
He does not say whether con¬
merely put our people on a par the unit of measure disrupt altoHe says that it would not
But I also refer Mr. Bordwell
fidence nas been restored in this
prevent
with foreigners in respect to
exer-4 gether the normal functioning Of
further credit inflation; that
to the black market and other
gold
country, but assuming that it has,
market."
Here
he
again.
prices for gold abroad for light rising claims against our gold, i the
is
not
needed
to
then we have the conditions for redemption
That is an issue that Mr. Bord-< seems; to place on money the reon
popular enthusiasm for gold.
restoration
as
stated
by
him. strengthen the world position of
well does not meet.
sponsibility for change in prices.
the dollar; that the dollar is lit¬ He should also remonstrate with
Nevertheless
he
argues
against
The function of a unit of meas¬
erally better than gold: that it the gold mine interests who are
xra
restoration.
;
urement
is
to
record
change.
trying to get our gold-dollar price
He writes of "budgets" being hardly seems appropriate to let
Says Mr. Bordwell: "But if an' Presumably, if the peach crop
public policy be determined by a of gold raised because of high
balanced—apparently he does not
international gold standard is not were
larger than usual, Mr. Bordsmall minority who
confine himself to cur budget.
might wish to prices offered abroad for gold. attainable at the present time, and
If
well's argument regarding a good
Do these high prices abroad indi¬
all budgets of ail countries must hoard gold.
if unilateral action by the United standard of
measurement, if ap¬
cate that the people prefer gold
be balanced before we can return
Of course, a gold standard
States in restoring
a
gold coin plied to the bushel basket, would
may or
paper money as a storehouse of
to
a
redeemable
money,
then, not prevent credit inflation, but it
standard
would
be
pointless, lead him to insist that the bushel
Mr.

Misconceptions About Gold: Spahr

Bordwell

"And

says:

there is little popular

enthusiasm

>

.

...

„

.

,

,.

.

.

.

hi til

I rivifVA

+■J

A

ivi AtH

r

n

/1a.

.

.

'

_

-

.

*•

_

.

_

_

;

t

•

,

.

doubtless
to

an

we

are

doomed forever

irredeemable paper money.

gold that will
VI

in

exchange for its currency
the

un¬

believe, through
their own free judgments, that it
is as good as gold." That sets up
an obstruction to redemption that
ordinarily would prevent it in¬
definitely.
When a government
suspends gold payments, the irre¬
people

deemable

ciates

and

paper'money
it

cause

credit

infla¬

depre¬

generally remains
depreciated because paper is pa¬

a

self-liquidating

hat
to

can

get

a

the
gold

are con¬

trolled by managed-economy gov¬
which

can

international

an

standard

be

the

long-run

gold
mone¬

tary policy objective of the

dif¬

ferent nations of the world?"
It

is

mystifying to read of

manage

good

vent a

automobile

drunken

will

money.

not

neople

pre¬

have

driver from

basket should not be permitted to
reveal

an

more

bushels;

more

he

would

hold the unit of measurement

sponsible

international
gold
standard
nol
easily if they also
being attainable at the present
"managed" irredeemable
hav¬
time in the face of the fact that
paper money with which to coning
an
accident,
but
a
the United States has been on 9
good
i
automobile is still better for many trol and manipulate them?
gold standard internationally
reasons
than is one that is
poor j
Private property in gold giver since Jan. 31, 1934.
and unreliable.
As RobThe redemption the individual freedom.
The!! are S n r 615 "° valid
i u r e 1 v no valldl
aie
in gold that we should
; ert
Burns
said of the golden
A

for v the

bushels and

that

the

same.

of

enlarge the bushel

number

This

is

would

be

the essence

a

argument

re¬

number

as

so

the

of his

to what constitutes

a

good dollar.

He apparently would

not

fixed

have

would

a

measure

standard

change,

but

that
one

■

expect in

the

light

of

past

experiences i

should reduce Reserve and Treas¬
ury

If

gold stock to that extent.
Mr.

Bordwell

will

look

grounds

guinea:
Nor tor
But

a

hide it in

a

hedge

trained attendant

for the glorious privilege
Of being independent."

at

|

on

which

to

assert

that

that would itself so fluctuate that
other changes would be obscured.

A stable price level has great
domestically would be pointless. virtues if, as the Reserve Board
It would end
irredeemability; it said, it results from natural har¬

our

"Not for to

and




w

do

long as they

so

ernments

gold is gold. Therefore foreign quotations of the naper
it can hardly be expected, as a dollar as
against gold he will see
general thing, to be on a par with that he is mistaken in his assertion
per

abroad

standard

one's definition of in¬
flation he excludes, as I think he

should,

should

Furthermore,
people

tion if-in

Mr. Bordwell says that "A gov¬
ernment cannot offer to give gold
less

value?

probably would put a brake on it.
nothing in the nature of

There is

return to

a

gold coin standard

would enable the Federal Reserve

monies

banks

"managed"

to

out their so-called
it would restore tb<-

pay

Property
rights, liberty,
and "reserves";
independence, and the relation of right of private property in gold;

money

in

the

But

economy.

irredeemable
does not generallv

W*';' (Continued

on page

38)

a

paoer
con-

38

THE

(1234)

An

can't

Tomorrow's

or

Whyte

buy at the top
True,

sell

or

long

a

alright. I, for

in the world, so I leave the
confirmation theory to those

Consider however,

intensified;

market

at

imate bottom.

that

of the Dow

approx¬

the followers

Dow

system are legion

:

said

and

about

this

I've met

a

who've had this

ordinarily the

Bordwell:

law and

known

"Further¬

to

everyone

operation

private

subject to pressure

'

xvra

matters

'

The Post-1929 Record

/

prescribed by law" mean?

*

Bordwell say9: <fThere id
to think that if the

reason

national gold standard

interests."

international body to lhanage all
currencies of the v/orid is ap¬

Furthermore, and the

importantly, regardless oi palling to me.
'
any1 country's /experience
with
The provisions of our Constitu¬
gold, silver, or paper money, it is tion ; reposing in Congress the
not good economic analysis to
authority and responsibility for
tribute to money alone a given our
monetary system are not men¬
economic: condition.
tioned by Mr. Bordwell. Nations'
Constitutions often seem to! be

case.

Its

business.

depression.

most

not be

manner

restored

there

it

as

no

inter¬

within

1929

it

I

do

know

what

the

re¬

ard

was

no

concern

nation

so

manage

as

to pro¬

a

that

stability of

price level

which Mr. Bordwell recommends.

mean

not

or

could

vide

and

were another such

panic, tne
that if
Congress results would ' not be much, the
law-prescribing that same." •<-' ?:///■>'.. ■'
/'"':yr
the price level shall be stable the
The inference here seems to be
currency will sovpperate as: ■ to that" the experience in and after
1929 revealed that the gold stand¬
keep the price level stable?^ 7 I,[
Dees

little

nation's currency

that

again

were

in

was

of

among international planners, t
No
group
of monetary ; men

How much could

should pass a

monetary

international

an

authority

hope

to .ac¬

complish!
To manage a currency within a

nation in

defective, that irredeem¬

an

effort to maintain

a

stable

price level—assuming tnat
mainder of that quotation means. able paper money; is
better, and is desirable/ which it is not—the
Although a fundamental argument that the gold standard was in some managing authority would have to
in the Bordwell article seems to way responsible for what
hap¬ have authority to prevent wars,
be for a "managed" iiredeemable pened in 1929. The causes of that power to control
arming, power
currency, here he says that a sound episode require better examination to control the government's fiscal

theory, mostly by Peter Ham¬
ilton.

the

harmony/ quite

What does "should operate in a

sufficiently con¬
quite a dent
in the market picture.
The
public on a buying or a sell¬
ing rampage can start wheels
in motion that-only the very
naive would ignore.

part of last week's paper, is a
private fracas. So I'm dealing
myself in. There's been a lot
written

by

'

sound currency should
in a manner prescribed

operate

by

centrated to make

Theory, in another

Mr.
a

of officials or

tion is often

the

Says

more,

and their action on confirma¬

piece about

such

dependent Upon the
personal judgment of any group

,

I don't think the

1

the opposite is

should

I'm.cognizant of the faOt,

Bearish*

above critical points*

to

who does

who have.

hold

stocks

Thursday, September 23, 1948

suffered least from the effects of

(Continued from page 37) 7

f

tribute

exam

pie, don't have all the patience

'Recommended

present

the bottom.

work out

CHRONICLE

trader

position based on such a
confirmation, will probably

By WALTER WHYTE=

ness

he'll

FINANCIAL

&

confirmations

term

Says—
=

market

for

at

Markets

Walter

active
wait

COMMERCIAL

lot of people
So much for that. Now<fof
theory down the immediate market and the

currency should not be dependent than
Mr. Bordwell's generaliza¬ affairs and defieds, power to
reg¬
pat, at least that's what they position of this coluhm.. Last upon the personal judgment of tions suggest that he has given to ulate foreign trade and
tariffs,
I've read many articles week
them. For example, there is the power to regulate the
any group of officials.
velocity- of
you bought seven stocks.
desirability, of going back to the currency, power over rainfall and
explaining this theory. At one In the past few days you saw
•XVI*-77
O upheavals caused
by the Worlu drought, power over inventions
time I even thought it was the
Gbld and Deflation
them, together with the mar¬
War
and
postwar
government and discoveries, power to control
answer
to
how
to
make
Mr. Bordwell says. "The gold "management." It is not proper to costs power to regulate demand,
ket, face a selling attack. The

said.

.

money.

averages got

standard

down to around

record

177 and the air became blue

Here

Later I discovered the the¬

with pessimism. Some of the
didn't work as I'd hoped stocks recommended
here,
would for the following rea¬
even threatened to break thru

':i
;

'

didn't

I

sons:

understand

it; their

he

again

blames

the

position' that
can

and

gold

a

withstand

gold

it

should

an

keep $11 the world
keel

even

and" all'the

the drunken driver wrecks
Mr. Bordwell feems to
ques¬

regardless

of

wisdom

a

greater

than

that

shown

by the millions of people
who record their judgments in the.
market place when they
buy And

any

amount of human abuse and that

cause

t?

the

standard

standard for man's abuse of it.
Is
the fine automobile to blame be¬

ory

it

take

had a notably poor
preventing deflation."

has

of

on

wars

No

insanities, perpetrated

national

governmentwith

by human: beings, '
/P'e;p:/ any reasonable amount'; pf ^bod
If Mr, Bordwell's house bums judgment could or would
tion his contention because he
I didn't follow it as I was told after, the smoke cleared
attempt
they says "No money system can;
to;: ja' to repose aiiy^ su::hTfespofisibility
pre-:
I should or I followed it too
still held on. ;
vent business mistakes." But then ieht is he going to
with a' national
mohetafj*?;author¬
argue* that this
closely. The end result was
he promptly returns to his basic is proof that houses are inferior ity; Is thefe
any good feasor* rtb;
-'A %
margin calls. This was when
suppose
that any
contention, blames gold standards to tents?
international
I don't know if the stocks
as obstacles to
monetary authority could get or
recovery in the de¬
margin calls weren't synon- will hold on
7;. ■;'
XIX ^
indefinitely. I do pression of the 1930's, and says that
fulfill
the
responsibility which
SayS liih BoHwell:; "The' source
ymou§ with dirty 'words.
know that unless they violate "Countries which abandoned the of the trouble
Mr.
Bordwell proposes
that
it;
[in the early 1930's]
should have?
their stops;' they; should be gold standard first> such as! Japan Was the. competition for. gold
l by
and Argentina suffered the least a multitude* of
The
International
Monetary
So, instead 7 of 7 following held. For a complete list, in¬
Jndepehdehffiha^
from the effects qf the
depression. tional central banking system^ilv:^^ hid", was never properly con¬
Dow's theory (sh—sh— don't cluding
stops, of the stocks Those countries which,-maintained What does that demonstrate? ceived. What was needed was an
let,this get around) I followed
recommended, I suggest re¬ It the longest, such as France, had What caused that great, competi¬ International Clearing House
hunches. Horrors ! ! ! Uh-huh,
the slowest and least
satisfactory tion: for gold? Why aoes Mr* Bord¬ through which nations could clear
reading last week's column.
recovery."
that's what I s&id-^-hunches.
well hold gold defective because their international transactions in'
Statements- like the last have there Was so muchBut i stock i market hunches
competition for: terms of gold. E&gh nation's cur¬
More next Thursday.
been made many . times and ap¬ it? .The defects
lay elsewhere* rency would then exchange, at its
aren't
conceived
Jove-like
—Walter; Whyte parently are widely accepted as they did not lie with gold:*/It market value in terms of gold. 1
from
anybody's
forehead.
accurate. Mr. Bordwell is hot em¬ should not be difficult to set one's There ,is, no objective test of the
[The vietvs 1 expressed in this ploying
value of a nation's, currency. ex= '
They're based on experience, article do not
defensible methodology
necessarily at any when he Uses
cept its market value. If a
resistance

points.

But

.

p7

'

$
r

•

5

■J.
•

■7#

,

t)iree cases^—assum-,
kind of subconscious feeling iiffle coincide -Mthi-those;-ttfytiw
ittg their accuracy—to convey the
derived from past action ana Chronicle/ They are presented as hotion
that these are typical ex¬
thote 6f the duthot onty<]
tape performance.) Naturally
periences t
'
this method isn't infallible. If h/'y,
1
1 .UddlMttjyfea.
i V'
Against his assertion t putwhat
it'a reduced to a system iiU Floydl C. Harper, Joint <
appears to be a careful study made
by Di% Rufus S. Tucker, entitled
value becomes still less.
StaffofF?A: Allen&Co.'1

nation

a

•

,

Hr"

(Snecial

*

*

LOS
.

%77
r

ms

are

-.mathematical " formulas,

■

r^ whicircwhen: followed by too
^ liMnyi either l°se their value

become

f or
-

;

-

*

distorted^Do)V fol-

lowers aren't
Of

sell until

supposed to btiy

one

7

ANGELES, CALlFA-Floyd

"Business

To that extent it's

About by Suspension of

a

system

interpreters;

G. Brashears & Co. Adds
(Sbeclal

LOS

;

The

td

tfh«<jnfct,»>T

Financial

Julian, Jr; has become affiliated

1932, whether

with

had abandoned the gold standard:
And it is also plain that
feCoVexly

Brashears & Co., 510
Spring Street, members of
the Los Angeles Stock Exchange.
Tn the past Mr. Julian did busi¬
G.

South

Pacific Goast |

aSnaii'

individual* dealer' in

followed quickly

Securities

LOS

The

Financial

A N G E L E

in

Chronicle)
—

George to. Barker has beeri added
on

to

Pacific Coast Exchanges

the staff of Fewel &

South

Spring Street, members of

the Los Angeles Stock

Schwabacher & Co.
Members
York

San

Stock

Exchange
Exchange (Associate)
Stock Exchange

Francisco

Chicago Board of

Trade

•••

14 Wall

Street

New York

COrtlandt

7-4150

Teletype NY 1-928

5, N. Y.

Private Wires to Principal
Offices

San

Francisco—Santa

Barbara

Monterey—Oakland—Sacramento
Fresrto




Co., 453

Exchange.

exchange rates, although precisely
that would -be^; the; purpose^of n
restofed

the abandon/

^old-standard;"

at least

seven

/

months IafefrTn

cized.

It is

is so-

widely criti-'
to

no, answer

say,- as

country, Falestihey the is set by; the member nation in
together.-There Is no question: ' the -fund has no more

one

came

reason

to

conclude that currency
or

than

Dr.

that z

>

well's 'article.

adays there is

:

H6'

savs:

"Now-

no more

Standard, For nearly 15 years we
have had the standard which Mr.
Bordwell

Tucker indi¬

says

cannot

*4f What jie seems to;
practical
Does

think

advisory powers."

be revived

9ay,Jhas

any

m^aiifcug.

Mr.
that

"

Bordwell, by chanCe
there

is

no

inteitia-

tional gold standard unless all

helped fe*

XXI

coverv."

to France.

use

possible and "
International: Motie-. *'

as soon as

discard the
tary Fund.

.

depreciation caused
As

The world Should

*

countries recovery eame first; does Mr: Bordwefl, that "the valu¬
16 countries
depreclatibft 'Came ation [of an overvalued currency]

two

BbUse;

mechanism

many

International Monetary Authority

05

nations have it?

Does

he

think

a

nation cannot

heeded," says Mr.. have an international gold stand¬
He was formerly with
Floyd A. degression was reached 45 months Bordwell,* "is
an
international ard unless that nation has a goldbefore currency depreciation took monetary authority powerful coin: standard
Allen & Co.
domestically?
\
place. His treatment of Argentina enough to prevent the over-issue What he means by the "old" in¬
cannot be summarized briefly.
of national currencies, with re¬ ternational gold standard is not
Joins J. Barth Staff
clear.
A nation can maintain, a
sources enough to supply all the.
I am Tot awa^e th^t
anyone has
(Special to The Financial Chronicle)
of
normal
international, gold standard internationally apd
found errors in Dr. Tucker's anal¬ needs
SAN
FRANCISCO, CALIF.— ysis or
trade and with adequate reserves, still have any one of several sys¬
conclusions, and it would
Saul Siepser has joined the staff seem
in addition to check any panic so. tems domestically.
Jnecessary for Mr. Bordwell
serious as to affect international
The point is not to change Our
of J. Barth &
Co., 482 California to demonstrate that Dr. Tucker is
Street, members of the New
snd

San

Francisco

changes. «7:/'/

York

cates

wrong

that- the low month of the

in his conclusion before he

advances
Stock

Ex¬

'

the

plication,

:

contention,

that

countries

by

imt

which

abandoned the gold standard first

'

|

possibility {
Of reviving the old internatfortal h
under which gold is exchanged
gold standard than.there is of re-.'
grain for grain? are a very dif.Btftpire,!'; /, |
,€^rtcnt-thing from giving an arti-; Viving the Old
Perhaps it should beenipha - 1
sized again that since Jah; 21,J934,
papeW Curiencyr-;as- in the case of
we have; had an international
gold f
the British paper "pound."
It is

FrsfJCd; 'gold > units for/naticmS;

only two coun7
Japari: It Usually
either before
abandonment;^ -theTiatter that

first; in

S,, CALIF.

on

the countries

tries—Latvia and

17

to

or not

ment of the gold In
came

With Fewel & Co.
(Special

Orders Executed

cahie in' the
July., or (August,

en

\c^ticize/;it jor :maihtainhiit rigid

of Etirope

months of June.

or

New

Gold

elusions "It is clear that, the turn¬
ing point in the United States af»d
nine
of
the
leading; ^industrial
countries

ANGELES, CALIF.—W. H.

Los Angeles.

York Curb

ithe

o

ness

New

;

international author/ .tlements/ was "designed for, and f
iiy/which shall have the power- equipped to provide, £ properly-..;/
to prevent, the-abuse Of national coficeived Tnternationafr Clearing 7

an effective-

Recovery Not, Brought

Standard." published fn,the "AnHarper has become associated
nalist * of Aug. 21,
with Floyd A. AHeh &
1$(&/&&&£$ sovereignty.'" 7 g | Ha
/'
Cdb Ink,
1
oav'c
Lhif
rented statistical evidence in*'re-, V. '• Wo
650 SduUi ;hGrahd
^Avenue : Mr*
spect to
the experiences fbf^'34
Harper was formerly with First
countries and reached'.this Tcoft/ know^
what., they 7wanLr~"They
California Company*

average coh-

firms the action of the other.

with many

Financial Chronicle) -

C.

„

on

to* The

7

cahtafford ii/jolftt gtand^fd/ ike Q,
market value -will be
Mr* Bordwell would set
ideritical, ;
up. aft.
ihtfernational monetary (authority^ within costs oi shipping, with the 'j
Hd ^ay^thtif ^/thd^/lnternatiohaf• gold standard, value of an ouflce^of ;j
Monetary ..Fund * "is Istart fin the gold.: - yA/y;
The Bank for* International
direction of the establishment Of

"What

economic

is

relations."

-

-

;

77

'

international standard, but to

National 7 monetary ■% "manage¬
ment" has been bad enough; but

store

the

Mr.

thought of superimposing

an.

redeemability at home.-

"Where

we

stand

now,"

re¬
-

says

Bordwell, -"the restoration jof

Volume

THE

Number 4736

168

gold standard by the
would be a step
backwards.
It would
mean
at*
national

a

United

States

tempting

restore

to

system

a

which—however well it may

its

in

worked

day—is

have

linger

no

possible."
That

tific

estly face the

of

an

course,

is

It

statement.

unscien¬

basic

One of

ments, it would

seem

issues

my

com*

i

avmgnts. Even Mr. Bordwell says

ex*

able

gold coin standard," and

"Unquestionably

gold standard if we want it."

we

have

can

a

(1235)

placed

meet

risen sharply.

takes

place

world,
will

in

which

desire

As

market.

to

the

it

is

to

rest

of

the

our

earnest

our

promote,

continue

recovery

exports

decline and

our

not

the

all

it

upon

Extent of Inflation

debt

price

riods

The

in

rise

this period
of the Civil

itself.

In

both

World

Wars

The Economic Situation-

war

that

it took place after the war, when
the
suppressed inflation of the

creditor nation such

Strength and Weakness
(Continued from page 4)
introuuees an

element of great

special session to grant pow-.
stability into the
control to the Board of
Governors of the Federal Reserve

cent

of

ers

Board's regulations
should succeed in
rbtafdirig the growth of this type
of Credit.
This is a justifiable
in

1

would

der to

ac¬

and intensify any sub¬
sequent deflation. While it is to
be expected that a major war will
be followed by liberal Consumer
spending, it is interesting to spec¬
ulate on what would havp hap¬
pressures

war

v

and have been

demand for goods and

and

k

Purchases of goods

an,

im¬

services in

equipment expendi¬

$12 billion in 1*946,
$16 billion in 1947 and are esti¬
$18 billion in 1948. About

the
are

in
the

substantial

My

guess

that productive ac-

is

periods
and

first

prices

dangers

of

inflation.

oil

They

all too well known from past

terized

Inflation

by

is

decline in

a

charac¬
the

eco¬

rby the Federal gov* nomic position of the "rentier"
by state and and
relatively
fixed
income
local governments, on the other groups, an increase in the eco¬
hand, have increased. The Fed¬ nomic position of the farmer and
eral government has been able to manufacturing labor, a distortion
teduce debt; whereas expenditures of normal price and income rela¬

Funds were ex¬

Purchases

and

state

havC

exceeded

local

governments

revenues,

despite

the raising

of tax rates and the
levying of hew tiaxes.

riod to replace

recently,

■

is

prices and costs risen that there try rose sharply* a Substantial
is some danger that the construc¬
proportion of which took the form
tion industry may be priced out
of term loans.
of the market, and once

'

i

again be

subjected to those sharp cyclical
swings so characteristic of past

performance.
Over the

past 2% years, home

about

mortgage debt has risen by
*

$13 billion

to the record level of

The net increase of

$33 billion.
$13 billion

result of the

is the

extension of new loans of about
account

of

V $13 billion.

repayments

and

billion

$26

old

loans

on

about

of

It is doubtful

Exports

lib¬

a

is

higher

tion of the income of home
v.

fers.

own-

have

prices
level

prospective

*

In

a

period of intense business

activity and rising prices, exces¬
sively easy mortgage credit is no
jndre justified thaft overly
instalment

credit.

