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ESTABLISHED 1S39
ADM*
LVBRAKf
BUS.
Reg. U. B. Pat. Office
Volume
New
Number 4738
168
A "New took" in Oil
Managed Economy
Worldwide Keynote
A. WILFRED
By
Price 30 Cents
York, N. Y., Thursday, September 30, 1948
a
Copy
The Surrender to Inflation
MAY
Portentous
pyramiding of domes¬
tic, international direction and
controls, with complacency there¬
observed
over,
International
at
Bank-Fund meetings.
WASHINGTON, SEPT. 29—Be¬
in the inevitability of man¬
lief
agement and planning in the in¬
ternational as well as the domestic
* spnere,
•
-
.
•
?
'
is tne
impression
arising from
the proceedings at this
"annual
third
•> meeting
of
B,». over - ridng
the
\
Interna-
tional
B
a n
k.
j/i.and Monetary
n
•;
-
man>
A. Wilfred May
e
|iisj
struck by the
wi despread
acceptance of
°f the
premises
v
which .under¬
/
lie; belief
the
in
workability
centralized economic controls
management as the key to
reconstruction.
«
.
Just
as
^
worfe
, j '
in the course of domes¬
collectivizations,
tic
of
and
their
en-r
largement internationally i$ justified
on
the ground
that the un¬
controllable environmental factors
have
changed
since their initia-
(Continued on page 40)
'
See
PICTORIAL SECTION for
pictures taken at the recent An¬
nual Outing of the Bond Club; of
New Jersey.
We have
,
,
State and
recently completed
a.study*of.the
Municipal
Chicago Transit
Franklin Custodian
A copy
Bonds
CANADIAN
Funds,
Authority
inc.
SECURITIES
A Mutual Fund
will be supplied on request
COMMON STOCK FUND
PREFERRED STOCK FUND
.
BOND FUND
1
UTILITIES FUND
INCOME (BALANCED)
Members New York Stock Exchange
■;
40
Wall Street, New York 5 *;
Boston
€
THE NATIONAL CITY BANK
7
Prospectus on request
OF NEW YORK
Private
64 Wall Street, New
York 5
NY 1-708
Brokers and Dealers
belgian internal
PANC0ASTAL
securities
Underwriters and
Distributors of
Municipal
;
Bought—-Sold—Quoted
INSTITUTIONAL INVESTMENTS'
38 Bread
Street, New York 4, N.
Tel. WHitfhall 3-2840
Y.
Est.
'
s-:
New York
CLEVELAND
;
Tele. NY 1-809
Cincinnati
OF
THE
CITY OF NEW YORK
1896
bonds & stocks
Central Vermont
Public Service Co,
'
Prospectus available upon
Dominion Securities
Corporation
request
IRA HAUPT & CO,
Members
and
New
York Stock Exchange<i
other Principal
Exchanges
.
(Incorporated)
?'*
1
1899
CANADIAN
!
sutro bros. & co.
Established
Toronto
COMMON
,
£ Corporate Securities
Gordon Graves 4 Co.
NATIONAL BANK
Connect
;
For Banks,
OIL COMPANY
Wires
Montreal
New York
THE CHASE
H A never 2-0980
,VBell Teletype NY 1-395
>
Bond Dept. Teletype:
N. Y. 5
Bond Department
,
1
52 WILLIAM ST.,
FRANKLIN DISTRIBUTORS, Inc.
Philadelphia Providence
Amsterdam
Buenos Aires
Chicago
London
v
,
FUND
!'
Chicago
Denver
Columbus Toledo Buffalo
Members New
York Stock Exchange
120 Broadway, New
V
Telephone
40 Exchange
Place, New York 5,N.Y.
Broadway, N. Y. 6 ; ;
WOrth 4-6000
York 5
REctor 2-7340
111
Bell System
Teletype NY 1-702-3
Boston
Teletype NY 1-2708
Telephone:
Enterprise 1820;
2
(1310)
THE
Price Trends and
Northern States Power Co.
New
Common, W.
COMMERCIAL
D.
;
4
&
FINANCIAL CHRONICLE
Thursday, September 30,
Capital Demand and Supply
By SUMNER II. SLIGHTER*
Central* Illinois Public Service
r
Lamont
*
:
University Professor, Harvard University
Common
1948
Alabama &
Professor Slichter
analyzes price outlook as well as long-run demand for
capital and available supply of
investable funds.
Foresees no downward trend in
prices and looks for abnormally high demand
for
new industrial
capital for a decade.
Holds American personal
savings are insufficient to meet needs of
corporate industry and concludes, in foreseeable
future, supply of investment-seeking funds from indi¬
viduals will not
greatly increase.
Says postwar boom leveling off.
v
,
Commonwealth & Southern Coip.