To

liberal

encourage

people to go into debt renders a
disservice

to

the

individual




and

to $23 billion.

Of this

financed
the liquidation of dollar assets
foreigners and by gold exports

huge total, about y3 was
of

to this country.

The balance was
loans and

financed in the main by

grants from the United States.
:

So

far

this

increase

in

defense

Government.

Even though large
budgetary surpluses may no
longer be experienced, the Federal

Government

still

can

exercise

anti-inflationary influence by

fall

inflated

of

comes

to

an

a

held
by
banking system
of

cash

counts.

end, prices

It

the

into

reduce

trust

ac¬

debt

held

commercial banking

by the
tem

manage*

the budget is

the
commercial
through the in¬

.

flow

sharply, and this decline is

sys¬

still

can

further

by funding the
floating debt.
To do so, bonds
carrying longer maturities and
higher rates of interest than arty
of
the
issues
now
outstanding

Vulnerable level of prices.
Price Disparities

be offered to the public.

could

The
flated

Vulnerability of an in¬
price level i$ to be at¬
tributed in:large measure to the
:

disparities and inequalities of the

as

continue to retire

can

debt

of

accompanied by business reces¬
sion.
An inflated level of prices
is

long

balanced it

to

level

As

rhent.

an

ap¬

Anti-inflationary fiscal 1 meas¬
need to be supplemented by

ures

correlative

action

in

the

field

of

j

mbhey and credit. Consideration
price advance.
The present in* needs to be given to the repeal of
Ration is characterized by a rapid ail laws prohibiting the holding
advance in the prices of consiimp* of: gold
and
to
the complete
tion goods.
Prices bf industrial interchangeability of our paper
products and capital equipment money with gold.
Consideration,
have lagged behind.
In general too, should be given to the impo¬
prices that have advanced furthest
the most vulnerable in case of

are
a

decline.

which

Important

changes

Direct costs have risen faster than

Lagging overhead
sales volume
present high profits.

overhead costs.
and

account

a

for

large

The fact that the price structure

is

distorted

structure

and

the

of

a

definite

limit

the

on

Reserve notes

be issued against the
A principal source
many inflations has been the
"coinage" of the public debt into
currency.
According to $ome ob¬
servers the reintroduction of gold
may

also public debt.

have

occurred in the structure of costs.

costs

sition

amount of Federal

price-cost-

of

redemption and the imposition of
a limit on the arftouftt of Fedetal
Reserve notes that may be issued

out of balance portends

substantial

readjustments

in

„

year,

our

net ex¬

port trade balance has declined
substantially from the large totals
reached in 1947. The decline has

burdenso me.

How* effect

oh

Corrective Measures

The Problefn of

Inflation

selective

The corrective "measures which
need to be taken

of

fiscal,

lie in the fields

monetary

to

adaptable

employment.

credit.

the forces of deflation
set
in, debt totals become in¬
creasingly onerous.

ness

amounted

February, 1946, the Fed¬

expenditures would seem to pre¬
clude further substantial debt re¬
duction on the
part of the Federal

the accompanying high
business activity.
Once

or

inflation

able

been

never

an

vote

debt has been reduced from
$280 to $253 billion.
The reduc*
tioh in tax rates this year and the

of production artd a relative de¬
cline in labor productivity,

We

Nor

to

upon a

seem

reason

by

.

States

against the public debt would se¬
the verely curtail the activities of the
economy.
If analogies can be Federal Reserve Banks, in par¬
drawn from past experience, the ticular, their support Of the gov¬
In my
period of readjustment will be ernment bond market.
one
of falling prices and reces* Opinion, however, Such mechan¬
sion.
ical restrictions would prove de¬
Present Problem
Federal debt and, paradoxically
cidedly advantageous, for there is
enough, has introduced elements
The present problem, however, altogether too much elasticity—
of rigidity and instability in the is not one
of. deflation, and reces* one-day elasticity—in our present
economy.
The economy becomes sion, but that of inflation and monetary and credit System.
Corrective action in the field of
more
rigid because of the in
boom.
But because of our almost
creased amount of
income re
psychopathic fear of recession, we credit can take the form either of
quired for debt services.
The are not willing to take the neces* selective or general credit con¬
Selective credit controls
economy becomes more unstable sary corrective action.
We still trols.
because the current level of busi
to security
live
under the
shadow of the have been applied
ness
activity is made contingent Great Depression.
We have too loans and to instalment credit.

result the percentage

mortgaged

for

ever, once

expenditures, but^ also by
of our net export, trade
bOw than ever before and debt balance. Net
exports of goods and
Service
and
maintenance
costs services from the beginning of
to
the
middle Di
1948
threaten to absorb a large propor¬ 1946

homes

bf

time

|

Business activity ha& been at
old, the qual¬
high levels not only by,reason of
ity of mortgage debt has deteri¬
Consumer, construction and busi¬
As

still very high.

are

the

continued increase in debt little confidence in the inherent The regulations applied to secur¬
A period of inflation is a time strength of the American econ¬ ity loans are very restrictive; they
when debt should be reduced, not omy,
We f^il to realize that the might well be more restrictive in
case
of
instalment credit.
corrective measures
are the
increased.
Debt incurred when sooner
incomes
are
inflated
does
not taken, the less severe will be the Selective credit controls are also

eral terms than the
orated.

support the
agricultural
products
despite declines in recent

tionships, increases in real costs propriate policies of debt

stabilize

,

^

to inventories.

Since new loans have

been extended on much more

whether business

expenditures Will
continue at
these
high dollar jtotals. Want
and equipment expenditures are
tending to level off, although elec¬
tric light and poweff companies,
railroads, oil and Chemical com-*
panies
have plans for further
large expansion. Justifiable cau¬
tion is being shown wrth respect

it

particular
is not the

soldiers' bonuses.

:

<

to

eral

Und services

of

favors

gov¬

of

which,
months,

War and World War I, the
became explosive.

experience.

pended in the early postwar pe¬
fatuities &hd more
Should
defense
expenditures
with the emphasis on
| iivity would have remained on a cost reduction, to make use of new Hse sharply, purchases of goods
comparably high level and that
techniques and to produce new and services by the federal gov¬
price inflation would haye been
products. In view of the price in¬ ernment would again occupy an
less. The real worth of individflation, the actual additions to Important place in the economy
iial savings in terms of goods and
'
productive capacity are less than Defense expenditures have both a
services Would, have been pre1*
direct and indirect effect on busi¬
the dollar totals would suggest.
served to a greater extent.
By*
ness
activity— a
direct • effect
The
second
most
important
making
unprecedentedly
large
measured by the total volume of
expenditures, consumers the m- source of business demand has goods and services involved in the
selves are partly responsible for centered on inventory accumula¬
program and an' indirect effect in
the inflation which has reduced tion. / For the 24/2 years ending in
stimulating forward buying by
;
June, 1948, the rise in the book
so
substantially the real
very
individuals hnd fausihess Concerns
5
value of their savings.
Greater Value of business,.inventories Was
Contingent as they ate on the
thrift would have contributed to about $22 billion, or about 70%. In'
international political situation
personal and national well-being. all previous business cycles, in¬ defense
expenditures
are
the
ventory changes have played a
great unknown
in the present
Residential Construction
role of great importance in stimu¬
business situation.
Sihce the end of the war the lating or depressing business ac¬
basic demand for residential con¬ tivity.
When business activity is
Business Activity and Debt
struction has been so intense that at a high level, stimulated in part
Postwar business activity has
it has strained the capacities of by inventory
accumulation, in¬ bfeeh at record levels by reason
the construction industry.
The ventories never seem too high. It
of the rise in personal consump
demand
for housing has grown is only when sales decline that in¬
tioh
expenditures,
construction
out of such physical factors as ventories
grow
to
Gargantuan
expenditures, business expendi
geographical shifts in population proportions.
tures, the net export balance and
and an increased rate of family
In order to finance expenditures
governmental expenditures,
The
formation,
it has been created, oh plan and equipment and in¬
rising levels of expenditures were
fob* by such financial factors as ventories, and, tp extend credit to made
possible by the use of cur
a high level of national income,
customers,
corporate
enterprise rency and deposits resulting from
accumulated savings and exces¬
required about $68 billion from wartime deficit financing and by
sively easy mortgage credit. These the beginning of 1946 to the mid¬
the
postwar increase in deb
factors have caused this demand
dle of 1948.
Internal sources of Consumer debt, mortgage debt
i to express itself in sharply rising
funds supplied about $43 billion business debt, the indebtedness o:'
prices and costs. Encouraged to or more than 60% of tdtal require¬
foreign nations and of State and
go into debt by excessively easy
ments.
The balance was obtained local governments have all in
mortgage credit, individuals have in the form of increases in bank
creased.
The increase in private
bid against each other for housing
loans, new security issues and debt has exceeded the decline in
accommodation. So sharply have
trade Credit. Bank loans to ihdus5

at

There is little need to dwell

have

due td

three

of

rose

Since

1945,

product
is

grant

if

called upon

Surely this
appropriate time to

Dahgfer& of Inflation

fallen recently to about 13%. This

% of the total has been spent on
equipment.

rise

gross

decline

the

slowly

each

In

of

national

are

to

follow

or

ernmental bodies

and services,

40%

ernment.

mated at

new

about

pe¬

business

policies

groups.

prices

by all governmental units which
Constituted

only in

Once

anti-inflationary

'hen gained momentum.
Just be¬
fore
the
turning points in the

the overall redUctibh^ inrpurchases of goods

tures totaled

pened had savings remained large
—-pot at the war level but, say, at
about 10% Of disposable income.

foreign

reduced

boom.

of

economy in government

flation.

or¬

Civil

community.

Plant

it easier for

make

periods flared into open in¬

war

Government Demand

portant stimulant to
the

and

•

,

of the

surplus,

be prepared to reduce

nations to obtain dollar exchange
in order to repay American loans.

record dollar totals since the end

inflationary

present

centuate

only

and

import

an

should

trade barriers still further in

equipment, inventories 3nd
customer financing have been at

selective credit control.
Continued sharp increases in in¬
stalment- credit

in¬

we

Business expenditures for plant

force

type of

*

economy.

Business Demand

The

System.

now

the

United States will eventually ex¬

perience

Its

as

be

can

activity slumps and incomes de¬
War and World War I.
In the cline, government deficits quickly
absence of price Controls and ra¬ emerge and deficit financing en¬
tioning the peak of Civil War sues.
inflation took place during the
We
cannot
achieve
maximum
that

exceeded

aas

imports to increase. It is expected
a

39

been used to decrease debt, particularly
demands the debt held by the commercial
and prices haVC banking system, thus reducing at
one stroke both
disposable income
" '
and bank deposits.
Governmental

has

capacity,

to

and the

American
resume a

ductive

.

.

chbose to

-

in

decrease

a

ports and an increase in imports.

policy of foreign nations,
earlier in his article: "The United in need of dollar exchange, of
States
undoubtedly could diverting their products to the

possible to

gold coin system if we
do so.
And, if we hon-

from

CHRONICLE

difficult in* The increase in imports reflects a
restoration Of production abroad

restore the

i

resulted

FINANCIAL

&

deed to avoid resumption of gold

.

is.

four

in Item

stated

COMMERCIAL

and

credit

business ac¬ policy. Fiscal policy concerns not
tivity since the close of the war only the fiscal policy of the Fed¬
The high level of

In

this

credit

urban

mortgage

however,
control has been
field,

applied in reverse; inflationary
practices
have
been and
are
being
fostered
by; government
guarantees.
In our use of selec¬
tive credit control, we have been

been
accompanied by the eral Government, but also those far from consistent.
In
Likewise, in our use of general
greatest rise in prices experienced of States and municipalities.
by the American economy.
The all units of government we should credit controls, we have not been
for
the
largest possible wholly consistent. Member bank
basic reasons for the rise in prices strive
are
This course reserve requirements and shortto be found in the fields of budgetary surplus.
interest
rates have been
of action calls for a high degree term
money
and credit—the reduced
But the restrictive effect
It means the raised,
propensity to save, the use of the of self-discipline.
war-created money supply and avoidance-of tax reduction, the of the!se measures has been-offset
the
increase
in
private
debt. deferment of every postponable to a considerable extent by the
Gains in
production have been expenditure and maximum econ¬ continued support which the Fed¬
eral Reserve Banks have given to
substantial
and
have
tempered omy in government.
has

the

The budgetary surpluses result¬
the
reaching limits of pro¬ ing from this policy should be

inflation. % Nevertheless,

economy,

the

market.
(Continued on page 40)

As

government bond

a

.

40

COMMERCIAL

THE

(1236)

is

as

The Economic Situation-

practicable.

domestic

Weakness

as

the Federal Reserve Banks

weight.

and

rate of

increase

in

continue to peg

States

further;

metals

as

coal,

petroleum,

steel,

for

materials

basic industrial

iron

non-ferrous

The

much

such

(Continued from page 39)

long

United

the

cut

be

CHRONICLE

As long as her
continues,
im¬

boom

from

ports
cannot

Its Strength and

FINANCIAL

&

their

and

products, and chemicals represent
the hard core of those imports,
amounting to about 66% of the
Dominions
purchases
in
1947
from this country.
On the other
hand, the possibilities of further
shifting ' exports
from
Europe

in

Thursday, September 23, 1943
the United States may show a nat¬
ural .trend toward a
closer bi¬

restoring the basic conditions

for multilateral trade.

Final

suc¬

remains

lateral equilibrium, as that coun¬
try develops its own oil and iron

greatly in doubt, as
political ten¬
sions, overhanging Europe and the
entire world, cannot be eased. ;
From
a Y strictly
long-range
viewpoint, Canada's trade wiL.
cess

{long

as

the

grave

resources, and expands its indus¬
trial
facilities, thereby reducing

the dependence on some basic im¬

ports from the United States.

the prices of gov¬ consumer purchases is falling and
seems
to
be
bonds, they will have no business demand
real control over the volume of reaching
a
peak.
Construction
credit and cannot be a stabilizing costs are rising fastpr than in¬
force in
Our net export balance is
our
economy.
In the come.
Already certain prices
language of the Federal Reserve falling.
where, hitherto, they have yielded
Halsey, Stuart & Co. Inc. headed an underwriting group that
Act, they will not be able to gov¬ have experienced sharp declines.
only little in "hard currencies," offered publicly Sept. 22 $75,000,000 Pacific Telephone & Telegraph
These various develonments may
ern their open-market operations
to
the
United
Co. 35-year 3Vfe% debentures, due Sept. 15, 1983 at 100.53% and
States,
appear
"with
regard
to
their bearing portend the end of inflation.
accrued interest.
The group won award of the debentures at comequally limited.
Tooon the general credit situation
At this juncture a new unknown
On the other hand, a business
uuve scue aept. 21 on its bid of'*>
of the country."
Present policy has entered the economic picture
recession, such as might develop 100.13999.
the company spent $135,000,000 for
in this respect needs careful re¬ in the
form of defense expendi¬ next
in the United States
the first seven months of 1948.
year
The company first will use the
consideration.
tures.
If these rise sharply, a new and
spread
to
Canada,
would ret
proceeds to reimburse its treas¬ Expenditures for all of 1947 to¬
impetus will be given to infla¬ tend to deteriorate the Dominion s
Summary
taled $195,000,000.;.
V . , v.
ury, in accordance with orders of
If defense expen¬ terms of trade, as the country is,
In appraising the present eco- tionary forces.
the regulatory authorities of Cali¬ / The company is engaged in fur¬
romic situation one needs always ditures rise so sharply that they primarily, an exporter of (pricefornia, Oregpn and Washington, nishing communication services,,
amount of our wise
to give emphasis to the inherent absorb a sizable
volatile) grain and raw mat
for expenditures made for exten¬ mainly local and toll telephone
strength of the American econ¬ production of goods and services, terials, and an importer of fin¬
sions, additions and improvements service,
in
California,
Oregon,
we shall find ourselves once again
ished goods; this is particularly
omy.
This inherent strength is
in a war-type economy, with its true for Canada's trade relations to its telephone plant. It then will Washington and the northern por¬
evidenced by long-term increases
Its wholly-owned
repay $32,650,000 in advances from tion of Idaho.
in production, in productivity and accompaniment of rationing, price with the United States, whereas
its parent, American Telephone subsidiary, Bell Telephone Co. of
controls and the allocation of ma¬ in her commerce with the United
in national well-being.
Superim¬
and Telegraph Co., and $23,000,000 Nevada, furnishes such service in
The future trend of de¬ Kingdom,
posed upon these long-run secular terials.
long - term
purchase in
outstanding bank loans. It is Nevada. On June 30, 1948, the
ontracts would soften the impact
trends are cycles of boom and fense expenditures is contingent
expected that the balance will be company and its subsidiary had
recession.
All of our booms have upon that greatest of all uncer- of a business slowdown on the
in
inter¬ trade terms. Although output and expended within a relatively short 3 570,270 telephones in service and
been characterized by sharp in¬ taint;es—develonments
per iod to meet the cost of exten¬
national political relationships.
creases in debt.; In the case of the
were furnishing, local
export of gold might, then, be
service in
sions, additions and improvements
current boom, the rise in debt took
stimulated,
such
an
Should defense expenditures not somewhat
About 34%
to the telephone plant of the com¬ 621 exchange areas.
the form of an increase in public rise
could,
on
balance,
sharply, we are still con¬ eventuality
pany
and of its wholly-owned of the telephones of the company
debt during the war and
of an fronted by the spectre of inflation weaken, or even upset the vul¬
increase in private debt in the in a peace economy.
•ubsidiary, Bell Telephone Co. of and its subsidiary are located in
This may, a* nerable equilibrium now reached
ernment

.

Halsey Siuart Group Offers Pacific Tel. & Tel.
$75,009,000 issue

•

,

postwar period.
That part of the
debt financed by the commercial

b»"k:ng system finds its counter¬
part in increases in currency and
bank deposits.
.

.

_

indicated

fields
credit

during the boom must be brought
voder control.
The only way to

fo

these

cyclical

swings

recessions is

prevent

to

are

to

the

curb

of
fiscal,
policy.

This

of

its

own

since

we

can¬

with

and

monetary

of action is

course

deal

the

inflation,! not

boom.

fall

However,

not be certain that this will occur,
I
have
attempted to suggest a
ooss'ble course of action in the

be moderated, the increase in debt

If

above,

weight.

basic

designed

causes

simply

with

of

its

Inflation has attacked

symptoms.

various economic systems at varifeed-by. the sharpest increase in out times. The remedies are well
commodity prices ever expe¬ known, but their application re¬

The r>re«ent boom is character-;

^

rienced bv the American economy.
Our problem thus resolves itself

the

country's

U.

dollar

S.

Nevada.

not

surprising that the Canadian
is closely watching
the
unfolding of the European
Recovery Program. Indeed, ERP

is

possible that the present
inflation
may
fall of its own

struction

in the largest con¬

program

and

vicinity,

and

in San Francisco and

vicinity.

its history

in

Angeles

about 25%

Government

to be the

seems

for

gold

and for

S.

U.

and

dollar

large scale multilateral trade.
Up to recently, Canada has

re¬

ceived the lion's share of ECA's—

disappointingly
procurements."

small

(Continued from page 3)

reserves,

restoration of

eventual

an

Kaiser-FrazerfMeleel

mainstay of hope
improvement of

gradual

a

—

"offshore

butter

about

to

$400

million

necessity.

Here's what

Judge Letts said

on

that subject:

"Expulsion from the Association (NASD) prevents
members of the Association from granting the expelled
member the usual and customary dealer's concessions
without which it is impossible for an investment bank¬

will

amount

;'f,

voluntary. We have constantly claimed that no volition was
nvolved and the statutory set up under the Maloney Act
was such that membership in the NASD became a bread and

of its operations may reach only
demon¬ about
$3.5 billion. Canada's share
strate their vitality and strength. in "offshore
procurements" may

American, economy

Los

Now engaged

Under these circumstances, it if

Considering the
various difficulties, total ECA au¬
into that of checking Once inflation is checked,5 the
thorizations in the first 12 months
long-run
basic
trends
in
the
.

inflation.
It

quires a high degree of under¬
standing, courage and self-denial.

in

budget.

in

during that period.
While this would be a. far cry
from
the
$1.6 billion worth of

ing house of any size to operate. Such an order of ex¬
pulsion is the equivalent in the case of a large investment
hanking house such as Otis & Co. to the complete de-;

various

struction of its business."

U.

Will Canada Ease Her

U. S. Import Restrictions?
(Continued from page 16)

time, bring relief from infto*ionary pressures to the gold
mines), Canadian gold producers
pnr»e

increase

) an

F,,om

$462

1947

to

of

those

million

at

reserves

the

end

of

million by June 23

$742

have been granted subsidies, the 1948. That does not vet
represent
st'muJeting effect of which, how¬ a comfortable margin of safety,
ever, is likely to be limited.
Ca- becaure reserves amount to o^iy
rt-idian gold production in the first, about
W? times the probable 1948
ff-'e
14

months
million

J 2

1948

fine

million

1C47,

of

in

like

first half

and

against

ounces,

the

about

was

period

exports

of

+his country.

1947.
serv¬

ing with the United States should
aJro have improved, as 1948 tour¬

expenditures of Americans in

a

ance

appears

.

which

halted

of

in

the

United

States

has

have
time

the

been

being

outflow

net

a

United

capital

influx from

the

States.

For

that y exports

Finally,
t^ere

long-term account,

on

should

have

been

Dominion

/eight months.
Canadian

marketed

$140

d-awn, thus far, from
lion

short-term

Export-Import
also

indications
continues

f

;

-"t

border.

On

dian

in

1-48

were

the
The

that
to

the

the

first

U.

S.

make

other

net

velopments

five

capital

effect

of all

are

busi¬

mater'al

of

the

hand, Casecur¬

months

$10.8 million in

reverse

li the

There

purchases of U. S.

ities

*>'■'

credit Y by

investments north

#

i

million

$300 mil¬

a

Bank.

ness

total

national

obviously, is of great concernBroadly speaking, the Dominion

during the past
In August 1948, the

repay

its

output, the future of world trade,

Government

to

of

mate¬

a

$150 million 15-year 3% bonds in
the United States; proceeds will
used

28%

capital into

rial net influx of U. S.

the

about

of

excess

movement.

these

de¬

has

to

trade

an

excess

of

grain,
metals,
wood,
pulp,
newsprint
and a variety of lesser
items, plus
its tourist and

dations,
and

a

for

shipping accommo¬
iron, steel, oT, coal

wider

range

of

finished

products, plus the servicing of the
external
debt.
Historic ties,
as
well as purely economic reasons,
focus the country's interest on a
multilateral
pattern of interna¬
tional

trade, with concurrent
vertibility
of
the
major

con¬
cur¬

rencies.

Only in the absence of
f^ese conditions, has the country,
reluctantly, been forced to take
take

the

road

to

bilateralism.

Canada's holdHowever, Canada has, by now.
$L'£S oi gold and U. S. dollars, was i probably gone as far on that road
upon




which

the

listed

recently,

as

"available to ERP countries" for
the
period
from
July
1,
1948
through June 30, 1949, it would,

nevertheless, cover a major part
of the expected trade deficit with
the

United

States

and,

materially

ease

thereby,
her bal¬
of payment difficulties. Pro¬

tend

to

ance

vided there

be

net

no

outflow

0'

capital into the United States, it
would probably enable our neigh¬
bor to further strengthen her gold
and

U. S.

dollar

reserves.

However, the actual call of ECA
on
Canada's resources may be
below

even

these

estimates, in
year's
abundant
in the United States. More¬

view

of

ERP

should

U.

dollar

S.

is

save

Canada

attrition,

continued

on

a

from

long

as

fairly

as

large

scale.

In view of the political and
economic implications, ERP now
seems

several

likely to be kept alive foi
years, irrespective of the

outcome

tions.

of

For

November

our

elec¬

;

.

the

evolution

of

world

trade,

these will be transition
years, for better or worse.. In the
meantime, Canada seems likely
to

retain

most

of

her

severe

re¬

strictions on
imports from this
country, and to make only token
concessions, until she has, agpin,
built up her reserves-of
gold and
U.

S.

ably

dollars
sure

demand

and

can

be

reason¬

that unfettered domestic

for

U.

S.

goods

will

claimed powers. In this instance they have attempted inde¬
pendently to interfere with the jurisdiction of the United
States Court and, through an inquiry set in motion by the
SEC and a proceeding pending before the NASD, to wrest
confidential communications from the affected party wherr
at the s&me time the issue of the right to these communica¬
tions is pending before the Court.
Judge Letts' determination is significant in that it has;
made plain respondents before the Commission and tho
NASD can have their rights safeguarded when they are m
a
position to fight.

This is another way of
saying
that Canada will
probably return
to; more
liberal t.roHp
nra^ti000
ERP

Unfortunately many respondents haven't the financial
to put up the militant fight that has been staged by

means

Otis & Co.

It is

regrettable that representatives of the SEC and the*

NASD do not have the vision to await the Court's determina¬
tion

of

their

confidential communications
and client without in¬
stituting and forcing their own proceedings while that de¬
termination is still pending.
right to wrest

incident to the relation of attorney

We are informed that the stabilization of Kaiser-Frazer
stock immediately prior to the new underwriting was au¬
thorized by the Commission.
In the

complaint, however, made by the District Business
Committee," No. 13, against Otis & Co. and its
registered representatives, William R. Daley and Cyrus S.
Eaton, this stabilization is characterized as manipulation
Conduct

and

it

is claimed that this

stabilization was improper and
maintaining an inflated and artificial price and
manipulating and unfairly and improperly stabilizing the

resulted in
in

market."

"

<

'

no*

drain her again of gold and U. S.
dollars.

only if and <whcn

;

The Findings further substantiate our view that the
Commission and the NASD make arbitrary use of their

this

over,
a
slow-down in our do¬
mestic demand may free more of
our own goods for ERP.
Even so

it

country

a

*

commodities

Dominion,

crops
re¬

to be the result

seems

dollars

of

serves
on
current
account; the
major part of the recent increase

record,

severely reduced.

from

be said

can

orecious gold and U. S. dollar

year's
been

imports

to
the

for

has

in reserves

tourism

United

somewhat precarious bal¬

have'probably topped last
Canadian

the

All that

is that

Canada

while

1948

projected

achieved,

The Dominion's balance of

with

States, and to aooroximately 45%
of

gold amounted to
f?4:3 million, against $45.9 million

ist

deficit

;

of

von-monetary
m

trade

S.

succeeds

These two partners,

ently working at

cross purpose

the other condemns.

The

hunt

stances often

the SEC and the NASD,

-

here. What

one

are appar¬

authorizes,

.

for extended
leads to such

powers

in similar circum¬

contradictory results.

f

'

Volume 168

Number 4736

|

THE

COMMERCIAL

following statistical tabulations

shown in first column

8teel

STEEL

operations

Equivalent to—
Steel

INSTITUTE:

(percent

of

capacity)

Previous

Weel{

,

.

Week

gept 26

__

y <.

.

'

..

.

S6 1
.

96.1

ALUMINUM

Ago

Ago ■;/'

(in

1-1,732,200

1,732,200

1,728,600

(BUREAU

Jt-ruuuciion

94.:

95.9

oil

runs

Gasoline

oil

Residual

distillate

fuel

oil

fuel joil

output

(bbls.)
(bbls.)—___

output

5,535,000

16.709,001

2,050,000

7,182,000

7,509,000

6,235,00*

§6,828^000

8,598.000

8,932,000

8,817,00,

pipe lines—

oil and

distillate

fuel

oil

oil

fuel

(bbls.)

(bbls.)

11

at

of

exports

Revenue

AMERICAN

OF

freight loaded

Revenue

RAILROADS:

(number

freight ree'd from

;

connections

North

To

of

cars)

ENGINEERING

CONSTRUCTION— ENGINEERING

RECORD:

..■-

96,634,000

84.853.00C

To-South

21,679,000

21,619,001

Total

U.

construction

Public

§57 355,000

68,969,000

57,061,000

§36[o6b,000

To

Asia

72,308,000

61,458,000
68,523.000

To

Africa

57,156,000

ERAL

788,700

895,279

891,277

698,000

689,543

As

922,370

628,440

,

682,174

Central

America

(net

(net

State

and

America

(net

—

$106,894,000

$117,146,000

$90,627,00(

33,177,000
73,717,000

55.420,000

45,897,00-

104,449,000
78,831,000

Sept. 16

61,726,000

56,434.000

51,521,000

Bituminous

17,283,000

10,205,000

11,180,000

'

—Sept. 11

,

10,775,000

*11,980,000

—Sept. 11

952,000

1,162,000

1,199,000

FORGINGS

124,400

*149,300

,*,146,200

(tons

STORE

SALES

INDEX—FEDERAL
TEM—1935-39 AVERAGE—100

RESERVE

—

12,490.000

ELECTRIC

Electric
..'

(in

output

,rV V.'T'

'•

FAILURES

INSTITUTE:

Sept. 11

308

285

STREET, >; INC.

Sept. 18

._

*■

AND

•

•

•■

BRAD- •'

&

SEED

»

5,426,247

T

5,166,126

5,390,788,

T

4,977,14:

I '

94

Sept. 14

3.75255c

♦3.75255c

♦3.75255c

3.18925c

Sept. 14

$44.74

$44.66

$44.52

$36.91:

Sept. 14

$43.16

$43.16

$43.16

$37.7 L

72

Pig iron (per gross ton)..
Scrap steel (per gross ton)—.

__—

—

v;; 23.200c
23.425c

-

:

Lead

Zinc

Louis)

(St.

at—

(East St. Louis) at-.-

103.000c

103.000c

19.500c

19.500c

.<■'

.

19.300c

19.300c

14.800c

15.000c

15.000c

'

-

to

-

'

,

6.

U.

Govt.

;

_____—

31——

Aug.

10.500c

j

(500-lb.

Fiber

Aug.

corporate.;.-.;.—

Average
Aaa

—:—

Aa
y-. A ■

—

—

—

bales)—

_L—.

111.44

111.25

115.82

116.22

116.02

120.60

:

114.27

119.0(

Lint—Consumed

110.52

110.34

115.6:

105.00

in* no

in" "

107.27

COTTON

LINTERS

AND

MERCE

,

,

.

-

of

31

Baa

.—Sept. 21

104.63
...^...^..LSept. 21'107.27

-.

___..

,

t, :

•

Railroad; Group-i-i-^---———————
Public Utilities'Group^T(t..-.._^----*^-^-iii-i-Jii.i,-iiii:^.Ii..l.-^.Sept.'21y:'

.

Industrials

MOODY'S

Group—

111.07

lxi.o'1

111

115.43

115.04

119.2C

yv' .:;

In

Aaa

Sept. 21

:

:2.94:
.

Sept. 21

MERCE)

Shipments

2.84

■

3.32

3.89
420.6

Sept. 21

422.0

3.21
v

3.1)

3.07
,

,

(short

(short

427.4

Index

Foods

ASSOCIATION—WHOLESALE

Fats

—

oils

and

of

Cotton

>
■<

"

•

'r*

Sept. 18

229.9

224.4

212.0

CASTINGS

270.0

272.3

261.f

Sept. 18
Sept.18
_^—4._Sept, 18

v—

Grains

Livestock
:

co)nmoditles__L_'_:—

^

Metals

Farm

——

machinery^—

All. • groups-

292.9

256.9

233.8

233.8

168.8

168.5

195.5

187.3

187.5

187.4

233.3
155.3

149.6

140.9

140.9

139.2

Stocks

149.3

147.5

147.5

135.7

—8ept, 18

144.5

144.5

143.1

127.1

226.3

225.9

227.1

212.6

end

132.3

Sept. 18

.combined-ii'^—

Sept. 18,

(at

Month

of

Orders

.^SSOClAT?ON:i

1-

Production

i

162,353

Sept. 11

234,396

Sept. 11

144.410

182,685

Sept. 11

410,240

392,753"

180,203
186,174

165,194
184,342

OIL,

91

-

orders (tons) 'at—_—

Unfilled

AND

PAINT

REPORTER

DRUG

PRICE

93

375,515

••

144.2

Sept. 17

144.7

143.9

sale

for

tons)

of

-Month

end

at

All';commodities

•

Farm'

:

(value In

Foods

-Hides and

-

'

-

.'

-Textile

leather products———

products

i

Metal

metal

and

Building

Bousefurnishings

j.

Miscellaneous

.

"

-

'1
Special groups—•
Raw

188.3

Manufactured

-;

140.4
114.4

——..Sept. 11

172.0

172.0

170.9

150.4

comodities

commodities

♦Revised

figure.

refinery strike.

"

than

other

203.2

202.0

132.1

131.6

120.4

147.7

146.9

146.8

118.5

118.3

117.9

180.9

180.7

182.5

171.9

Sept. 11

158.6

158.7

159.7

.Sept. 11

163.9

164.7

152.5

Sept. 11

163.4

162.8

164.2

153.4

153.3

152.9

138.1

JReflects

effect

■■„;yy":




of

strike

in

260,097,131

51,445

55,188

79,064.

$253,428,940

$260,176,196

813,031

817,327

875,289

$252,287,776

$252,611,613

$259,300,906

$22,712,223

$22,388,386

$15,699,094

$275,000,000

time——
y

public debt—

v

—

.

253,049,362

150.9

.Sept. 11

$275,000,000

253,373,752

one

gross

150.4

'

Guaranteed

obligations

Treasury
Total

%

not

public

gross

owned

by

——

—

debt

the
-

.y

and guaranteed

—

Deduct—Other

products
—i
products and foods

—

^

132.1

119.9

^__

farm

V :

;

$275,000,000

any

Total

179.4

133.2

;

than farm

$308,111,500.

obligations
—
;■ $253,100,807
outstanding public debt obli-

203.1

^_Scpt. 11
Sept. 11

at

Outstanding—

.

products
other

All

All

•**

articles

i

—

—As of Aug.

185.2

137.3

">*,'' L
■■
"

.3,110
3,665
$10,120,415

$1,124,000

31 (OOP's omitted):
y
Total face amount that may be outstanding

147.8

i

Semi-manufactured
'

<>

••

-

\

.,

U. S. GOVT. STATUTORY DEBT LIMITATION

Sept. 11

1

\

———

180.9

137.6

materials

...

' 473,923 '

,

$4,369,000

190.3

Sept. 11

..

;»

—-—

184.0
189.2

goods_____—

85,014
*• 31,942"

,

,-A,047
4,113
y$12,108,978

-—-——,——

185.9

147.5

commodities

.

'"

purchases

187.3

188.8

—

<

'

157.4

137.6

allied products

■

469,973 y

,:'r.v

3,429
3,765
$11,200,095

DI-

»

190.4

147.5

—______

1

..

SECURITIES

August:

169.0

Sept. 11

materials__

Chemicals and

sales

Net

of

187.8

Sept. 11

products—

A.—Month

167.4

———__Sept. 11

Fuel and lighting materials

"V;..'.;* -:

——

188.1

Sept. 11

——

i.——

ji

S.

Net

—

GUARANTEED

AND

U.

^117,794 /
yV. 35,100

..

r

.

116,956

'

y,.;

TREASURY MARKET TRANSACTIONS IN
RECT

152,894

<

/

497,410

'l-v- :/,v-'-"v.*;

units)
dollars)—.—

,♦

/.
^

32,518

.

81%

---

month

(DEPT. OF COMMERCE)—

July:

86%

/'

.

87,927

/

-

-

168.0

——_^Sept. liy-y,:;.
Sept. II "

products.——

of

u

(number of units)—.

WHOLESALE PRICES—U. S. DEPT. OF LABOR—1926=100:

>

120,445

(number of

OF

:

17,095,009

v

<

,

——:————

tons)

Shipments

142.6

*16,086,000

897c:

i;-j
,

—————

Production

INDEX—1926-36

AVERAGE=10O

.15,971,000
18,179,000

'

103

V"

—

California.

Sept. 11

«-

§Excludlng

yy„;;-' y":y,y*.""V

California

163.0

figures

which

were

unavailable

due

to

,

y

gations not subject to debt limitation
Grand

total

outstanding,^

Balance face amount of
under

♦Revised

above

figure.

-

'

12,417,000

.

472,229

■

234,656

17,740,000
19.544,000

producers' own use (short tons)

TRAILERS

'

v

17,757,000

COMMERCE)—

For

TRUCK

26,591

,

.

21,426,000

—-:;.y

orders

35,320
178,760

»

(bbls.)^^_

OF

Shipments

"Percentage
•

36,601

1

sale

(short

_a—if
:{t-ons)_—.—_'—_—

.

,

y—s

For
v

40,733^
23,420

•

33,634

_

(DEPT.

(short

64,162

81,747
48,113

64,995
34,940
30,055

*

Bhipments (short tons)

.

receive4

yyyvyyv

——:

of month)

July:'

132-5
J1

;

sale

for

(bbls.)J—:

used

Capacity

-2,675,138

/>

1130.7

'

1

,

,

OF MINES)—

-

mills

STEEL CASTINGS

Unfilled

NATIONAL PAPERBOARD

(bbls.)

from

2,587,081

180,424

June:

of

,

•

_

-

months

of

CEMENT (BUREAU

Month

226.6

155.3

•

.

—i*---

Shipments

159.1

235.3

-

—

tons)

Production
■

393,802

474,416

.ry

y

OF

(DEPT.

July:

-

end

orders;

PORTLAND

216.3

155.6

of

tons)

tons)

•;(short

168.6

197.2

235.4

——;

„_a——

(short

190.6

169.7

_Sept.l8
—Sept. 18
..Sept. 18

materials

Fertilizers
-

.

287.2

tl30.Q

For

Unfilled

303.0
284.9

195.1

—-18 y

Building -materials,—
Chemicals and drugs——
Fertilizer

295.8
220.2

233.8

Sept. 18
—^Sept...l8-'

i——1—

:

294.9

224.2

284.5

:—____Sept. 18

Miscellaneous

Textiles

-

297.1

221.1

-

(short

519,137

597,624

■:»

•

,

of

middle

at

sale (short tons) —
'———
producers'..own use (short tons)——"
Orders
booked, less cancellation, lor sale

222.0

268.3

<

'

For

234.0

——-Sept. 18

—

Fuels-'
•

1

246.2

242.7

;

912,939

m

COMMISSION*—

Employment

IRON

MALLEABLE

53,156
21,188,000

:!";v

'y

2,601,084

Railway

163,188
•

>

1,072,040

424,105

i

month

tons)

Shipments

245.6

__Sept. 18

of

August ^(1935-39 average=100)

COMMOD-

—

—

Farm: products

:

•

FERTILIZER

a

end

at

INTERSTATE COMMERCE

2.69

ITY LVD EX BY: GROUPS—1935-39=100:

.

(short torts),.—.

sale

80,865

•

21,328,000

r ■
<
914,464

'

—490,359

tons)

for

orders

COMMERCE)—Month

NATIONAL

86.468

,

4

—-

producers' own use

712,864
1,155,481
840,201

COM-

tons)

sale

Unfilled'

2.79

.2.90
426.3

2.88

u,

(short

For

:

OF

134
273

V

190.424
71,026

y

Month of July:

—

For

2.87

3.33

3.08
.

,2.70

3.45

:yy

3.32

3.08

2.62

2.94

3.15

3.45

Sept. 21
Sept. 21

4

2.85:

2.94

...

3.14

Sept. 21

INDEX—

', V

2.23

:y,^#2.8*y

(DEPT.

CASTINGS

IRON

2.45

'3.13

104,810
'147,381

August

public storage as of Aug. 31—^
f: ~
69,228
Cotton spindles active as of Aug. 31—• .21,352,000

3.10

3.46

.Sept. 21
—i

2.84

.v

Sept. 21
A

of

consuming establishments as of Aug. 31

In

2.45

.

month

Linters—Consumed
>

.«V

1,723,616

public storage as of Aug. 31-

3.09

f.

2.45
3.09

Sept. 21

COMMODITY

In

GRAY

Sept. 21

Baa

1
.

YIELD DAILY AVERAGES:

BOND

MOODY'S

107.09

111.62

•••••'■ 111.621
115.24

Sept. 21

—

•

•

„

,

'

1,246,848

y-

-

••

-

T62,

627,393
1,471,644
1,335,996

728,732

of Aug.

as

V

v;

,

'-•>

August——

establishment

71,883
31,738
39,594

4

COM-

OF

BALES—

month

23,141
24,395

.

\

11,725
13,992
'
9,780
2,187 ; », -1 45,986-1^470
4,454 V'■
42,507
2,203

—_

DEPT.

—

RUNNING

—

'ln consuming

•'r

t*

1! to Aug. 31——^—
to Aug. 31—--——

1

114.27

--^-Sept21^-:v'^y;:.-:110.70 :

—■

—

440
540
270

r

Aug.

34,554,.

y>

99,452
1,281,481
1,261,773
'
170
17,713
17,844

,

m

1 to Aug. 31i—

Shipped Aug.

114.27

v
^

—Sept. 21

—

41,302
921,879
916,385

,

100.73

,r-

.

101,348
53,165
51,269

;

31—
31——

Aug.

Shipped Aug. 1 to Aug. 31,——'
grabbots, etc. (500-lb. bales)—
Stocks
Aug. 31

100.69

26,722
46,971
67,190

'

'

31

Aug.

,

44,219
36,397

1

to

1

82,363
1,897,865 ,'
1,862,443

39,314

C

—

to Aug. 31

1

1 to Aug.

Aug.

i-.

-

Aug. 31

1 to

Aug.

Aug.

100.69
111.44
116.22

104.01

.■

74,554
80,566
88,375

fy
'■

Aug.

31

Aug,

Produced

"

116,241,000
25,216,000

—

31

Aug.

(tons)

'

V*.-a ' 4

Sept. 21
Sept. 21
—Sept. 21

—

19,202,000
31,032,000
29,849,000

~yT■:

:v

(tons)

Produced

PRICES DAILY AVERAGES:

Bonds_,_

,

„

31

—

MOODY'S BOND

25,601,000
22,893,000
51,209,000 1,274,530,000
44,768,000 1,276,030,000

-

31—

Aug.

Motes,
V

•'>

.

"
1
60,695,000
98,432,000
40,299,000 1,168,045,000

-i.-—

1

'

Stocks

15.000c

*

•!•,* £!>.•-y

\

OF COM-

Aug.

.

Shipped

Hull

80.000<

15.000d

Sept. 15

i_

,

21.425c

19.300c

Sept. 15

.

-

167,444
101,917
165,058

4,074,820
4,081,166
93,182

373,048
173,060
289,068

Linters—jrunning, bales—

21.225c

23.425c

19.500c

.

23.200c

183.000c

_

,

.

:

—

31———

31—__—
1 to Aug.

Aug.

.

(tons)

Produced

23.200c
23.425c

■

31

Aug.

"

lyrpftl.

Stocks

Sept; 15V

77,212

81,946

Produced (tons) Aug. 1 to Aug. 31Shipped-(tons) Aug. 1 to Aug. 31—2—_

"" " '

.

Aug.

(pounds)

y.,^'Stocks (tons)

yy

relinery/ati^LiLL;»-^^^i^——~—

96,374

80,463

(tons

31—

(pounds)

Shipped

Domestic

Aug.

Oil—

Hulls—

yy

METAL PRICES (E. & M. J. QUOTATIONS):

..Export■ refineryVat™.i...__._—_.Sept. 15/
l Straits tin: (New York)
.—Sept; 15
Lead (New York)y:at____,^.y..'—i__w.
—.Sept. 15

*108,085

—

i to Aug. 31—

Aug.

to Aug.

1

(pounds)

Produced

Electrolytic copper—

88,122

107,014

106,467

(pounds) Aug. 1 to Aug. 31——

<»n/1

y'y

lb.)—

(per

.

102,798

—,——

COMMERCE

OF

(tons)

Aug.

(pounds)

Shipped

Produced

83

•

'y^y.jr
88,496
.,, ♦81,473
83,301

.

—

PRODUCTS—DEPT.

SEED

Refined

84

—Sept. 16

..

DEPT.

—

(tons)

Stocks
'•

f•

.

.

—

mills

at

Stocks

V'jV'V V

'

.

August:

lbs.)_•

stocks at end of period

(tons)

Stocks

steel

92,352
630,925

Crude Oil—':

IRON AGE COMPOSITE PRICES:
Finished

119,532
640,747

AMERCE—

-T--v- iTT:

INDUSTRIAL)—DUN

For Month of

—

2,000

lbs.)-;

Produced

kwh.)__

000

97,455
627,131

>

_

291

258

of

copper

2,000

Received

•

•'

\

(COMMERCIAL

•

(tons of 2,000 lbs.)

COTTON

•

EDISON

OF
•

,

(tons of 2,000 lbs.)—;

S.

Crushed

SYS¬

_

__

,

—

A.

Stocks

DEPARTMENT

$244,000

customers—

COTTON

140,901

-

,

(DEPT.

July:

of

In U.

12,604,001
1,223,00(

—Sept. 11

•

(tons)—.:

$284,000

$309,000

-

tons)

to

of

and lignite (tons)—
anthracite (tons)

coke

10,640

-

YORK—

NEW

OF

Deliveries

S. BUREAU OF MINES):

coal

Pennsylvania
Beehive

2,859

—

(in millions)—v.

STEEL

•:

443,210
—

OUTSTANDING—FED-

BANK

(short

Refined

33,550.00*

12,781,000

;•

Crude

Refined

COAL OUTPUT (U.

.

246,0o4
.—

158,080

'•

Copper production in U. S. A.—

44,730,000

66,050,000

-—Sept. 16

—_

.

>

450,969

.

152,378

Unfilled orders at end of month (short tons)

Sept. 16

—

:

699,904

—

.

-

tons)—

August 31

296,486

tons)

(net

;

PAPER

COPPER INSTITUTE

—;

•

.,

,

tons).,:

tons)

(net

COMMERCIAL

?

Sept. 16

—_

municipal

Federal

,

.

611,908

449,364

tons)

RESERVE

of

Shipments

„8ept. 16 $183,280,000
'.

—_:

construction

.*
.

.

'■■

■

construction—:—

S.

Private

'

—

To Europe

Sept. ll

NEWS-

;y'

■'

anthracite

,

COMMERCE)—Month
CIVIL

20?
2,501,2^8!

MINES)—

Pennsylvania

of

and

94,893,000
23,721,000

Sept. 11

(number

(tons)

*

§80 074 000

"

.

cars)

of

^307
*2,941,834

,

reporting

OF

.

....

.

tons)

COMMERCIAL
ASSOCIATION

1
307
2,765,313

(end of June)

transported

(BUREAU

July:

§23,553^000

ll

Sept. ll
Sept. 11

at

S.
(net

—

Sept. 11

Isept.

EXPORTS

Month
U,

46,259Not avail.

•

carriers

freight

COAL

Ago

55,450
13,868

July:
motor

of

2,117,001

§6 482 000

of
of

Volume

5,361,00v

17,489,000

1,981,000

l„.Sept*

__

Residual

5,506,000

17,645,000

§2,038,000

Sept. U

_

Stocks at refineries, at bulk terminals, in transit and in
Finished and unfinished gasoline (bbls.) at—
Kerosene (bbls.) at
;—i
Gas

§4 625 000

§i5'373'o00

i

Month

ASSOCIATION—

TRUCKING

Number

5,217,30,

Sept. U

—_—

(bbls.)

output

and

5,507,050

5,531,450

Sept. ll

(bbls.)

output

Kerosene
Gas

*5,346,050

_____

Year

Previous

48,557
16,394

tons)—Month of June——

short

Month

output—daily average (bbls. of 42 gallons each)_;_____Sept. 11
to stills—daily average (bbls.)_____
—-Sept 11

MINES)—

OF

primary aluminum in the U. S.

of

Stocks of aluminum—short tons

C 1,646,70.

T

AMERICAN PETROLEUM INSTITUTE:

Latest

Month

;

Year

Month
,

.

-Sept. 26

_

-

AMERICAN

Crude

41

production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of quotations, are as of that date) :

cover

Latest

>

:'

ingots and castings (net tons)

Crude

(1237)

CHRONICLE

either for the week

are

.-.v.'
AND

IRON

Indicated

FINANCIAL

Indications of Current Business Activity

The

AMERICAN

&

—

-

n

obligation issuable

authority

tPreliminary figure.

<,

-

"

<

,

42

THE

(1238)

COMMERCIAL

to achieve results as good as

Observations

a

|

from

choice of tools

his

as

k

compared with those of other

prognosticators. For example, was the market dope acquired
from the "Big Irisiders," even though deceased and through the
spiritual medium of his sister, actually inferior to the tips allegedly
handed down by the big banker's barber or the market wizard's
lady-friend or third-cousin, which through the years of bull markets
(both ore- and post-SEC) have been eagerly consumed and followed
by the investing and speculating public—with its jumbling of stocks'

turning point has occurred—shortly after the event?
The researchers found that of the definite opinions expressed,
221 were correct and 274 incorrect.
If the speculator has elected to
act

similar to Mission with Intermission?

on

big-wigs

The "Legitimate," "Scientific"

mate" efforts at

laborious, and
predicting the market

more
more

real preponderance of brokerage opinion

Practices

"scientific" and "legitifruitful than Mr. Gold-

or

more

agreement—he would have found

by

the

New

.

below the

Estate; Prices and
Mortgage Practices

amplitude nearly comparable to the present ones. The long, slim
triangle which lasted seven months from September, 1939, to April,
1940, ended in a down puncture [sic] ushering in the long, slow and
or

(Continued from page. 9)

halting bear market to April, 1942.
The wider four-month MayAugust, 1928, and the fivermonth February-June, 1938, triangles
culminated-in upside perforations [sic].

Cyclists and Sun-Spots

,

we

may

for

'

question what exemplary results have been demon¬

of

dwelling; that all heating

tems

will

walls

or

derive

be

or

embodied'' in

floors,

our

or,

that

sys•

we

the

will

heat from some sort o'

solar furnace.
we

Do not believe that

all

going to bathe in glass
plastic bath tubs, or are going
are

to live in

80%

a

house whose walls

glass brick,

or

are

aluminum or

steei, etc.: It just is not going to
happen.

The innate conservatism

the great mass of our popula¬
tion is going to prevent it.
of

Competitive "Double-Talk"

closely watched, is the matter
of the neighborhood and its con¬
veniences and amenities. In many
and

And how has the "double-talk" issued by Mr. Goldsmith's com¬
petitors fared toward results compared to that complained of in the
Goldsmith letters?
A leading market commentator, for example,
"forecast" the market's direction in a single letter, as follows:
"By referring to the usual statistical exhibits, our readers will

that this ratio fell

at

look may

,

•

18-year amortization schedule.

to

As

I

have

pointed
is

amortization

not

earlier,

out

unmixed

an

.

Y

*

Y

blessing, particularly in a market
where there are not enough good
mortgages to go around.
I

that

think

there

—

is

-

,

another

situation arising

of

many

us

which will cause
to abandon some of

present policies. Many lending
institutions will hot now lend on*

our

properties

dwelling

which

are

25. years old. This policy, a&

20 to

will be completely in- j
if it is not now. We ij
must learn to study our neighbor^ ;

time passes,

defensible,

of

ourvcities: and

there

has

been

building without

a

towns

good

today,

deal

of

any considera¬
location of the prop¬

both

'

real, estate

market, I believe we through its use or -exhaustion, Js K»
near a point-about
capable of throwing,? off a sus40% above the prewar level. The tained income stream. It may not,..
$6,000 prewar house will be built be a 66%% loan; it may be only t )
at about $8,500, and * the $10,000 a 10% loan; but there is a loan . ,
prewar dwelling at about $14,000. in such a, property which; can be /,
These
figures compare y with
safely made, if all factors of the
present selling price in our area loan pattern are analyzed.
YY
'' YY i
''SfYY/YnYY Y :y Y:
'■■■;< Y
of metropolitan New York of $11,500. for the one house and $19,000
to $20,000 for the other.
In, ,conclusion I / should . like, to
re-state some fundamentals of our. ;
Building Out of Reach of Most
business as they applyJto, whatf I/|
will

be

at or

=;• v

\

.

j

.

.

YY

It is

Families

'

important to remember m

this connection

that about all the

building which is being done to¬
day is being done at prices out of
reach of 1 approximately 85% of
the families of the country. The
market, therefore, is a shallow
one.
I believe that, had Congress
not passed the Veterans Guaran¬
tee Act, this market, would aL
ready have been - exhausted for

\

have" said heretofore.

t.

.

Any successful mortgage
institution must rest much of its
First:

on
sound,
/procedure.
be, any better^

policy
and practice
competent
appraisal
No

portfolio

can

judgment of the ap- 1
praisers who were responsible for
the. selection of the loans to be
made.
'•
; '
i
than»

the

Wednesday and Thursday when the tion of the
that the brief recovery was not erties with respect to such items
[sic] nature. It did not spring from the inner depths as schools, churches, transporta¬
of the market, but seemed to reflect pump-priming efforts [sic].
tion, stores and all the other
Second: Good mortgage prac¬
This reluctance of speculation to follow the market's upward thrusts things which go to make up an
tice dictates that good servicing
much of the country.
may mean at times that the initiative is passing into stronger [sic]
acceptable community pattern
is a
pre-requisite of successful
hands.
Yet these hopes are belittled by the relative price action of There has been a tendency, with
I cannot agree with the "public
portfolio management. The best
the better quality stocks.
So far, no evidence has appeared the pressure to make loans, for housers" that there is any obl'gaportfolio can be ruined and can
that a significant upward trend is in the making.
Perhaps a stronger many of our institutions to follow tion on the part of either lending become the source of unnecessary
following than that of last week may develop if new efforts are made these builders and make loans to institutions or government to pro¬ losses, unless properly and ade¬
to push the market up.
It seems, doubtful, however, that it can gain them in what are going to be vide everyone with a new house quately serviced. The alert servic¬
much momentum.
Technical indications still point to a further clearly marginal locations when or new
multi-family living ac¬ ing / organization will be there
extension of the decline [sic]."
the housing shortage is over.
I commodations.^Y Some^pf us, ^
first when money is available mid
We would respectfully suggest to the Attorney General that he have the definite feeling that one
overwhelming majority of us, are will see that its share of the in¬
re-orientate his impressions of forecasting and forecastibility by of the things we are
going to live going tc have to live; in "usee come is received to satisfy its debt.
reading more of the literature being issued by the profession, and to regret has been the permitting houses" whether we like it or not
Third:
The territory in which
of loans to
builders* who
inquiring into the results registered by expert academic economists,
have Unless we do so, there will be no
it is proposed to loan should be
business analysts, statisticians, as well as the stock market fore¬ built in locations for no other
stability
in our
real property under constant scrutiny. Changes
casting profession.
*
reason
than the fact that they values.
We are still a long way
do not take place overnight but
And as it seems to d'sturb him that neither Goldsmith nor most could buy the land at a price from
making the maximum utili¬
gradually. Factors to be watched
of his customers seem to have made
of * our
money trading, he might inquire which would permit them to make zation
existing ' housing are transportation changes, unde¬
whether personal fortunes have been made by his more legitimate a fine profit, and which would
plant through modernization anc sirable racial elements entering a
competitors, or at least take note of the title of a keen book, "Where permit them to sell the product repair of existing facilities. This
new
territory for the first time,
Are the Customers' Yachts?", showing the abortive results achieved at a
is. a program to^ which we wil"
competitive price. // •
obsolescence of buildings without
over the years by all speculators.
.*
have to turn our attention in the
repair and modernization, the in¬
Real Estate Prices at Peak
near
future
when
the 15%
o
trusion into residential neighbor¬
The Record of Results
As to prices of construction, I families mentioned above are ab
hoods of industry or other non¬
Fortunately, there are available data to show the actual forecast¬ am firmly of the opinion that sorbed in new housing, plus those
ing results obtained not only through the use of charting, but of the prices are about as high as they made artificially eligible under conforming use. With respect to
new territory opened up for hous¬
users of the finest available tools for
analyzing all relevant statistics, can go. In fact, in some directions the Veterans Acts.
ing, I do not like to loan in -such
financial factors, and the external worldwide economic and business declines have
already set in. These
territory in the absence of strict
^
and political factors thought to affect the market.
We have the declines are attributable to in¬
Y: v Y^ •"IPractlce^^^
building restrictions or adequate]
careful, scientific researches made by the University of Chicago's creased efficiency in labor rather
Coming now to the final head¬
zoning, until at least 40% of the«
Cowles Commission for Research in Economics in 1933 and 1944 and, than to drops in wages or changes
ing of my talk, "Mortgage Prac¬
lots in the area are built or under«
published in two pamphlets, "Can Stock Market Forecasters Fore
in working conditions. These will tices," I would like to mention
development. It takes about this]
cast?" and "Stock Market Forecasting."
come later.
They found that 16 recog
However, I am also some changes in mortgage prac
much building to set the character)
nized financial services, with 7,500 recommendations, made an aver¬ convinced that we are never going tice which seem to me to require
of. any- given area.
"Y YYY
in • our
age, record that was worse than the average common stock during back" to prewar construction* costs attention
management
Fourth: In any inflationary P|-;
the same period.
The Commission found that 24 financial services, in either labor or material.
thinking.r;
Vy:''■<[YYY/^Y
i In years gone by, at least ip our riod, such as the present/the mortAs to the "Overall Trend" phase
during a period of 4Y2 years, failed as a group, by 4% per annum,

see

market advanced.

on

This

indicates

of an organic

.

.

.

,

'

look

second

.

Another factor to be considered,
'

a

every

-

impact of war. - Exponents of the legitimate "rhythmic" cycle assume
that they follow each other in rigid mathematical discussion.
They
say that while the business cycle will go wrong with every imponder¬
able in the current economic situation that is unanticipated, the
"rhythmic" cycle has rigidly related the timing of events as varied
as economic changes, snorting
events, farm price swings, and even
financial panics to astronomical phenomena like the sun-spot cycle
and the changing position of the planet Venus. ;
The "legitimate" cycle theorists claim : that there; are existing
trends in the economy that can be measured and demonstrated be¬
yond -doubt; that there is distinct rhythm or periodicity in the cycles
that accompany these trends, and that this information can be used
to predict the future of the stock market.
\
;

take

house of modern type .of this talk, history tells us that hoods, their amenities. tbe;effec- V
design which has been built after every great war,, going back tive age of these properties in ;
in the past 25 years, I believe 1 to the 100 Years War, there has
terms of what has been, done to ;
can show you at least 100 houses
always been a decline in 4he pur¬ modernize them, etc., and y then j
of conventional-type architecture chasing •> power
of H the financial make
our ; decisions
as
to ; the
and design erected in the same unit in nrder to support the debt amounts
which
can
be
safely ;
period.
So—as a prediction—do caused by the war and to repair loaned. If there is; any single •:
not become imbued wito*.the idea the ravages of war in the coun¬
generalization which I feel that I >|
that everyone is goingv to' Tive' in tries affected.
can
make about the mortgage, j:
a
precast concrete house,.: or a
Again, as a prediction, whenwe business, it is that there is a loan,y
demountable
veneer
Itouse, V or level- off and so-called^"normaF in an amount, that/jcan^be safety
some other modern assembled type
conditions again prevail r in : the made Hon
any : pw>perty; ,which,

strated by the popular Cycle Theorists gauging their prophesies by
ihe business tides, the ocean tides, sun-spots, etc., and completely
disregard external business and economic factors, even the possible
\

to

ender

and

"In the former instance, the big rise up to September, 1929,
ensued; in the latter, the July, 1938-September, 1939, bull market
followed"; all contributed to the net captioned conclusion: "Market
Triangles Signal Renewed Bear Market."

And

obligations with maturities up to,
There is a very ;,
ability of the

32 years and more.
virtue in the

real

.

Real

lower side, then investors are said to have been unloading.
"Since 1928, at least there have been three triangles of duration

i

mortgages and taking
government-guaranteed

year

some

legal

York

.

purchasing stocks; if prices fall

25

on

his security. True, this
come
at a'time when

devoted to the depiction of trend signals of all
"warning signals," "downtrend signals," ratios, and
all kinds of arithmetic and triginometric projections, "ratio lines,"
"control lines," "penetration points," and single, double and tripleQuestion: "Did you consult any earnings or statistics?"
tops?
Answer; "They are perfectly; useless in calling the top of a
How have the users of geometric market pictures fared?
One of
these practitioners typically in a leading article in December, 1947, market."
described his use of "Market Triangles," stating that "triangles pre¬
At least; this column most respectfully and piously expresses the
sumably denote periods of accumulation or distribution.
They are hope that such heresy does not result in the gentleman's permanent
distinguished from 'lines' in that prices in the former fluctuate in disaster.
progressively narrowed swings until a decisive break-out either way
eventuates.
If prices rise above the upper side of a triangle, investors
cate chart systems

been

to

the loan;
considered as legiti¬
could not be refinanced elsewhere,
authorities as earnings and assets
but he can at least measure his
analyses, business data, financial statistics, charts—have garnered
risk again
and, either through
such abortive results, it must be asked where the public or the
accelerated amortization, or
law should draw the line against such media?
In setting long-term
through refinancing, do something
public
policy, the legal
authorities
should bear in mind
the about his
potential losses before.r
danger of attaching a false sense of security and unwarranted legiti;hey get away from him. I am, at
I,..,1,ii aIiaacac
4»
/-.oil local
acy to those techniques which it chooses to call legal.
the present time, giving serious
V
reijuwps tunic uay even the honest and homely philosophy ex¬
consideration to writing some of
pressed by defendant Goldsmith may even be agreed with, as ex¬ our loans on a 10-year maturity/
pressed in the following key expert from his testimony: YY:H;:;
and basing our payments on a 15

kinds fared—the

supposedly have

mortgages;;
relatively short .
maturities. A three-year mortgage *
was
common, a five year more ;
popular
and
a
ten-year
very
rarely.: I believe that we - should i
shorten the present pattern where
many
of us have gone to the,,
other extreme and are writing 15
our

with

made

were

And, also, the composite opinion would have

Since the customarily used forecasting tools

mate

T-Tn\xr
havo tho cprvinpc
How have the services hasorl on the intri
based on thp int.l'i-

cmifh'c n/vnilt mf>1 hnrlc?
smith's occult methods?

a

been correct six times and wrong nine times.

so

Are the voluminous,

only when there was
one direction—a 75%

only 15 such instances.

much more ill-founded than President
Truman's current concept of "the gluttons of Wall Street" or Con¬
gressman Sabath's
investigations into the powerful inside manu¬
facturers of market collapses.
market

territory,

own

.

Incidentally, is Mr. Goldsmith's awe over the power of the sup-

posed

The
,

market

names

the average of all common stocks.

judgment of forecasters over a period of years was not as good as the
results from tossing a coin.
Similarly, results were shown by a study of brokerage house
forecasting made by Edward F. Underwood and Myron C. Nelkin.
Two questions were explored: (1) To what extent has brokerage house
opinion been able to predict important downturns or upturns in the
market shortly before they occur, and of equal value; (2) To what
extent has brokerage opinion ever been able to recognize that a

(Continued from page 5)
suffered

Thursday; September 23, 1948

CHRONICLE

FINANCIAL

&




.

,

.

,

lume

' Number 4736

168

banker who

e

is

•

expected to
v is ; faced

THE ^COMMERCIAL &

I-

/

Historically,

of need araqng^he

at about-the

are

we

(1239)

FINANCIAL CHRONICLE
outlook

public, but due

one

as

The

it.-

sees

man

only 'in

wartime.

But

43

inflation

apparently "to- the continued in¬ usual indicators. are nearly*- all goes on. Buyers' resistance is de¬
Cotton textile favorable. Production is high. Em¬ veloping. Armament expenditures
th a number of problems which estate. There would appear ohlyi. creases in prices.
st become part and parcel of one way to gQ-from>here, that
pricqs: .are; -getting ."jittery" too, ployment is at a record high and are very high, are very likely to
/same reason, while at unemployment at a record low. go still higher, and can lead to
policy, such as how far he may \yould.be down. How far down we
the same time we are about to National income is reaching for economic trouble. And the inter¬
ely follow an inflationary mar- go.* depends, to some extent, on
the sky. Business profits, dollar- national situation is not healthy,
t upward, for how long a period our policies in the servicing of our harvest,one-ofvour greatest cotton
wise, have never been equalled. on two counts, though it could
ould h$;loaa, at what rate and investments. Much more will de¬ crops,/':,;//>
Farmers?
some
other pri¬ The volume of construction is ex¬ easily be worse.
w fast he should
try to get his pend on the wisdom of our col¬
For whatever it is worth, my
Sales are
lective leading policies of the next mary-producers don't need to be ceeding all past levels.
"ney back. " ~
v 1
" '**
k
price resistance, plus extremely high. And the volume guess is that our prosperity will
here is a point, history tells us: few years and the exteht to which told y that
record crops, is beginning to af¬ of saving is at levels exceeded still last a while.
which • he can go in following we have* involved ourselves in
Butter and eggs, and
ch a rise. At this point, if he is trouble by our lending in the im¬ fect them.
se he will stop and he will prob- mediate". past.
;; ' ■
• -; '.vy meat, and some other foodstuffs
have already had a short tobog¬
ly have only a normal amount
We have bought some trouble,
trouble and foreclosure. If he of that there can be no doubt. gan slide, started by the refusal
of housewives to pay the prices
sees
this:-; point,, his
troubles How much we have bought will
demanded of them and given a
Qupt h; ahnost geometrical pro- depend on how/good and how
push by the latest crop estimates.
essioif.The
gauging of this flexible our lending policies have
And, in case this should be re¬
it is the prime' headache for
been in this rising market period.
(Continued from page 10)
garded as gloomy news, let it be
ery. policy-making executive in
Speaking for myself I believe the v f-7vipp"h»re
follow-through is probably un¬ underwriting commissions and the
tir^
♦""oos
are
sc
e
mortgage business/ On the time has come to slow down on
large 'discounts,
all constituted
great that even at the lower prices precedented.
se, beyond the point at which he some types of new construction,
Even when the
As to the benefits derived by warning signals.
our farmers have the prospect of
fusesyto follow the market, he take stock of our situation, re¬
making of the loan was questiond
latger total income tnan they the borrowing country, I believe
ts< in his office doing little, if
examine our policies and prepare
that a brief review of the dis¬ able, however, there usually were
got last year.
;
,
<
' /
*
y, business and cursing his own
unforeseen and unpredictable fac¬
to chart new courses.
I will ven¬
bursements of our $195 million
■y. Watch, buyer resistance, how¬
midity. \ There is much satisfac-f ture a final predictioi—we are ever. It can be a
tors that contributed to the ultiloan to the Kingdom of the Nethvery powerful
on later if his judgment be vinover the crest of values and they
economic
force, as our history erlands will prove interesting in- ! mate default. You may recall that
icated, buf I doubt, sometimes if
will recede in almost all cate¬ abundantly proves,
asmuch as it is a typical loan,
even in the United States deen this satisfaction is full comi In the third place, the rising The funds were- spent for ships faults by domestic borrowers were
gories of real estate ih the very
ensatioh for i the headache and
burden of armament expenditure and vessels,: equipment and raw a depression phenomenon during
eartach e of the earlier period. near future.
A total of $64 million the '3°smust, it would seem, lead inevit¬ materials.
The record shows that the memably either to an increase in taxes was disbursed for many small!
items
of equipment, mostly for
or to deficit financing by the gov¬
.j ber countries that contribute 75%
ernment of the United Statesi re¬ the numerous small firms which of the total capital of the Interin

n

such

market

a

another

of

apex

in;., real

boom

r

"

•

The International Bank

*

In World Reconstruction

.j

.

Is This

Prosperity Fictitious?

/

,

'

(Continued from page 7).

*

gardless of which party wins in
November. )£ Intelligent
civilians

,

It is also very evi*
ith them?
dent that many of these goods are
Here is thev record? Taking-the being bought on the installment
eriod 1935-1*989 as equal to 100/ plan, that is, partly out of savings
and partly out of current income
epartment store sales were 207
It is true too* that there is not
: 1945, :264 in 1946, rose to 285
the same patriotic urge to save
st year, and in July of this year
ere*at
an
annual rate of 315. that existed during the war. But
hat's not bad, is it? Chain stores people ARE saving at a great rate,
and the proof of that lies in the
nd mail order sales, using
the
fact that, in the second quarter of
ame base of
measurement, were
this year, accumulation was at the
81 in 1945, jumped to 233 in 1946,
rder

houses*

ook another

in

nd

July

,How

:

business

leap to 280 last
of this year

iist about 313.
ool

is

year,
were

That's pretty good

v

buying them;

do not. set themselves up as com-

rpetent judges about our country's
defense needs. They leave that to

theyleaders of the armed forces.
But/no intelligent citizen can af¬
ford.to ignore the costs of de¬
fense,, because he and his fellow
citizens must find the taxes to pay
it.

for

Some

armed

the

recent proposals of
have

forces

next

put

year's armament expenditure, ac¬
cording to reports, at over $20
billion. If all other costs of gov¬

make

the

up-

pattern

of

national Bank are countries that

Dutch

defaulted on publicly isdebt.
Those concompanies, one of which was Phil- tributing 10% of the remaining
lips Incandescent Lamp and Ra- capital had only partial and involdio Works/
Because of bombing untary defaults, as in the case of
and subsequent looting; the Phil- Denmark,
which was unable to
lips plant at Eindhoven was hard meet a dollar bond maturing durhit during and immediately after ing the German occupation. She
the war. Only 7,000 workers were maintained interest payments, alin the plant in January,
1945; though unable to pay principal,
there are now 34.000 ana proau-Only the countries that subscribe
tion levels early this year were the remaining 15% of Internation150% of pre-war. Not only has al Bank capital had unsatisfactory
industry. Sharing in this were two
of
Holland's
largest
industrial

never

external

sued

most of the war damage been re- default records,
than $12 billion an¬
ernment are added to that, the paired in the Phillips plant but (:
Now as to my philosophy about
That's a nice-sized nest
burden can well become so heavy there has been added a cardboard foreign lending:
egg for Mr. and Mrs. America, and
that only increased taxes, or a factoryandceramicfactory.
j
believe
very
strongly that
it will provide a good cushion for
renewed increase of the national
$7,000,000/of the amount alio-, when a loan is made to a foreign
hard times, if they come.
All in all, then, .without further debt, could meet it. We wOiild be cated for equipment was used for •" country, it should be made on the
wise to keep our eyes on that, too. the
purchase of spare parts foi basis that both the borrower and
examination, we may say that
Finally, there are tensions in the aeroplanes of KLM (Royal Dutch the lender expect that the money
these seven indexes tell a story

of

rate

more

nually.

<

But here the

warning needs to

given that this is dollar value

&

nd= not

volume.

If allowance i3

ade for. the lower buying power
f each dollar, the picture is less
osy,

though

even

it

still

for

times, with justified hope
of prosperity.

continuation

a

lacks
But

riy hint of depression.
(7) The Rate of Saving—There
are

of good

"a

Inat might be examined, but one
will do. That one is tne rate

does

there

are

this

all

no

mean

there are no clouds on theI
horizon? that we can rest Hardly!
easy in
our minds for the future?

more

at which the American

people

are

saving from their huge collective
income.

It's

interesting pic¬
ture, and it gives rise to impor¬
tant questions, Here's how it has
been going.
In

it

1944

an

reached

when

had

we

peace,

it

fell

four

to

all-time

an

high pf $35;600 million;

In 1945,

^

months

$29,000

of

million.

The next year, our first full

post¬

that

doubt?

for

causes

there

For

ARE

disturbing

some

elements in the picture. Here

they

are!

international

situation that could

easily snap: and; engulf us either
in

a

bad

business

set-back

or

in

another war,

with all that is im¬
One of these ten¬
sions is in France, where struggle
of great importance to America is
going on which involves the ques¬

plied in war.

tion of Communist domination of

that

once-great country. Middle-

of-the-road-

people are trying to
precarious balance between
begin with, inflation lias al¬ two extremes, Communist and
I
ready traveled far in our economy Fascist, There is still no. assur¬
and, up to? the moment at least, ance
that
they
will
succeed
has not yet suffered any serious in holding that balance.
And the
set-back in its onward move since
importance of that struggle to
we entered the war. According to
America is to be found in the fact
the
most
reliable figures avail¬ that France is one of the key
Elements of Doubt

hold

a

To

able, the cost of living is still countries in the whole Marshall
rising/ Ahdf when rent controls Plan for the rebulding of Western
removed^! it will likely, take; e Europe and. for the "containment"
took another tumble to $10,900
good jump beyond its present of Russian Communism. If France
imillion.
That doesn't look sp
level; Wholesale commodity prices should fall into the hands of the
good/ dbes it?
/ / ' * likewise are still rising, and
war

year,

jto- $14,800

it dropped almost half,
million.
Last year it

are

,

.,

,

!

.

Now,. hiere: arei several possible
explanations of/this decline? in
the people's savings.. One is that
there was, during the war, a great
patriotic urge to save while that

at < wholesale and at retail
have not yet; fully reflected;.the
increase in railroad freight rates.
prices

;;; N0w/< dofes/any^intelligeht man
think that organized labor will be
longer?exists. Another is satisfied? with
present wage, rates
;that certain goods were not avail¬ if costs of living keep on climb¬
able during the war, such as cars,
ing?^ We may have to face still
vacuum cleaners, radios, washing
another round of wage increases;
machines and other, less durable
and that will set the inflationary
goods. - This, it is said, means that
spiral going' again. f Be sure - to
xatheiy/than/?feeing*;real savings;
keep your eyes son that!; f
•
these huge wartime accumulations

;urge no

|werp;
And a third explanation,
offered specially by labor leaders,
labor economists and some others,
•is that the decline" in savings is

ings."

due, in the main, to the increase
In the cost of living;
They say
that

the

e\7en

large

increase

in

rates has not offset the in¬
crease in prices and that, for this
reason, many people
are
saving
wage

Jess while others have been forced
to

draw*, down

order to live.

their

■/'■■■%

Now/- it
many

able

is true
other goods

that

,

were

savings

that

off

the

knowledge

that

market

is

com¬

people




are

And

lapses, one of the arches on which
our;/ near-term
prosperity rests
would

be

months

gone.

France

on

eyes

and

So,

in

keep

the

remember

your

coming
that

the

done.

that

we

country, it could have the ef¬
of slowing down
the con¬

struction

boom. y And

certain, that
some

will

it

it is almost
bring about

revision

downward

in

the

prices of building materials, espe¬
cially lumber; that have gone far
of

line

even

when

It

has

also

hit

the

clothing and in shoes.

all

over

/

>

market

.

in

All the re¬

ports indicate that there is worry
in

these

two

lines

declining sales,

of

due,

trade;

not to

over

lack

a

world-wide service.

Slightly over $40,000,000 of the
total was used to purchase and re-

the
-

/ The idea that seems to be popu¬

briefly about foreign loans in gen¬
eral and also to give you my phi¬

lar in
to

losophy of foreign lending.

been

Apparently she believes

will not dare take the risk

of another war. And one

day, soon

perhaps, she ma.y throw a chal¬
lenge that we hardly dare reject.
None of us wants that, but it may
come
•

In

whether we want it or not.
such an event, we shall be

compelled to turn almost totalitar¬
ian, and to pile another infla¬
tionary war debt on top of the one
we
now
have. Let us hope that
no

such fate is in store for us.

Here, then, in summary, is

.

is

a

generated and colored by the
on inter-Governmental War
during and fol-

disposition to regard

the

picture

are

records ,of

many

foreign

and the fact that con¬

siderable

capital was invested in

bonds which were a

risk at the time
as

not

form

sound

a

.

basis for the

its proper

completely

countries

the running

to foreign governments
cannot be repaid ^ea<^
on b°lb sides* and,certainly

other side position in international finance,

overlooked, such as the excellent
credit

,

United States to assume

r

Certain factors on the
of

reasons^should take the form of a
/yben there is little or
chance of repayment is,
my opmion, completely crrone°"s
king. Such aid, if a
,
should take the form of a
,
we should be careful
^™
r loan^
or to ^all

I

-likelihood of repayment, and particularly when both borrower_ and
lender know there is little l^®b"
foreign ' J100^. of repayment. Loans mad

lending as suspect per se, and to
exaggerate the actual losses from
foreign investments which United
States investors, in the aggregate,
have sustained.

places that aid given
countries for political

some

some

for-!

eign borrowers are often characterized by confusion and misunderstanding. These attitudes have
losses

?.■/■':

making' the

closing I would like to talk

American attitudes toward

prepondeant reason for

War I be a

Philosophy of Foreign Lending
In

prevailed in some cases nr.
private market after World

which

equipment.

days/ of/our isolation are > over;
The other tension is in Russia. lowing World War I; also by a disShe' >aims' at' including
all of proportionate emphasis op the un-/
aspects'; of
American
Europe in her economic and po¬ favorable
litical orbit. She has only one op¬ lenders' experience with foreign
ponent powerful enough to chal¬ dollar bonds. Consequently there

ever

fect

project or projects that so far as
it is possible to ascertain are needed, are worthwhile, and are of the
pair surplus U. S. ships, 53 vessels type that would immediately aid
having been transferred to the in the general economy and balDutch merchant marine. Agricul- ance of payments of the borrowtural production was aided ing country. I further feel that thethrough the investment of $30,- rate of interest charged would be
000,000 in tractors, animal fodder a fair rate based on the going
and fertilizers.
Another $25,000,- rate for money.' It should not be
000 went into rolling mill prod-) an absurdly low rate.
The mere
ucts, principally for the State fact of making the interest rate on
transportation system,/dikes and a loan very low does not by any
waterways, the State mines and a means insure payment. Nor should
large private industrial concern r;the rate be exorbitantly high. Nor
making electric motors, diesel en- should the profit motive evidenced
gines and other heavy electrical by excessive underwriting fees
planes in

Debt3 contracted

the

cars

are now

Mark you, it might not, but
would be very grave.
if the Marshall Plan col¬

the danger

lenge her, ' and that is America.
Already she has tempted us far¬
ther than any other country has

the Pacific

on:

inflation is considered.

and
avail¬

lapse.

coast, but not there alone. If the
resistance should spread all over

market, especially

out

//*;;"*•//

during the - war.; And. it
mon

in

developing in a number of areas,
it has already hit the/re&l estate

Marshall

whole

the
col¬

party,
Plan / could

Communist

French-

Airlines), which had lost practi-/ will be repaid. It should be made
cally its entire fleet during the for a sound reason and should be
war
and which now operates 70 for the
purpose of financing a

questionable

of issue.

Yields

high as 8%, excessive

With Coffin & Burr, Inc.
(Special

to

The

BOSTON,

Financial

MASS.

Chronicle)

Alfred A.

added

Wagner

has

staff

Coffin & Burr,

of

been

—

to the

Incorpo¬

rated, 60 State Street, members
the Boston Stock Exchange.

of

44

(1240)

THE

COMMERCIAL

Securities
:•

•

FINANCIAL

&

Now

INDICATES

in

Thursday, September 23, 1943

ISSUE
'*

■

*;

•

American

Motor

Plow

•

Co., Frankfort, Ky.
./
Sept. 13 (letter of notification) 2,500 shares of stock.
Price—$100 per share.
No underwriter.
To manufac¬
ture and market motor plows.

■

\

June

2

filed

500,000

common

shares

($1

be

offered

Nov.

1.

one

to purchase

$40

Three

for

new

Under¬

'Y

the

of

(no par)

stock.

" YY"Y •:
California Water &

Sept. 9
.

s

,

•

«

Telephone Co.

(letter of notification)

'

•

construction.

X

■

?f;

t

t

/>

1

-

>

the

officers
each

Proceeds

«

15

common

,

X ,X:YY;yY^!YYI!ISy

(Ohio) Wired Music Corp. *
(letter of notification) 3,000 shares

stock.

Price—$25

per

loans and add to working
capital.
'

•

share.

To
}

($10 par)

retire
*

.

.

bank
,

•

preferred stock.
Inc.
Proceeds—To

loans

and

Y

at

commercial

paper.

X

Corp., Cleveland,

Y:X

;

Ohio

/

Y/YtX'Y
Corp., New York City

($25 par) and 172,000 shares ($1 par)
(72,000 shares of comihon to be reserved

of the preferred.)
Underwriter—None.
share for the preferred and $10 for the com¬

;

,

Products, Inc., Stockton, Calif.

of

to

have

with

agreed

unsubscribed

dial

Price,

par.

260,000

,

Fuller

Brush

Co., Hartford, Conn.
July 12 (letter of notification) 3,000 shares of ($100 par)
preferred stock:
Price-^-par. / To raise working capital
and retire existing indebtedness. Y; No
underwriting. ' '

at

expan¬

No underwriter.

sell

com¬

shares

telephones,

will

preferred shares and 250,000
common
shares and company 125,000 preferred share#
and 75,000 common shares.
Company's proceeds will be
used for general corporate purposes. Effective
May 5.

Gauley Mountain Coal Co., New York ;
13 (letter of notification) 6,093 shares of capital
(par $10).
Price.',par.:- Stockholders of record
Sept. 1 will be given right to subscribe at rate of one

Aug.

For

stock

Washington, Inc.;
Washington, D. C.

/f

,

three

....

Canton

Sept.

a

holders

share for each five shares held.

new

15.

;.»•

Y

..•

"X-

,

shares

Rights expire Oct.

General improvements, etc.

;;

Globe

Publications, Inc., New York
(letter of notification) 2,040 shares of capital

Sept. 21
Price—$10

stock.

costs of

printing,

Hall

per

share.

paper,

Underwriting—None.

salaries, etc.

Meet

;

"

(C. M.)

Lamp Co., Detroit
August 2 (letter of notification) 53,770 shares of common
stock (par $5). Offered for subscription,to stockholders
of record Aug. 30 on basis of ope newY share for each
five shares held.
Rights expire Oct. l. Price—$5 per
share. For advances to a subsidiary, Indiana Die Cast¬
ings, Jri<?., land ;t0;!mprav£xshippih^enot(#
No Underwriting. '
-■*r" * vYX C
-V»; ;?/

^

of .notiflcatlonL 750 shares of preferred
common.
To be offered in units of

„

of

preferred and five shares of common
;
t
$400 per unit. Underwriter—Laird & Co. :■■■ nrij. retire "
To
4mnn

Underwriting—None.

•

and 1,250 shares of

($25 par)'/
No underwriter.

..

the

(par $1).
Underwriter — Floyd D. Cerf Co., Chicago.
Price—preferred $10; common $6.
Proceeds
Stock¬

of mining operations.

* Y YDe,5^2T^

j»

,

of

Son,

.

-

12,800 shares

common stock. X Price-r-$23 per share.
For

*•>■

bank

&

March 6 filed 385,000 shares of 60 cent convertible
pre¬
ferred stock (par $5) and 325,000 shares of common stock

Crosbie Co. of

i

d

Rollins

conversion

Flotill

stock of record

none.

stock

stock.

Price—$25

common

common

Enamel

mon.

subscription by holders of

Underwriting,

Vsrd

(par 100).

expenses

.

fletter
.

Ferro

preferred

^ ;

stock

mon

Y

of
-cumulative
20-year deferred debentures.-* Price, ?par.?; Underwriting
v
CaiiiAFiua

conversion

H.

outstanding

common

Sept. 7 (letter of notification) 50,000 shares of class A
common stock ($1
par), 25,000 shares of class B common
Corp.; Kidder, Y
Stock (100 par).
Underwriter — James T. DeWitt Co.,
Peabody & Co.; Equitable Securities Corp.
Proceeds — Y
New York and Washington.
To pay $2,625,000 of
To be offered in units of
promissory notes and to finance ;Y
two shares of class A and one share of class B at
additional costs and corporate
$5 per
nqeds.
Bids—Bids for
unit,
To reduce or pay in full present
the purchase of the bonds
borrowings from
will, be .received by company YY
the Manufacturers Credit
at 49 Federal
Corp., to reduce the present
Street, Boston, up to 11 a.m. (EST) on ;
current liability position and to
'Oct, 5.
provide additional work¬
ing capital.
1

■

con¬

June 4 filed 36,000 shares of 5% cumulative convertible

Consolidated Molybdenum, Inc., Seattle, Wash.
Sept. 10 (letter of notification) 1,470,000 shares of com¬

Brockton* (Mass.) Edison Co. (10/5)
;;
•
3 filed $4,000,000 first mortgage and collateral
trust bonds, due 1978. Underwriters—Names to
be determined by competitive
bidding.*/Probable bidders: Halsey, Stuart & Co. Inc.; The First Boston

•

for

First Guardian Securities

share for each 10 shares held.

share.Y Conversion

per

sion, etc.

'•••••■

m

reserved

general corporate purposes.

Columbia

pany

Sept.

Sept; 16

pur-»

<

derwriter—Merrill Lynch, Pierce, Fenner & Beane. Pro¬
ceeds—Company and subsidiaries will use the funds for

(Pa.) Telephone Co.
Sept. 21 (letter of notification) 3,000 shares of common
stock (par $25).
Price—$40 per share. Stock will be
offered to stockholders on Oct. 1 and rights will
expire

Price—40c per share Cana¬

exploration of properties.

To

conditional sales

—

•

common

par).

Price—$8 per

—For general funds to be used for construction.

x

writer—Mark Daniels & Co.
dian funds. Proceeds—For

•

System, Inc., New York

12,229,874 outstanding shares of

Ottawa, v'Y:

Ltd.,

be

for

Gas

Oct. 5 in ratio of

.....

Co.

or

Temporarily postponed.

equipment.,
Columbia

Price, by amendment.

Underwriter—The First California Co.,San Francisco.
Stock being sold by Dardi & Co.
Price
—$4.25 per share.
''
;
v
'

Exploration;

to

Colonial

Offering—To

(par $1).

■

chattel mortgage notes,

Sept. 17 filed 79,080 common shares ($1 par).
Offering
—To be offered for subscription by stockholders in ratio
of one additional share for each four shares held.
Un¬

Sept. 16 filed 1,223,000 shares

Blair

XX

''v

reduce

•

Underwriter— *

v

Canada

y

Underwriter—E.

new

working capital.

Borderm inster

'

Family Finance Corp.
Sep. 2 filed 25,000 shares of 4(£% cumulative preference
stock, series A (par $50) (convertible to and including
Aug. 1, 1956) and 97,580 shares ($1 par) common stock

Candy Corp., Morgantown, W. Va.
Sept. 17 (letter of notification) 100,000 shares ($1 par)
common stock.! Price — $2 per share.
Underwriter—
Grubbs, Scott & Co., Inc. To pay past expenses and for

BigeEow-Sanford Carpet Co., Inc. (10/6)
Sept. 15 filed 30,000 shares (no par) cumulative second
preferred stock.
Underwriters—F. S. Moseley & Co. and
Kidder. Peabody & Co.
Proceeds—For additional work¬
ing capital.
r

■

•

Eureka Williams Corp., Bloomington, III.
Aug. 9 (letter of notification) 4,700 shares ($5 par) com¬
stock.
Price—$6.25 per share.
No underwriter.
For working capital.
' yV-^'-Y-'..
(" •

15,000

•

•

•

jr,' •i,.*' ^ "•

mon

Coleraine Asbestos Co. Ltd., Montreal, Canada
Aug. 16 filed 200,000 shares of capital stock.
Price—
50 cents per share in Canadian
Currency. Underwriter
—P. E. Frechette.
Proceeds—For drilling operations.

Berry Motors Inc., Corinth, Miss.
Sept. 20 (letter of notification) 25,000 shares ($10 par)

>

•

Cantor, Fitzgerald & Co., Inc., New York.
share. Working capital, etc.

•

.

-i.if.

Trustee Securities Co.

Clarostat Mfg. Co., Inc., Brooklyn, N. Y. (10/1)
Aug. 26 (letter of notification) 37,400 shares of 500
cumulative convertible preferred stock.
Underwriter—

•

stock

—

New York.

Austin (B. F.) & Co., Inc., Grand Rapids, Mich.
Sept. 16 (letter of notification) 1,CC0 shares of common
stock.
Price—$10 per share.
No underwriting. •X For
drilling oil wells.;

Holdings Corp., *New York
Sept. 7 (letter of notification) 15,000 shares of

Underwriter

tracts, secured by a first chattel mortgage on electrical
equipment of various kinds. Y'Y;;Y;Y-Y''Y' '"Y'-: YX- • YX'-Y,

warrants,

Armstrong Rubber Co., West Haven, Conn.
July 8 (letter of notification) 1,000 shares of 43A% cumu¬
lative convertible preferred stock ($50 par). To be sold
at $44 each for Frederick
Machlin, Executive Vice-Presi¬
dent and
Secretary of the company.
Underwriter—
F. Eberstadt & Co., Inc., New York.

cumulative class B preferred stock.
Gordon Meeks & Co.
For

chase

shares being reserved for exercise of 15,000
purchasers of which will have the right for
four years to purchase shares at $2.75 per share.
Gen¬
eral corporate purposes.
Underwriter—Dunne & Co.,

Haven, Conn.
(letter of notification) 1,000 shares of 4%%
cumulative convertible preferred stock, ($50 par) and
2,000 shares of class A common stock. To be sold at $44
and $11.75,
respectively. This stock is being sold by
James A. Walsh, President of the Company. Underwriter
—F. Eberstadt & Co., Inc., New York.
30

5%

stock.

;YY"': Chieftain Products, Inc., Brooklyn
->rv
Aug. 3 (letter of notification) 25,000 shares of common
stock and 20,000 warrants. Offering—10,000 shares and
15,000 warrants to be offered in units (one common;
share and IY2* warrants) at $2.75 per unit, the balance
of

Armstrong Rubber Co., West

June

Chattahoochee Gold

Syndicate, Atlanta, Ga.
Sept. 16 (letter of notification) 25,000 pre-organization
certificates (par $1).
Price—$1 per unit.
No under¬
writing.
To repair and install equipment. Y

•

American Steel & Pump Corporation, New York
Sept. 21 filed 200,000 shares ($2 par) convertible class A
stock. Underwriters—Herrick, Waddell & Reed, Inc. and
Sills, Minton & Co., Inc.
Price—$8 per share.
Proceeds
—To retire indebtedness and for working capital.
^

-

-I/, Hey den Chemical Corp., New York, N. Y. /X-Y

d_

June

outstanding bank loans and to provide working capital*

29

filed

preferred stock

59,579

shares of cumulative convertible
to be offered common stock-;

(no par)

Douglass Manufacturing Co., Inc., Portland,
holders in the ratio of one share of preferred for each 20
;YY:Y'YXX Maine .:;;yYY Y-xX" "Y'aaY' XX';YyX;YY:;Y:-YXY:Y: shares of common stock held. Price—By amendment.
Aug. 16 (letter of notification) $100,000 of 5-year 5%
Underwriter—A. G. Becker & Co. will acquire the un¬
convertible

debentures, with non-detachable stock purchase warrants;' 10,000 shares of common stock
($l^?ar)
reserved for conversion of
debentures, and 10,000 shares

Central Electric & Gas Co.
(9/30)
Sept. 9 filed 30,000 shares of $2.50 cumulative convertible X ($1 par) common stock reserved for exercise of warrants.
preferred stock (stated value $50 per share).
Under- * Underwriter—Minot, Kendall & Co. For. working capital.
writers
Paine, Webber, Jackson & Curtis and Stone
Dynacycle Manufacturing Co., St. Louis, Mo.
& Webster Securities
Corp.; Proceeds—May be used in X Sept. 3 filed 100,000 shares (80c
par) common stock.
making additional investments in common stock equities
Underwriter—White & Co., St. Louis.. Price—$5 per
of its telephone subsidiaries and
may be applied in part
share.
Proceeds, plus an additional amount which may
for its own construction
program or for other general
be obtained from the sale of franchises
(estimated at
corporate purposes^ *
$100,000), will be added to company's, general funds.
,/...• ......x Yx/YYyyy.. X y"Y''
About $230,000 would be used to purchase
Century Electric Co., St.
equipment
—

X subscribed shares. Proceeds—To be used in part for im¬
provement and expansion of; manufacturing • facilities.
Offering postponed. " : ;7 \
■■
X
' Y
v

•

!

Holy Moses Mineslnc.,Kingma«, Ariz.

Sepl. 7 (letter of notification) 300,000 shares
capital stock.
Price, par;/ Company will act

; Y'
Y i
(100 par)

as

its

own

underwriter. For additional development and equipment.

.

J,..../.y

•YY Hyde Park Cooperative Society, Inc., Chicago
Sept. 15 (letter of notification) 8,000 shares of common
stock
Price—$10 per share; No underwriters. For re¬
demption of all interest-bearing obligations and purchase
of equipment and to increase working capital. ; X ;
/
./■<

Louis, Mo. v : i-; X
and $185,000 for working capital.
August 23 (letter of notification) 25,000 shares
'YxXY. ■'YY,-.'' :B'Xv;>Y/YJ:Y.
($10 par)
common stock.
Offering—Common stockholders of rec- Y •
Y ' Hygenic Service Co., Boulder,
Electrical Products Securities
Cqlo.vX,V'Y
X
Corp., Houston,
ord Sept. 7 will be
given right to subscribe on or before
'•/■///.: Texas /v/Y;-;
>YYX.Y;Y Y;X:A/YYY Y:. Y Y/YX;.^ YX August 16 (letter of notification) $50,000 first mortgage
Oct. 29 on basis of one new
share for each 21 shares Y:
5% 20-year (closed) bond issue.
Underwriter—E. W;
Sept. 13 <letter of notification) 400 shares of preferred
held at $12 per share; -No
underwriter.
To increase
Hughes & Co. For new plant construction and improve¬
stock $100,000 9-vear cumulative
8% bonds, $50,000 10working capital.
ment of existing
\YxY>YY Y.XYY/XYY'X X ?■'/ A Y/X/;;'/■ /'YX; year 8% convertible bonds and 500
plant/YY/YXXxXY/YY/Hy




•

Registration
PREVIOUS

SINCE

ADDITIONS

CHRONICLE

shares

of

common

(1241)
;

Bids for purchase of securities will be received

" '

,

«

.

i

.

...

-

Utilities

Tennessee Gas Transmission Co

September

29,

American
are

Noon

Michigan Racing Association,

a—Common

Co.

September

30,

000 has been

1948

Gas Co.^_,_

.^.—Preferred
Common

Central

Electric

&

horse

duct

None.
'

^

A'/// ' ft:: October 5,' 1948
11 a.m,\(EST)____
■vPacific Gas & Electric Co.!.-11
1*.,

Bonds

October

6, 1948 y^:/ V/Zv/y;y
Bigelow-Sanford Carpet. Co.—-Preferred
Chicago & North Western Ry./
» /
, \
,/
Noon (CST)-—;-__Equip. Trust Ctfs.
Pennsylvania RR., noon (EST).=_Equip. Trust Ctfs.
,

,

October

•///'

Monarch

v

11*1948

-Common and Pref,

Co*

Eberstadt

con¬

v

ferred

Price and

stock.'

con-.

common

on

agency basis

being discussed.

determined

>

/,

v

1.000

,

■'

•

.

Realty Co., Denver, Colo,
Sept., 8 (letter of notification)

shares

of

non¬

par).* To be sold at $27. per
Underwriters-^Ralph S. Young and J, A. Hogle

pre-

& Co.

For working capital.

.

Un¬

r

.

,

Remington Corp., Cortland, N. Y.
Aug. 31 (letter of notification) 5,620 shares of common
.stock (par $5)., Price—$7.25 per share. UnderwritersEastman &

Co. and

Grabau-Buchman, Syracuse, N. Y.,
selling agents.
Development of air-condi¬
tioning units, etc.
//'
■,
' ;•;*/,
.
;

will

Inc.

be

assessable capital stock X$1
share.

by amendment.

Co.,

will

Underwriting—The company rejected bids
Aug. 4. The SEC on Aug. 23 exempted the
proposed sale from the competitive bidding rule,- Sale

Temporarily deferred.
Enterprises

Names

—

submitted

derwriters—Goldman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis.
Proceeds—To retire
$3,000,000 of bank loans and general corporate purposes
Northern

Underwriters

provements.

&

dividend,

Hampshire
$7,000,000 first mortgage bonds, series D,

Public Service Electric & Gas Co.
June 11 filed 200,000 shares ($100
par) cumulative pre¬
ferred stock. Proceeds—For property additions and im¬

,

/V--;;
/

New

deposited with
trustee, available for withdrawal against
property additions.

/:

National Battery Co. -""y
J:;
July 14 filed 65,000 shares ($50 par) convertible

of

the indenture

...

(9/29-30)

Co.

Co., Inc. (jointly).
Proceeds—Of the proceeds, $3,600,000 will be, applied to the reduction of
outstanding shortterm bank borrowings.
$3,400,000 will be

stock (no par).
Co., Inc. and Prescott,
rHawley, Shepard & Co., Inc. Proceeds—Stock being sold
*by• certain stockholders.;•'«v,. /;:y;V-■;/'y yf ;V//X;;V">

Underwriters—F.

Bonds
■

«

purchase real estate and for

Machine Tool
Sept. 13 filed 26,000 shares of

Brockton Edison Co.,

Official Films Inc.—

Proceeds—To

struction of the racing plant..

Preferred

Co.,

paid in cash and until authorization to

racing has been obtained by the company
Racing Commission.
Underwriting—

1978.

•

Service

through competitive bidding. Probable bidders: Halsey,
Stuart & Co. Inc.; Kidder,
Peabody & Co. and Blyth &

offering
$4,750,-

from the Michigan

^October' 1, 1948,':;
Clarostat Mfg.

due

costs of

,

Sept. 9 filed

Inc.,

lected persons and none of the proceeds of the
will be received by the company until the entire

Equip. Trust Ctfs.

Oklahoma Gas & Electric Co...

Public

Detroit
/..*
Sept. 9 filed 3,065 shares of 5% cumulative preferredstock (par $1,000) and 3,815 shares of common stock (par
$100).
Price, par for each class.
The stock offering is
to be made through company officers to about 300 se¬

1948

(EST)—

for general

used

were

Proceeds—To provide part ot the

construction.

corporate purposes, in¬
cluding construction, additions and improvements.

Reynolds (R.J.) Tobacco Co.-I—Debentures & Com.
Southern Pacific

ybonds only).

Telephone & Telegraph Co. (parent), which
expected to be about $81,500,000 by Oct. 19.
These

advances

Common

Co.-.-...

Monarch Machine Tool

Public Service Co. of Colorado

■

•

,

September 27, 1948 /:/..■ t/£/•■/»'
& Specialty Corp.____Preferred
September 28, 1948
Chicago Milwaukee St. Paul &
Pacific RR., noon (CST).___^.Equip. Trust Ctfs.
Metropolitan Edison Co.
'
'
- i
Noon (EST)
—
Bonds and Pref.
Southern Ry., noon (EST)______Equip. Trust Ctfs.
United

•

■

Sept. 17, filed $10,000,000 first mortgage bonds, due 1978,
York.
''
i"
and 66,000 shares of cumulative convertible
;
•
preferred
•
-stock ($100 par).
Underwriters — Names to be deter¬
Michigan Bell Telephone Co., Detroit
mined through competitive bidding.
Sept. 17 filed $75,000,000 40-year debentures.
Under¬
Probable - bidders:
writers—Names to be determined by competitive bid¬
Halsey, Stuart & Co. Inc. (bonds only); The First Boston
Corp. (bonds only); Glore, Forgan & Co. and W. C. Langding.
Probable bidders: Halsey, Stuart & Co. Inc.; Mor¬
ley & Co. (jointly on both); Harris, Hall & Co. (Inc.)
gan Stanley & Co.
Proceeds :—To repay advances from

NEW ISSUE CALENDAR
•'

up to
Sept. 28 at Room 2601, 61 Broadway, New

(EST)

noon

45

(Philippines)

act

as

.

Idaho-Montana Pulp & Paper Col Poison, Mont.
May 17 filed 100,000 shares of 4% cumulative preferred
stock ($100 par) and 500,000 shares ($10 par) common
//

Underwriter — Tom G. Taylor & Co., Missoula,
Price—$300 per unit, consisting of two shares of

stock/

Mont.

preferred and 10 shares of common stock. Proceeds—To
erect and operate a bleached sulphate pulp mill with a
200-ton per day capacity.

>

;

.

'

.

/

Sept. 2 filed 500 shares of class A stock and 1,500 shares
Price—Class A* $102.50 per share and
class B $100 per share.
Underwriting—None.
Proceeds
—For sawmill machinery and equipment, purchase of

(JR. J.) Tobacco Co. (9/29-)
Sept. 15 filed $60,000,000 of indentures, due Oct. 1* 1973,
and 260,000 shares of preferred stock
(par $100). Under¬
writers—Dillon, Read & Co. Inc. and Reynolds & Co.

general merchandise and hardwares, etc.,//•

Products

Nu-Era

Offering—Holders of the

common stock and new class B
stock of record Sept. 29 will be given the
right
to subscribe to the preferred stock at the rate of one

V:

Co.» Denver, Colo.

common

common stock in
connection with the company's offering of 100,000 shares
of $10 par preferred stock, registered in July, 1948. With

Sept. 16 filed 100,000 shares ($1 par)

pre¬

ferred share for each 37.6923 shares held.
Rights expire
Oct; 13. Proceeds—Will be applied to the reduction of

Interstate Power Co., Dubuque, Iowa
each share of preferred stock, subscribers will have the
Sept. 10 filed $5,000,000 first mortgage bonds, due 1978.
right to buy one share of common.
Proceeds—For or¬
i Underwriters—Names will be determined through com¬
ganizational expenses. - *•
'
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Official Films, Inc., New York (10/11)
Inc.; The First Boston Corp.; Smith, Barney & Co. Pro¬
ceeds—Of the proceeds, $2,400,000 is to be applied to
July 16 (letter of notification) 49,000 shares 350 cumula¬
pre¬
tive preferred stock (par $5) and 49,000 shares of com¬
payment of promissory notes, $1,400,000 will pay in "full
mon stock
(par 100). Price—$6 per unit, consisting of
the $724,446 balance on a lease and purchase agreement
one
share of each.
Working capital and other general
and for property additions; and $1,200,000 will deposited
corporate purposes.
Underwriter — Aetna Securities
with corporate trustee under bond indenture, available
I Corp., New York.- •
for withdrawal against property additions.
,

Kansas Soya Products Co., Inc.

Aug.

2

common

ferred

Oklahoma Gas & Electric Co.

(letter of notification) 78,000 shares (25c par)
stock and 1,925 shares of $5 cumulative pre¬

stock.

Underwriter—Kenneth

Van

Sickle, Inc.

For additional working capital,
Hold-Hold

Aug.

6

(letter

common

-stock.

notification) 36,666 shares (SI par)
Shares will be issued to H. B. Johnson

McQiiaid

vertible

debenture

Old

North

June 24

filed

(par $5)

bonds,

Corp., Birmingham, Ala.

(letter of notification)

25,000 shares

6% preferred and 25,000 shares

($5 par)
(100 par) common.
To

be sold in units of

common

share of

one

of preferred at $5 per unit.
curities Corp., Birmingham,

and one share

Underwriter—Mallory Se¬
Ala.

and the payment of bills.

For working

^

y

capital
-

..

"

ij

13,333 shares will be purchased by underwriter for pub¬
or private offerings; and the remaining 40,000 shares
will.be publicly .offered on a "best efforts basis" od
completion of the subscription of the first 40,000 shares
and the company's receipt of a license to do business Id
North Carolina.
Proceeds—For general business pur*
poses.

America, Inc., Minneapolis ^
Aug. 13 filed 100,000 shares of common stock ($1 par).

,

'

.

,

6%

account

ratories,

of

etc.

capital stock of Paragon Testing Labo¬

y/yy;//Zi;: /;

/y yy/Zy'

•

v Metropolitan
Edison Co.
(9/28)
August 19 filed $3,500,000 first mortgage bonds, due 1978,

Underwriters—Names

petitive

bidders.'

Co.

W.

to

cumulative preferred stock.
be determined
through com¬

and

C.

Langley (jointly); Halsey, Stuart & Co.
Inc.; Union Securities Corp.; Kidder, Peabody & Co.;
Equitable Securities Corp.
Bidders for preferred stock
probably will include Drexel & Co.; Glore, Forgan &
Co.; Harriman Ripley; & Co. and Union Securities Corp.
(jointly); Kidder, Peabody & Co.; Smith, Barney & Co.
and Goldman, Sachs & Co. (jointly),
Proceeds—To the
proceeds company will add a $1,500,000 capital contribu¬

.

Sept.

Pacific Gas & Electric Co.

10 filed

$75,000,000 first and refunding

statement




on

the company's faeili-'

effective

Sept.

7.

Bids—

:.

required to make

stock of Iowa

or

reduce

further

a

Public Service

$1,800,000

a

note

/

,

to
•

pur¬
.

;

production and working capital.-

;

.>

; Standard Cable Corp., Westerly, R. I.
y .
Sept. 17 (letter of notification) 94,000 shares (250 par)
capital stock.
Price—$1 per share.
Underwriter—Ster¬
ling, Grace & Co.
To move the plant and purchase

Probable bid¬

bidding.

additional

The

ders; Blyth & Co., Inc.; Halsey, Stuart & Co. Inc.;

Engineers

Oklahoma

Tulsa,

Producing Corp.,
V1 ^y.-Z

•

•'!<:

7

•

common

at

oil

properties./1:yy^y/y/yyV/Z/y /

—John G. Perry &

Co.

/

yz'

preferred stock ($100 par) and 500 shares ($1 par)
To be sold in units of one share of preferred
and one share of common for $100 per unit.
Underwriters—Edward H. Morris and Frederick C. H. Wessel, Jr.,
members of Sterling, Morris and Bousman, registered
broker-dealer
To
purchase equipment and provide
working capital. /,;/•;//':■:•/
_/'/'•/ // '

•

,

Tennessee

^

Sept.

For drilling operations.

7

filed

Gas

400,000

Underwriters—Stone

Providence

Seot.

stock.

17

(letter

(R.
of

Price—$«5

additional

canital.

I.)

Wholesale Drug Co.

notification)
per

share.

2,000 shares

No

White, Weld

of capital

underwriting.
'

For

.

common.

Drilling, Inc., Casper, Wyo. T^Zy/y

Powers Oil &

;

tive

the holder to buy two additional shares of
$30 per share).
Underwriter — Central

To purchase and develop additional

-

/ Steelton Foam Slag Corp.,

Baltimore, Md.
Sept. 16 (letter of notification) 500 shares'of 6% cumular

rant entitling

Royalties Company.

accessories.

and

/

(letter of notification) 3,400 shares ($25 par)
preferred stock and 1,700 shares of common stock. Offer¬
ing—To be offered in units of two shares of preferred
and one share of common (each unit to have one war¬
Sept.

...

Stanley Aviation Corp., Buffalo. N. Y.
Sept. 20 (letter of notification) 1,500 shares of $5 divi¬
dend preferred stock
(par $100) and 15,000 shares of
common
stock (par 100)./ Price, par.
Underwriting—
None. Engage in engineering and aeronautical research
and in design and manufacture of aircraft components

,

Petroleum

machinery.

•

Proceeds—To retire $12,000,000 bank
loans and pay for part of company's construction pro¬
gram.
Bids—Bids for purchase of bonds will be re¬
ceived by the company Oct. 5. /

•

improvements

full

Squankum Feed Supply Co., Inc., Farmingdale,
New Jersey
Aug. 4 (letter of notification) $150,000 20-year 5V2%
sinking fund debentures.
Price—102. ' Working capi¬
tal, etc. Underwriter—Fidelity Securities & Investment
Co., Inc., Asbury Park, N. J.

mcr.^ge

payment to subsidiary, Edison Light & Power
Co., for
purchased power, and $950,000 of this $1,500,000 will be
for Edison Light's construction
activities; and $3,450,000

Registration

in

;

bonds,, series R-, due June 1, 1982. Underwriters—names
determined through competitive

July 14 (letter of notification) 800,000 shares (250 par)
common stock.
Price—25 cents per share.
Underwriter

will be applied to

pay

in part, bank loans used for construction
Indefinite../•" //;;'.//•'/;
*

increase

(10/5)

tion from parent, General Public Utilities
Corp. and use
the money as follows: $3,500,000 will
go for construction
and improvements; $1,500,000 will be
used, as a partial

ties.

to

purposes.

Probable

bidders for bonds .include
The First Boston Corp.; Drexel & Co.; Glore,
Forgan &

common

Soya Corp. of America, New York
Sept. 15 (letter of notification) 100,000 shares of com|mon stock (par 10).
Price—$1.25 per share.
Under¬
writing—None named.
Payment of accounts payable,

First Boston Corp.

and 40,000 shares ($100 par)

of

To pay.
poses.

cumu¬

common

on

Holders

—

Associated Telephone Co.' •
/'
Aug. 24 filed 22,000 shares of $2.60 cumulative (n6 par)
/preferred stock.; Underwriters — Paine, Webbery Jack¬
son & Curtis; Stone & Webster Securities
Corp.; Rauscher, Pierce & Co.
Price by amendment.
Proceeds—

.

preferred stock (par $20) and 1,000 shares of
stock (no par). Underwriter—Mohawk
Valley
Investing Co., Inc., Utica, N. Y. To be offered in units
of five preferred shares and one common share at
$100
per unit.
Replenish working, capital funds for payments

Indefinite.

y Southwestern

of Calif., Los Angeles
y
Sept. 8 filed 30,000 shares ($10 par) common stock, issu¬
Stock will; be sold to present warrant holders for
able upon conversion of 15,000 shares of outstanding pre¬
$3
per share.
No underwriting. Proceeds—For additional
ferred stock, 5% series. /No underwriting.
To be added
working capital.
■:
to the sinking fund for the purchase or redemption of
-j
y,
I' ■; ,
- a
/ the preferred stock.
If no preferred stock is then out
/
Matheson Co., Inc., East Rutherford, N. J.
standing, the proceeds will be used for general corpora'*
Sept. 7 (letter of notification) 5,000 shares of
lative

and

sums

common

Bankers Trust Co. •;

Finance Corp.

Pacific

Offering

portion of the

a

investment in the

lic

Lithium Corp., of

•

Oct. 15 will be entitled to subscribe to
shares in the ratio of one-fifth of a share of ad¬
common
for each share held.
Proceeds — To

ditional

W"."

100,000 shares of >capital' stock

-

of record

new

provide

Merrill

on

Lamex Chemical

Underwriting—None.
the

pro¬

Co. y.

*

City (Iowa) Gas & Electric Co.
Sept. 21 filed 71.362 shares of common stock (par $12.50),

Co.

Insurance

State

:

•

Sioux

stock

conversion of'$55,000 of 5% con¬
Price—$i5 per share.
Underwriter—First Seeuritiei
due 1955. " UnderwriterCorp., Durham, N. C.
Offering—26,667 shares Will be
Buckley Securities Corp.
;
1
/ initially offered on a "when, as and if issued" basis:

Aug. 23

•

(9/30)

will receive the

••

.

—For general corporate purposes.

Lynch, Pierce. Fenner & Beane.

of

and J. J.

shares of company's common

<

y. Shoe Corp. of America, Columbus, O.
June 28 filed 25,000 shares of cumulative
preferred stock
/(no par), with class A common share purchase warrant#
attached and 25,000 shares of common stock reserved
for
warrants.
Underwriter—Lee Higginson Corp.
Proceed#

_

ceeds. Underwriters—The First Boston Corp. and

Manufacturing Co., Lansing, Mich.

short-term notes.'

Sept. 13 filed 400,000 shares ($20 par) common stock.
Offering—Standard Gas & Electric Co. which owns 750,000

y Reynolds

->

of class B stock.

For

& Co.r

Transmission

shares
&

($5

Webster

Co.

par)

(9/28)

common

Securities

Price by amendment.

stock.

Corp.

and

Proceeds—

expansion of the company's pipe line system.
(Continued

on

page

46)

ii

46

(Continued from page 45)

Drexel & Co.

Water

Co.,

Power

Wilmington, N. C*

-

Chemical

Detroit,

Co.,

Mich.

'

(

Aug. 23 filed 175,000 shares of 6% cumulative convert¬
ible Class B preference stock ($2 par).
Underwriter—
Co., Detroit.
Offering—To be offered at $2.25
share.
Proceeds—To build and equip a plant and
replace working' capital.
Carr &

per

Casualty Co., Cedar Rapids

United

August 18 (letter of notification) 10,000 shares of con¬
vertible cumulative preferred stock ($10 par), with priv¬
ilege of conversion at-any time

before redemption on a
stock ($10 par). To be

share-for-share basis for common

without underwriting.

offered at $25 per share

!

Sound

United

667 shares of common

par).
Price—$33 per share. Underwriting—
Finance expansion, working capital, etc.

Specialty Corp.

United Utilities &

(9/27-30)

July 29 filed 41,010 shares ot 5% cumulative convertible
preferred stock ($10 par). Underwriters—Herrick, Waddell & Reed, Inc., and George R. Cooley & Co., Inc.
Proceeds—For general corporate purposes.
Washington Gas Light Co.
Sept. 10 filed 102,000 shares (no par) common stock.
Offering—To be offered common stockholders of record
Sept. 29 in ratio of one new share for each five shares
held. Rights expire Oct. 13. Underwriting—Unsubscribed
shares underwritten by The First Boston Corp. and John-

Proceeds—for construction and other
including the repayment of $2,000,000 of bank

ston, Lempn & Co

,

-purposes,

borrowings.

.

•

Wafer-Fizz Corp.,

New York

(letter of notification) 110,000 shares of com¬
mon stock (par $1).
Price—$1 per share. Underwriting
—None. Operation of business.
Sept. 16

'

Detroit, Mich.
par) common stock, of
which 20-0.00-will-be sold by company and 80,000 by four
stockholders.
Price — $5 per share.
Underwriter —
•

Fiber Tile Mfg. Co.,

Yankee

■.

Sent. 15 filed J 00.009 shares ($1

£

•

i

will be in the market early

company

plant construction. Probable bidders: Halsey,
Co. Inc.; Dillon, Read & Co. Inc.; The First

&

Forgan & Co.; Smith, Barney & Co.; Kidder, Peabody
& Co. and Blyth & Co., Inc. (jointly).
'

sold.

.

Corp.

:

,#

from

tificates,

Corpora-!
approxi¬
stock,; such;

Station, Philadelphia, up to noon "(EST) 'Oct. 6.. Prql
Halsey, Stuart & Cot Inc.; The First Bojtt
Corp.; Harriman Ripley
Co. and' Lehman Brothe
(jointly); Salomon Bro$. & Hutzler;v
'; J ^
-

able bidders:

shares to be offered in the first instance to stockholders

corporation for subscription by tnenr

the basis

on

of one new share for each ten shares held.

j: ■

v;;%;/- :

•

Public Service Co. of New Hampshire
Sept. 21 New, England public Service Co, has asked tl
SEC to permit the sale of 200,000 shares of Public Se
vice Co. of New Hampshire.' ($10
par) common sto£
Competitive bidding is proposed for the -sale. ProbalL

<

\

•

Bids for the purchase of $6,600,000 equipment trust certi¬
ficates, series FF, will be received up to noon (CST)
Sept. 28 at Room 744, Union Station Bldg., Chicago. Cer¬
tificates will be dated Oct. 1, 1948 and will mature $330,000 semi-annually April 1, 1949-Oct. 1, 1958.
Probable
bidders include: Halsey. Stuart & Co. Inc ; Salomon Bros.

bidders include
Inc.

Hutzler; The First Boston Corp.; Harris Hall & Co.
Harriman Ripley & Co. and Lehman Brothers
(jointly).
*
-<
;
/,

Proceeds

(Inc.);

Chicago & North Western Ry.

to be used to pay off loans and defray pa.

are

Company asked that the Commission waiv
the requirements for sale ,at competitive bidding ah
permit a negotiated sale.
Traditional underwriter
Blyth & ~Co-> Inc.; Harriman Ripley & Co. and Dea
expenses.

[
;

(10/6)

Bids for the

purchase of $5,325,000 equipment trust cer-.
tificates will be received up to noon (CST) Oct. 6 at;
office of R. L. Williams, President, Room 1400 Daily
News Building, 400 W. Madison Street, Chicago.
Bid¬
ders at the sale will have the option of submitting pro¬
posals either for certificates maturing in l-to-10 years ?
or for certificates maturing in Lto-15 years.v Probable
\
bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley &
Co. and Lehman Brothers (jointly).
:

Witter & Co.

•;

.

i', Southern Pacific Co< ;(9/28)

;
'
Bids for the purchaise of $11,050,000 equipment trust cer

tificates, series Y, will be received at company's offic
Room 2117, 165 Broadway, New York, up to noon
(EST
Sept. 28. Certificates will mature in 10 equal annus
instalments. /Probable bidders include: Halsey, Stuart i
Co. Inc.; HarHman Ripley & Co. and Lehman Brother
(jointly); Salomon Bros. & Hutzler; Harris", Hall & Cc
(Inc). '

'

•

"Cleveland Electric IlluminatingCo.

"•;

Kidder, Peabbdy & Co. and Blyth & Cc
(jointly).■'£ v-7/
•
*
'I

San Diego 4Sas & Electric'''Co.
Sept. 19 company asked the California P. U. Commissi^
for authority to sell 350,000 common shares (S10par

&

•

received

be

to 8,000,000 snares of common stock (par $5).
tion contemplates the issue and. sale in 1948 of

of the

series U, dated July 17 1948, and due In ;
Instalments of $645,000 July 1, 1949-1963, w
by .company ait Room 1811 Broad Stre

annual

6,600,000 snares of common stocks(par $5)

mately 660,000 additional shares of common

(io/6)'I^-Cv'

Pennsylvania ffR,

Bids for, the purchase of $9,675,000 equipment -trust ce

Sept, 21, 1948 stockholders authorized an amendment to
the certiiicate of incorporation increasing authorized;
stock

Probable bidders' include Blyth & Co., liic.

j
•

Central & South West

•

to buy sufficient shares of Pacific Gas stock on f
day bids are opened to stabilize the market., TJie sto
acquired would be sold on the New York Stock E.
change as soon as practicable after the 75,000 shares a

Boston Corp. and W. C. Langley & Co. (jointly); Har¬
riman Ripley & Co.; Equitable Securities Corp.; Glore,

.

Pacific^GaS';&r'Electric-'''Cd.'r'7/

Sept. 21? The North American Co. notified the SEC
plans-to sell competitively 75,000 shares of its holdin
of Pacific Gas
Electric Co.. ($25 par) common stot
North American asked the Commission for. permissi

V"

bond issue of about $12,000,000 to raise

a

(9/28)

(no

None.

1

Stuart

Vr' / y;£jv,§:

£

Chicago Milwaukee St. Paul & Pacific RR.

Sept. 14 (letter of notification)
stock

1949 with

Signal Co., Columbia, Pa.

&

v.-':

•

Sept. 16 reported
in

capital and surplus.

crease
•

To 'in-,

?

Carolina Power & Light Co.

funds for

July 30 filed 80,000 shares (no par) common stock. Un¬
derwriters—Union Securities Corp. and W. C. Langley &
Co.
Price by amendment.
Proceeds—For construction.
Indefinitely postponed.
v.;'///' •.,
Trenton

#

Thursday, September 23, 19

Shields & Co.; Lehman Brothers; Drexel & Co.; Hai
,hiamRipley &

First Boston Corp.; Lehman Brothers; Harriman
Ripley & Co.; Shields & Co.; Morgan Stanley & Co.;

,

Sept. 15 (letter of notification) 500 shares of non-con¬
vertible class A preferred stock (par $100). Price, par.
Underwriting—None. Working capital.
Tide

CHRONICLE

FINANCIAL

&

The

1

•

New York

Thermo Electric Fuse Corp.,

•

COMMERCIAL

THE

(1242)

•

/

.

r

/

;

.

r

.

-

will be in market for a sub¬ v^T.-'/i-VSoMthern-' Railway,-.:;(9/29>
/ '•
Bids for the purchase of $8,700,000 equipment trust ce
money" bonds in the not too
distant future.
No intimation of the size of the under¬ ;v tificates, series OO, dated Oct. 45, 1948 and due se
taking has been given, but will probably be about
annually April 15, 1949-Oct. 15, 1958, will be receive
$25,000,000. Probable bidders: Glotfe, Forgan & Co. and ;; by the company^ up to noon (EST) Sept. 29.
Probata
W. C. Langley & Co. (jointly); Blyth &
/ bidders include: Harriman Ripley & Co. and Lehm^r
Co., Inc.-

Sept. 22 reported
stantial

block

company

of

"new

.

Proceeds — To replace part of
working capital for past expenses.
/

Baker, Simonds & Co.

Yeakley Oil Co., Alamosa, Colo.
April 30 filed 10 000 shares of common stock (par $10).
Underwriting—None.
Price—$10 per share. Proceeds—
Mainly for development.

.

Sept. 22 expected

early filing with SEC relating to
shares (par $1), to be of¬
Grubs, Scott & Co., Inc., Pitts¬

an

offering of 100,000

■

,

Brothers (jointly); Halsey, Stuart &.Co. Inc.; Salomor
Bros. & Hutzler; The First Boston Corp.; Kuhn. Laeb-&
Co., and Blyth &• Co., Inc.
-J
:

£

Colonial Candy Corp., Nlorgantown, W. Va.

L

.

common

•

fered at $2 per share by

burgh.

Prospective Offerings
•

Alabama

"

.*

>•,

?

company plans sale
bonds later this year.
Probable bidders:
&

Investment

several

tion

companies, moved out in

of Security
Club of St. Louis.

'party

Bond Traders Club of Chicago
Luncheon for members of NSTA

SepL'23, 1948 (Des Moines, Iowa)
"

passing through Chicago on way

\

to the Convention.

Iowa Investment Bankers Asso¬

ciation annual field day at Hype?

rion Club, with

breakfast at Hotel

'

?

Security Traders Asso¬

ciation Convention. :

Savery.
Sept 24,1918 (New York City)
..

Nov. 14-18, 1948 (Dallas, Tex.)
National

Commemoration of

anni¬

161st

all

Traders

Nov. 13, 1948 (Chicago, ni.)

Field

New

Orleans

Sept. 18 counsel for FPC recommended approval of amipany's expansion program, estimated to costr-$122,000,009.
The

FPC

was

urged that securities by which progrante

qf

smaller

them

undertakings,
public utility

for

a

post-Labor
in

market

the

Day test of
wake

of

the

the

or

a

Co.'s 400,000 shares of additioria

spread of

only 39 cents a hundred dollar ?,
piecC, to yield 3.10 to the buyer.

brisk i

Investment bankers and dealers
waited rather anxiously for

this

price of 100.53,

•

common,

The second group bid 102.15-for
; Net cost of the
financing to the company
wofked out to 3.12% annually
a

3ty*% coupon.

current

late

whereas on its previous ( under¬
taking of similar proportion?, last
and the Federal Reserve Board toMarch, when the v company ac¬
stiff en
short-term money? rates
cepted a bid of 102.07999; the cost
and curb bank credit potentials in
was 3,142%. : The current
issue
a move against inflation.
^
/ was reported a little better than a
.

summer

actions

Security Traders

by the Treasury

Several sizable

American

,

will bd

The

way

in which the several- third ::soid--yesterday;//?*;:H//^/;r^/'.

of

ment Bankers Association

fall

Club to be

annual

Queen

City

followed

in the

eve¬

at

Hotel.

30-Oct.

1948

1,

(Boston,
The

Mass.)
Board of Governors of Associa.

tion of Stock Exchange Firms Fall

Meeting at Copley-Plaza.
Oct 1-2,1948 (Chicago, 111.)
M i d w e s t regional exchanges

preliminary

meeting

to

discuss

new

turned in

issue market this week

good account of itself
opinion of anxious ob¬
servers, so much so, in fact, that
a decidedly more cheerful atmo¬
sphere developed in underwriting

in

a ^-

traditional

rivals

for

each

,;

issue that has come to
market since competitive bidding
became the vogue.
; *
(

Pacific

Telephone

Co.'s huge

issue

&

Party at the-Kirtland Club..

.tbq .earmarks /.ofa ./fworker,"

-

—

■—




»

/

;

(Continued from page 8)

;

G. A. Saxton &

Co., Inc., 70 Pin
Street; New York:5; Nv Y. v/-'»

in

Ray-O-Yac Company—Analjr^i
ciVrrent issue of "Business ^

Financial

any

year

debentures which, of

course,

vket

as

will be brought-to
a

negotiated

it is mot subject .to

deal
SEC's

.
<»

New. York .6, N. Y.

-Als<

mar- >

way.

since?

available is. a Special memorandurr

com¬

on

the

of

successful

Issue

the. Auto Group.

t

on

petitive

bidding

rule:

while/ - common and

;•

B

.

uMean-

!

holders

•»

will have translerrable "rlghts"
to subscribe to 200,000 l^iares 'of %

Winters

for

a

3>^%

coupon j

-

Crampton

B1 Broadway, Nety
'

,

5

Analysis-r-C, ,E. Unterberg .'& -Go.f
York 6, N. Y*?
and proceeded with Teoffefinjj,^'
hew-^preferred1 jstock/f "■r:1Al
a vail* We i § an aha lysis bf
Miles Shoes/ Inc/v/- -j /
following formal award,v:at;.a / -?Tetinessee
G as; Trarismi ssiori
100.13999

debentures, $75,000,000, had all

syndicate bid
its
tender
of

^

m

ii^ for "bids./

,

The

Telegraph

m

railwa

'Thus

given

tele¬

phone

circles.

Oct. 1, 1948 (Cleveland, Ohio).
Bond Club of Cleveland Fall
(it

of

•

a

the

While

consolidation.

,

ifeiies

.

ning by a cocktail and dinner
party at the Bankers Club, Gibson

Sept.

-

,

Invest¬

the

meeting

on

spread of less than qne-third of\

Sept. 28, 1948 (Cincinnati, Ohio)

Valley Group

negotiate!

Digest'—Loewi & Co
-far; the company has not 2^5 East Mason Street,/Milwauke
- official
intimation of •2, Wis.
a point
presumably to hold the- the size of the undertaking it may;
yield to the investor; at 3%,
have in mind.
:
>
Riverside Cement Co.—-Circula •
which long has been the figure
—Price, McNeal & -Co., 165 Broad
set by major aportfolio managers.
Next Week's List
way, New York 6, N. Y. /
as
the
minimum^ return
in
Next week promises to be a
which they are interested,
rather active period in the -new
Security Banknote Company.issue market with the bulk of the
Pacific Tel. & Tel.
projected offerings scheduled for Memorandum — Homer O'Ccmne
The
biggest
& Co., Inc., 25 Broad Street, Ne\
underwriting ^ in Tuesday and Wedensday.
many weeks, that of Pacific Tele¬
York 4, N. Y.
Largest' single issue on the >
phone & Telegraph Co., brought
schedule is the Reynolds To- '•»
out only two bids from -groups
Tidelands Oil—Memorandum
bacco Co.'s $60,00QJ)00 of 25headed by firms that have been
J. R. Williston. 8c Co.. 115 Broad
market the bonds invoived

74th annual convention.

Ohio

<a

BrokerHealer

offerings, ranging Trom
$5,©00>000 to $12,000,000, were

Association

Bankers

on

equipment trust; ceftifirates als<

smaller

(Detroit, Mich.)

Sept. 26-29

also,

basis, will be brought out theprei
vious day, Tuesday, along with
40,000 shares of Metropolitan -Edi¬
son
Co. preferred and $3,500,00j)
new- first mortgage, .bonds.. Thfc
two latter, of course, will be
mqrl
keted
via
competitive bidding

rf/LookingforBusIness^?1
qf enactment'of the Bill Association entertainment for del¬
'of Rights by 'Wall Street Post of egates coming from NSTA Con¬ snapped up, suggested that insti¬
'Underwriters are con vinced that
tutional investors were
the Americap Legion at Federal vention—details to be announced
^htmgisr* the Cleveland Electric Illuminat¬
for material and findmg/itsin^
'later.
Hall, Wall and Nassau Streets.
/f ■
v/-/- /''■■■■./:■ //
ing Co. will be in the market/for
creasingly difficult to fill 4heir> ^ substantial/block Of; new money
Sept. 25, 1948 (New York City)
Dee. 5-10, 1948 (Hollywood, Fla.,
needs. ./v.
in the not too distant future. / At
New York Curb Exchange Floor
Investment .Bankers Associatioi
In
the
Clerks Association clam bake at
cases
of the^ three
-any * ; rate,: several / groups
are
1948 convention at the Hollywoor
smaller
Overpeck Park, Ridgefield Park, Beach'Hotel.
utility
offering^ :the»/ forming" in anticipation of a call
successful bidders ,proeeecie«IM«^^ ^ 4qtJ>id/for an offering.
N.J. ■'
;
"...

-

Co.

•

versary

-

Transmission

of

had

Nov. 18, 1948 (New Orleans, La.)
s

Gas

$12,000,000 / would -be financed be sold at competitive bidding. Tra¬
ditional underwriters: Stone & Webster Securities Cor]
Halsey, Stuart
Co.; The First Boston Corp.; Morgan Stanley & Co.; and White, Weld & Co..

Oct. 11, 1948 (St. Louis, Mo.)
Tentative date for annual elec¬

EVENTS

.

Georgia'Power Co.

Sept/ 16 reported

Power Co.

COMING

'

.

B

Sept. 16 reported company plans sale of $12,000,000 later
this year.
Probable bidders: Halsey, Stuart & Co. Inc.;

In

-

•

Tennessee

rolume

Number 4736

168

THE

COMMERCIAL,

&

FINANCIAL

CHRONICLE

ticular customers
to

or
contributing
inflationary price in¬
V'.,//' •'[
•
-

general

creases.

"This should not be the occasion

lit International Crisis

for

30.000

some

Lhe

there

development,

United

irvice

in

providing

States

which

trackage

a

of

miles

being

today

would

we:■

regard as primitive. The telegraph
ras

still

there

and

curiosity

a

of course, no electric lights,
telephones, no automobiles, no

rere,
10

airplanes, no atomic
inergy. There was also a lack of
so many of the conveniences and
ndios,

no

badly wounded civilization stands
bay against subversive forces

devices

edies

the

which is

crite-

well

to-

our

-

[states united under

federal gov-

jerriment. at Washington. The Na¬

% Now, what

our

Bankers

credit to

hand in hand during this
re-

Igard with satisfaction the results
I accomplished; t \
^ r~.
>
».

public to maintain
omy,
fires

are

,

JB^nking Responsibilities Enlarged
NOW ; that' the

great " period

be¬
peo¬

of

expansion and development here
this continent lias been accom¬

on

constructive

forces'

who

the

dislocation of

natural

"In

systems

and

our ' economic
wrought by

the

.

the

the

matter

we

have

keen

editors.; The

Assn., i

25

BROAD

York
of

American

the

remain

BROWN,

of

press

STREET,

open.

of

Board

Directors

of

this

16,

as

October

payable

record

27,

1,

the close of

at

1948,

on

1

"Almost

w

i th

the

and

on

EDWARD

Financial

you

O T I S
ELEVATOR
COMPANY

COMPANY
30

Rockefeller

Plaza
"

' ;

;

New York 20, N. Y. y/y
Dividend No.

The

this day
semi-annual

declared

One

($1.00)

on

Writers'

A dividend of 50tf per

dividend

cash

Dollar

of

the

at

ber

close

15,

ord

on

of

business

sincerely

businessmen

American

enforcement of
American
policy

and heartily favor

Deep

this matter.

I

committee

that

and

gratified at this

am

it

Octo¬

with

Department in this investi¬
gation.,
'
•

and

"Every businessman, every con¬

trade .and unfairr competition,

there

can

be no

doubt that these

policies have made a substantial
Contribution to the success of, our

iree enterprise system. They must
repudiated. Businessmen as
well as others accept the decisions

not be

highest Court as the last
word on what is the law. Furtherof

our

.

imore, businessmen
with the law.

|

the steps

merce

C. A. Sanford, Treasurer
New York,

'

are

PACIFIC GAS AND ELECTRIC CO.

beginning,

a

will

be

for

no

the

this situation should not lose

veteran,

"Meanwhile,

I

hope

that

law, will,

avoid

far

so

as

imposing hardships

and

Town

west

ferred.

and

»

possible,

taken

from

which

.of the United States, I repeat,—
restore the right to own, and to

on par¬

Commercial

and

Financial

icle, 25 Park Place,
ii

Common

Stock,

tember 20, 1948.

/

i

I

'—'

11

i 11

"v.

•




Beckett,

Treasurer

California

.V

Secretary and Treasurer

MINERALS A CHEMICAL
CORPORATION
General Offices
CALIFORNIA

SOUTHERN

EDISON

;t

v

20 North Wacker Drive, Chicago

COMPANY

Common Dividend No. 155
Preference Stock

Dividends

4.48% Convertible Series
Dividend No. 6

'

declared

were

Board of Directors

;

-

September

Preference Stock

9,

1948,

as

by the
on

follows:

4.56% Convertible Series

2

Dividend No.

Cumulative Preferred Stock

4%

'

26th

Consecutive

Regular

Quarterly Dividend of One Dollar
($1.00) per share.

of the
following quarterly dividends:
37^2 cents per share
Stock;.

-

--

,

-'

*:'}[- 'yV f

■].

I

'/

City of New York has declared

payable November 1, 1948

to

holders of record

not

be closed in connection with the

of this dividend.

28

cents

Preference

28^2 cents

Both

V

;

per

share

on

All three dividends

NATIONAL

BANK

OF THE CITY OF NEW

October

31,

;

are

at

to

J. Egger

/

-u-

the close of

:

Checks

will

Bankers Trust

rv../--

be mailed

showers,

by the

Company of New York.
Robert P. Resch

Vice

Secretary.

President and Treasurer
★

September 17, 1948

Vice President and Cashier

—

are payable
Septem¬
stockholders of record
business September 20,

stockholders of record Octo¬
ber 5, 1948.
o. v.

A.

Stock

,

YORK

CHASE

Common

dividends

1948.

pay¬

1948,

Value

ber 30, 1948, to

the

y.

Par

Regular Quarterly Dividend of
Forty Cents (40c) per share.

per share on the
Stock, 4.48% Con¬

vertible Series;

able
'

THE

$5.00

the

Preference Stock, 4.56% Con¬

the close of business October 4, 1948.

The transfer books will

on

Common

dividend of 40p per share on the 7,400,000 shares of the capital

payment

r &

J.

Francisco,

Philadelphia 32,•September 10,1948

Mining and Manufacturing

New York, 8.
.

E.
San

'

-

Chron¬

of (he ".year of 50'cento
the Company's Common

Checks will be mailed.

vertible Series.

S-23,

payable

authorized the payment

THE CHASE NATIONAL BANK OF THE CITY OF NEW YORK

management.
of Missouri River pre¬
Box

the

on

September 30, 1948, to stockholders of
record at the close of business on Sep¬

The Board of Directors has

property

References.

the

dividend of seventy-five cents ($.75) per
share

upon

opportunity here and

DIVIDEND NOTICE

at

desires banking connection
possibility of acquiring in-*
terest
in
future.
Compensation
secondary to opportunity to learn
general banking as lifetime career.
Experienced in real estate, insur¬

from

declared

adequate explanation of
Let us be content

them in 1933,
they had enjoyed
from the beginning of our Na~
tion—until that particular fate¬
ful year—restore to the people
was

pro¬ tv

ducers, in considering what steps

a

uate,
With

ance,

have

Accumulated Surplus of the Company a

-

college grad¬

29,

Directors

cpiartcr

share

Capital Stock. This dividend will be
paid by check on October 15, 1948, to
common shareholders of record
at the
close of business on Sept, 30, 1948.
The Transfer Books will not be closed.

!

quires that those who know the
facts should give the facts,

stock of the Bank,
Married

,

•

feel strongly that sweep-;

BANKERS ATTENTION !!!

•

third
per

community affected with the announcement. Here it
is;—-■■'/
■%;/;'/:/;!
the opportunity to give Congress
Restore to the people of the
the facts. The public interest re¬
United States, the right, which
by

The Chase National Bank of the

d

1948

Quarterly Dividend
Die

Board of Directors on Sept. 15,
declared a cash dividend, for the

The

sumer, every

to effect this

SITUATION WANTED

company

192nd Consecutive

matter.

confused as to

ing changes in traditional pricing

Common Stock Dividend No. 131

H. C. ALLAN

will make

compliance. Moreover, many busi¬
nessmen

|

:/

DIVIDEND NOTICE

The Electric Storage Battery

a

now

the

necessary

September 15, 1948.

,

wish to comply! they should take to comply with

"In connection with this matter,

however, they

on

,

primary objective—simple
—elementary,
However,
there

complete cooperation of the Com¬

against monopolistic restraint, of

historic

the

sound reasoning
constructive suggestions, we

we

.

will

thinking,

"So,

have 'the

close of business

the

at

Checks will be mailed.

1948.

.September -16, 1948

on

par

October 4, 1948.

E. E. DuVall, Secretary

sorely need.

the

assure

will

no

29, 1948, to stockholders of rec¬

Com¬

November 15,
1948, to stockholders of record

pany,

share

value Common Stock
has been declared, payable October

share

per

the capital stock of the

payable

the

regular

a

Common Dividend No. 164

•

10

board of directors

has

desire

purpose.

ommendations in connection with

on

Secretary.

FRAHER,

NATURAL GAS

am■; told,

"Perhaps

rec¬

shown

as

Gtsrgo A. Morrell, Vice Pres. ( Treas.

CONSOLIDATED

the part of the

publication writes it has assigned
a special, writer to work with us.

basis for

exception. businesslike step and

t

o u

as a

share

1948.

of

.

get at the facts

October9,1948,

Oltmnwi, Iowa.

holders of
September

to

business

per

capital stock of

the hooks of the Company.

Series
pany,

the

paid October 30.1948, to stockholder*

of record

day declared the regular quarterly dividend
$1,375 per share on the outstanding 5Va%
Cumulative Preferred Stock of the com¬

of

One-Half

and

($0,375)

John Morrell&Co. will
1>«>

has

x

an actual physical reloca¬
tion of plant faciUties WitH e con¬
sequent migration of workers.

'

1948.

company

CO.

dividend of Thirty-

a

on

YORK 4, N. Y.

NEW

&

DIVIDEND NO. 77

.

Treasurer.

September
The

rela¬

assured

inquire at
this point-—whqt's your program?
(Continued from page 15)
How do you propose to go about
art of ,the delivered price of a practices will be harmful to pro¬
it?
Of course, you realize how
_roduct.- This could have severe, ducers and consumers alike.
complicated is the subject. How
Repercussions upon smaller busi¬
"The matter Is critical, an ap¬
few bankers, for instance,, would
ness enterprises which would be praisal of the factors involved is
care to express themselves on the
[among the first to feel the effects difficult, and an early and com¬
subject, likewise, insurance men,
of changes in business practices. pletely objective approach to the
mortgage men, savings bank men;
Should there be large-scale resort problem should be welcome. I am
whose responsibilities for future
to f.o.b. pricing,-by industries now pleased to note the recognition of
value of money are greater, per¬
Using other pricing methods, the the complexity of this problem by
haps. We will get splendid coop¬
customers of such industries will the Congress and the fact that the
eration from them, I am confi¬
jfind
their own
costs . revised, subcommittee under Senator Cape- dent.
Already, the head of one of
i Where these - revisions are sub¬ hart has already begun, with the
America's greatest life insurance
stantial, the result may be a shift advice of a distinguished commit¬
companies has said he will join a
[io other suppliers or. in extreme tee of businessmen and citizens, to committee for the same

[cases,

MORRELL

JOHN

this

will hold forum
discussion
on
the
subject
this
iponth.
A
prominent financial

Urges Study of Basing Point Ruling

Treasurer.

;

Cents

«

been

interest

for information

working with the

B.

FISRE,

Streets

New

will

books

quarterly

a

thought.

tions,

law, and not against it.

,

$0cial

company

affairs, in part, he directs.

■

off the past teach
that this spark pf initiative is
inherent in men, and in keeping

Septeriiber 16, 1948

CITY INVESTING COMPANY

in his operations

expansion of the program to
other communities. -

us

COMPANY

of

Seven

the

All the lessons

22,

Directors

ROBERT

changing views and contemplating

tunity for individual achievement

SMELTING

declared

COMPANY

Company

Transfer

is now in process of organization
there, and soon we will be ex¬

plished, pur banking system sud¬
denly finds its- responsibilities en¬ tion and without; which a society
larged. • It: faces world as well as becomes lethargic and spiritless.

.

1948.

They recognized the
leadership of the N. Y. Board of
Trade, and indicated their will¬
ingness to cooperate. A committee

dearth of goods.' It Is important
to keep ambition in men arid to
cultivate that urge and oppor¬

Secretary.

1)4 % (87J4 .cents per share)
on the Preferred
Capital Stock, and a divi¬
dend of fifty cents (50(f) per share on the
Common Capital Stock, both
payable on Oc¬
tober 15, 1948 to stockholders of record
at
the close of business
September 27, 1948.

has declared a divi¬
dend of 25c per share on the Common Stock,
payable October
1,
1948
to
Stockholders
of
Record at the close of business September 21,

the

great

of

Manufacturing

Zellars,

"Last week, I ventured to Al¬
Was amazed and delighted
to discover there a kindred line
of

STOUT,

MINING

have

distin¬

our

bany.

&

are

ac¬

Board

West

and

Brooklyn

past has experienced
vicissitudes of inflation and

whose

channels where there is

we

of

MANUFACTURING

Noble

V

Congressional

unsound money
abroad
for
the

Directors

share
capital

October 15,
at
the
close

■

,

STATES
AND

per

the

on

payable

-

Co., 1028 State Street.

AMERICAN

'Return

Chairman, John

in

BARBARA, CALIF.—
Maguire is with L. J.

-

DIVIDEND NOTICES
re¬

you

.

farsightedness

guished

which

it alive

get

Chronicle)

(15c)

day

S.

1948;

16,

UNITED

dividend

L.

Cooperation,, thanks to

cbri-

leadership.'It needs imagination,
Courage, vand
steadfastness. The

4)

page

The

the

which gives vitality to a civiliza¬

pationat problems. It needs strong

September

to

Financial

cents

this

Corporation

to

The

SANTA

Albert

So you authorized the Com¬
mittee on

attempting to increase supply
those

the

of

REFINING

Vetter &

tion.

their power
stable

^(Continued from

added'—to

this great re¬
a;

,

.

The

fifteen

of

declared

JOSEPH

ATLANTA, GA. — Lamar M.
Wise, Jr., is with Merrill Lynch,
Pierce, Fenner & Beane, 23 North
/
y
Pryor Street.

"However, 'something must be

to put out the threatening
of inflation, and to assist

those

in

i

aid

been

stockholders of record
business September 30,
1948.

of

With Merrill Lynch Firm

prac¬

Wall Street, New York

14

dividend

A
has
1948

•

do about all

can use

■

.

FRANCIS

to Gold' resolution.

influence toward this

end.

well

competitive
forces of

that we make this private system
of banking work well.
We must

mobilize

serious,

the..,.subject. Finally, if
member, we passed the

for

and

we can

over

may

-■/•

this at the moment is to keep our
house irl order,. and«to be sure

Banks and - the' Comp¬
troller of the Currency, who have

period,

we

■.

,

.

stock

Outlines Program for
Gold Standard Return

the first to be absorbed. //

ers are

of.' State

significant

a

ning.''

(Special

power

second,
retreat of a free

tional .Association- of. Supervisors

[worked

.

weil-known

a

character—this is only the begin¬

of

.

war

a

DIVIDEND NOTICES
National Bond and Share Corporation

L. J. Vetter & Co.

ple before collectivism the bank¬

48

of

system

a

great

against V the

in any

cause

-leader¬
ship. And certainly it has adapted
•

lot

because

the

totalitarianism,

surge forward into- wmld

I itself

of

leading the cold

economy

there has been;-a/gr£at

its aegis

first, of course,
citizens

the preservation of

are any

the

much to bank-'

are

Certainly Under

success.

means

ers;

us

Irion, this American system of
[banking. with its dual feature, has
a

to

dignity of the individual,.

All of this

If the economic achievements of

been -i

falls

America to play an important role
in preserving free institutions and

by

Ithese United States

it

and

form and

any

"In the words of

persecuting business.

faced with

are

business and government with a
view to serving the public inter¬
est."/-:
;

-

Men in great suffering become
reckless in their search for rem¬

>nly about 85 years ago.
-

destroy it.

about

tical and immediate problem which
should be examined jointly by

•/

mentally to project
irselves back that far—and it is

possible for

We

at

which threaten to

which we
live today that it is practically im¬
ingenious

government

Second World War is much great¬
er
than at first realized and a

clamor

or

dispose of, gold in

in any quantity, whatsoever.

:

business exploiting the public, or

(Continued from page 11)
iarly,

excitement

47

mi

t

I

rti«s»h»t*

•

Potash .* .FertHiw f phemMs

48

COMMERCIAL

THE

(1244)

&

CHRONICLE

FINANCIAL

Thursday, September 23, 1941
Lawrence seaway, cost not late¬

BUSINESS BUZZ

ly estimated; "reform" Federal
pay scales
(in addition to the

"temporary"
ment

boost

employee

in

pay

Congress), cost, not

govern¬

voted

by
estimated;

restoration of appropriations for

Federal power,

reclamation, and
the like, post almost unlimited.
that

Now

the Federal Deposi
Corp. has paid off th«
$289 million the government orig
Insurance

D. C.—How can one government agency step
business of another agency without stepping on
the latter's toes and starting a fierce intra-bureaucratic civil war?
That was the question which was raised when
the Federal
lieserve Board decided to consider^~~~
whether
instalment
loans
for
that heating oil will have to
come from other sections. The
liome improvement should, like
heating oil situation is in such
other instalment credit be sub¬

WASHINGTON,

in and regulate the

?jo as

to

anybody

ever

Under

FHA

saw.
borrower has to

a

only 10% down to get a loan
improve his home, and he has
3G months in which to repay. Un¬
der the Federal Reserve Board's
pay

to

^Regulation W a borrower has to
put down from 20% to 33 %%
<on

deal

instalment

an

and

has

only from 15 to 18 months to rehis loan.

will mean

And

bringing home im¬
provement loans under such more
arfgld downpayment and repay¬
ment regulations would just about
slay FHA's Title I insurance for
liome
modernization
and
im-

loans.

proyemen I

the

how

is

Here

„

war—well, there simply isn't the
present high civ¬
consumption and the fight¬

of

a

Ball.

according to

war,

is

it is likely to be
shortly:
The
FR

the

Under

San
in

additional classes of govern

ment

These

revenues.

the

are

from the
payrolls of their employees for
the old age insurance trust fund,
articles,

manufactured,

designated

They

taxes.

Internal

Building.

of; easier terms; FHA not only
not be stepped on by FR

receipts

give

of

Revenue

business

payment

they

when

Salle

•

war

served

sharply in the minds of
officials the problem of American
economy would face in the event
of War. That problem is one of
sharply
curtailing the
civilian
consumption of gasoline, heating
■oil, and almost everything, for in
addition to remaining acute ma¬
terial shortages, there will be cur¬
tailments of many items of civ¬
ilian consumption occasioned
if
Tby nothing else, by the prospect¬
ive labor shortage.

Bureau

statistics

believes

event

war,

of

have

the

of

that
U.

re¬

1

Labor

in
S.

,

thewill

shortage of 3.1 million
in its labor force, even
taking account of diversion of
a

persons

know

file

you're

a

director,

new

isn't

credit

made

such

capital

Something is being worked out
deductions

C. J.f but that attire
necessary!"

profitable

political

of

excise

tax

the

for

them—embarrassing for the
cial planners,
—r : i";;;-'.

which

credited in the

are

viduals—are

not

>

with

that

if the

banks the

number

of

their

Revenue

will

be

cut

ter on the, Pacific Coast.
.

Should the strike fail of set¬

tlement for two Or three weeks
more,

an

acute

West

Coast

shortage next Winter of heating




as

under

of

the

first

;

year, *

things which

be taken up by Congress in
1949is the. amendment; of the

may

seem

to

be

almost

agement of
order

to

inevitable

U. S.

He;

120 South La
was

formerly

Finishing

Dorset Fabrics
Lonsdale Co.
Seatex Oil

fiscal affairs, in
inflationary pres¬

our

curb

sures, to safeguard our financial
position, and to permit reduction
public debt."

of the

the

President

"for sound

fiscal

M. S. WlEN & Co.

the "prudent" things

Among
which

ESTABLISHED

management of our

affairs,"

Congress,

proposed

were

but

killed

Member* N.

by

40

the expenditure

;

cost

of

the

day-was

go.*

a

With the Truman Administra¬

tion, the chief objective of the
mis-estimating
has
been
to
forestall not merely tax reduc¬
tion

but

1919

Y. Security Dealers Ast'n

Exchange PI., N. Y. 5

HA. 2-8780

Teletype N. Y. 1-1397

way

of

public

than

$2.3 billion

Trading Markets;

Federal aid

years;

health,

costing
per

more

year;

Rabton Steel Car

re¬

creation of Federal price and ra¬

tioning

control,

which

Oregon Portland Cement

would

.cost from $100 to $300 million to

Riverside Cement A & B

spending—so that the
would not be foreclosed

administer; raising by 50% the
monthly checks of old age pen¬

Spokane Portland Cement

total

by reduced
tious

/to

than $10 billion over

more

period

in

a

curtailment

federal
One

Fo^

of
$400 million for Universal
Military Training; an omnibus
housing bill, which would have

V

to

quarter, later to one every
and eventually to
a

J.

;

beyond the point the Republican

willing to

re¬

down

Chronicle)

Reiter Foster Oil

Truman, in last month's
budget revision, asserted:
"During the past three years I
have repeatedly taken action to
enforce sound and prudent man¬

Administration

>

turns to the Bureau of Internal

social

Truman

revenues

for ambi¬

programs

of

Administration.

the
Once

the total Federal budget was re¬

duced/the beautiful social bene¬

sioners and

from

age.

reducing to

65 the

beginning old

age

60

eligibility for

age

payments to

female social security recipients,
cost not estimated, but prob¬

fits could not be brought about

ably not less than $250 million

without raising taxes to pay for"

the first year; building of the St.

HAnover 2-0050

y LERNER & CO.
Investment Securities
;

10 Post Office Square, Boston 9.

Telephone Hubbard1990

Mass.

Teletype BS 69

Teletype—NY 1-971

would be that

giving the Banking
committees jurisdiction over legis¬
lation relating to the World Bank

and; Monetary Fund.
•V,."#

strike is settled

Before this is printed, diesel and
Beating oil will be tight this Win¬

war

„

•

even

the

The famous Republi¬

Secretary of the Treasury was
posal will simplify some of the
accused, perhaps not unjustly, of
problems of
business.
Excise I making the bad estimates for the
taxpayers
now
file, returns ? purpose of staving off tax relief

Legislative
Reorganization
act;
with respect to the jurisdiction
a
of legislative committees.; Little
ttention; to this situation was
the oil labor strike in California.
can
be ; learned
of
what
is
Before the strike, which begap
planned, for the secret of the
Sent; 3," California was relatively
changes is closely guarded by the
well off with respect to oil sup¬
Congressional leadership.
How¬
plies; Now the strike already has ever, one change which would

Wax Ball of the Oil and Gas divi¬
sion of the Department of Interior,

since

can

.

some

Vice-President

v-K4;:i^

Truman

The other event which directed

short of gasoline supplies. It has
insured the prospect, according to

a

-

Roosevelt, used Mr.

Mr, Mellon.

technical prob¬
lems have been solved, the nro-

excise tax return

it inevitable that for

once

Mr.

so¬

Mr.

Safe to say, the poor estimating
has been as consistent under Mr.

•

monthly. If they are permitted
to deposit receipts currently in

Financial

ILL.—John

Belle Isle Corp.

was

definitely visible political bene¬
fit.

these

When

one

months, the West Coast will be

when he

Meilon'8 fiscal mis-estimating to

Treas¬

confused

other tax payments.

j

Garner,
"under

books to the account of indi¬

ury

almost ineyithat manpower mobiliza¬

ducked by the Congress
during the last war, will surely
have to come.
"V

same

appropriate
Treasury :■ accounts.
The problems of this scheme are
technical.
Thus,
for
example,
some
way must
be devised to
avoid the danger that the old age
security
payroll
deductions—

means

tion,

doing the

late

Secretary of the Treasury under

living for civilians in the event

made

ac¬

really

during the -20s

Presidents Coolidge and Hoover.
The
politically
nimble
Jack

months,

iably

jeering

receipts to other

and

six

it

out

Andrew Mellon

be credited to the trust fund

one a

war;

was

South Jersey Gas

loan accounts.

production from civilian to mili¬
tary goods. This means not only
a sharply - reduced
standard 'of
of

opened]

with the Chase National Bank.
"I

whei'eby the payroll
can

to '.The

Street.

withholding tax receipts to the
Treasury's

tf

etch

The

and |

Exchanges,

He previously

Becker & Co., Inc.,

for

evidences

as

their returns. The banks

presumably will be enhanced.

lated to the labor supply situa-

Stock

Mejia,

York

has become associated with A. GL

■

nation.

New

Joseph]

individual dealer in San

as an

CHICAGO,

'

One of the announcements

&

Fox With A. G. Becker Co.

with¬

as

employers, who turn in
these receipts to the Bureau of

will

to

the

—

Davies

charge of their newly

tive

holding depositaries already re¬
ceive withheld personal income

/will be prohibited front reaping
the competitive sales advantage,

Two recent events have

with

of

Chronicle)

CALIF.

on

taxes to

*

now

,

stay outside FHA

*

Financial

The

Francisco

(Special
;

Improvement loans as FHA pre¬
scribes for its business. Thus all

■

has

office in the First National Bank

monies employers deduct

Banks

lment credit terms for home im-

Its

to

members

receive

to

authorized

be

the like.

merely clamp upon
all borrowers the same instal¬

Board will

regulation;

condition

JOSE,

Fabretti is

banks

depositary"

"withholding
would

SAN

proposal, designated

ous

Board

That

(Special

transportation, communication and

who

FDIC

With Davies & Mejia

in

proposal to sim¬
plify the problems of taxing pay¬
ing business along two lines.

announced

: lenders

until

Administration.

a

work out,- as

•

objected

year, it will run into no
objection from the FDIC or the

Mi-

study

under

now

Treasury

two

o

i

There
the

1%

been met. So the presumption
Is that when Congress takes up
the assessment rate
reduction

ilian

ing

of

and also the excise taxes on vari

will

deal

ment.

oil available for

pay

Obviously

istration

/

,

1/12

paid off its government invest¬

contingency

the

to

as

deposit insurance

now

Congress in 1947 wanted to cut
the assessment rate. The Admin¬

a recurrence

next Winter.

ages

for

is

rate

deposits.

difficulties
of short¬

transportation

or

That

weather, another strike,

severe

to

assessment

that unduly

delicate balance

a

government regulation
slay the Goliath of infla¬
tion.
The solution of this puzzle
its expected to be provided by the
Federal Reserve Board itself, and
it is just about the neatest thing
jected

inally invested in that institution
the way is cleared for Congres
to consider reducing the rate o.

Some

of

the

GOP

v

:

FOREIGN SECURITIES

/

boys with

■.

'*

v'-Ail Issues:

that

Hill, Thompson & Co., Inc.
Markets end Situations lor Dealers

r-ABL MABKS & ro. Mc.

Administration's record for con¬
sistently putting out pessimistic
estimates of the budget outlook.V

Where 'the
long
memory1
in, is that the Democrats

comes

-a;

v

upon

the Republicans go all out on the

■,

;

.r/

long memories are urging
party's high command

the

Firm Trading Markets

i

FOREIGN SECURITIES

•"-<

120 Broadway, New York 5
*

Tel

SPECIALISTS

50 Broad Shoo!

REetor 2-2020

Tele. NY 1-2660

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. lnc.CHICAGO

if

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y

J si

,

•

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