Common
BOUGHT
SOLD
-r-
—
QUOTED
New York Hanseatic
Corporation
First, I wish to examine the
long-run
long-run demand for capital; third, I wish to
analyze the long-run supply of
investment-seaking funds; fourth, I wish to examine
the shori-term<?'
briefly
business
out¬
ond
look; and fi¬
nally, I wish
Company
to
Bought—Sold—Quoted
by
well
the
community
managed
the
boom
the
last
Members
York
Stock
Exchange
New
York
Curb
Exchange
120
three
Tel.
REctor
been
5
onic
Wars
drop
in
by
in
Members
New York Curb
followed
of
the
Exchange
pe¬
riod in which the
dominant
ment of prices will be
Tele. NY M610
move¬
downward.
For
example,'62
nongovernment
Mining Stocks
who responded to a
questionnaire of the Farm Credit
Administration,
forecast
price
the
level
1956-60
Oil Stocks
would
the
period
for
the
ing the balance
The
(successors
1
William
to
Coulet
&
;
Stein)
St.,
N. Y.
C.
5,
N.
Y.
Montgomery St., Jersey City 2, N.
Tel. DI 4-2100
J.
Teletype NY 1-1055
The
of
slow
a
Bureau
nomics,
run
in
a
outlook
of
decline
for
will-average
1947
and
18%
about
are
These
based
on
estimates
the
Stock
Bought and Sold
Bought and Sold
With
,
'
these
forecasts
price
trend
dominant
will"
the
be
downward for the next
decade or
two, I disagree. These
forecasts
fail
to
takeaccount of major
IE BANKERS BOND ^
Incorporated
1st
Floor, Kentucky Home Life
Bldg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
Bell Tele. LS 186
changes
in
world
conditions,
(1) The forecasts of
period of
an
falling prices
upon the
extended
are
based
assumption that the Sec¬
*An address
by Dr. Slichter be¬
fore the
Mortgage Bankers Asso¬
ciation
of
America, New York
Established 1856
City, Sept. 22, 1948.
New
New
Stock
Exchange
Curb
Exchange
York
York
Cotton
Commodity
Chicago
of
New Orleans Cotton
And other
Canadian
Inc.
CHICAGO
and
the
military
materials
the
,.
The
and
raw
after
During
the
world's
British
j
19th
the
of
economies
progress outside
the northeastern
had
of
part
of
In
of
view
of
the
upper
^to
DETROIT
PITTSBURGH
SWITZERLAND
BROADWAY
Telephone BArclay
7-0100
the amount which
prices
5, N. Y.
SUGAR
Raw—Ref ined—Liquid
Exports—J m ports—Futures
sold
DIgby 4-2727
wages
as
1840,
gainfully
em¬
were
in
BUY
U.
S.
of
costs
The
in demand
in
BONDS
pe¬
changed
means
creases
fective
SAVINGS
that
de¬
are
far,less .ef¬
inducing reductions in
prices than they were when
the
great,
very
pp.■ •,iQ
Today the situation
ferent.
been
Fabricating
Wars
raw
accessible
supplies of many
materials.
The
new sources of
has
not
kept
growing
idly
discovery of
most raw
materials
pace with the
rap¬
Hence, despite
demand
the
for
great
them.
destruc¬
capacity in Ger¬
Securities
the
War
main
faire.
was
made
Civil
the
First
in
a
of INDIA, LIMITED
Bankers
7
;;
Hi
no
either
the
War
NEW YORK
6, N.
28
Y.
a
standards.
government
is reflected
in
**
surplus in 18,
deficit in
1865
1
and
s
one.
E. C.
India, Burma, Oeylon, Kenya
Kericho, Kenya, and Aden
and
Zanzibar
}
■//
the
(
Subscribed Capital
£4,000,000
Paid-Up Capital—
£2,000,000
Reserve
The
Fund
■
£2,500,000
Bank
conducts
every
description
banking and exchange business
,
of
Trusteeships and Executorships
also
undertaken
The
to
at¬
Imperial
the fact
Oil Rights
a
Bought—Sold—Quoted
deficit
In the 31 years
and
1896
budget showed
a
a
the
a
surplus
(Continued
.
i
i
I.
even
on.
..1,*
Fed¬
surplus
deficit in three.
it showed
1-672
-
three, and neither surplus
between
eral
-
budget
showed
■
In
Colony,
that in the 22
years between 1814
1836
the
Federal
Exchanges
'■{
.
or
and
nor
t
Bishopsgate,
/
26,
vigorous
Civil
Securities
Office:
ipu;London,
Branches
tempt to halt the decline in
prices
after the Napoleonic
Wars and the
and
■■
-
»
~
laissez
vigorous ef¬
after
present-day
of
j
Government in
.
in
the Civil War
to halt the decline
in prices. The
greentbackers made an effort after
the Civil
War, but they did not
get very far with their
efforts.
Some
attempts
were
made
to
cushion the fall of
prices after the
First World
War, but these efforts
would not be
regarded as
by
Banks
■*
■■
Head
com¬
committed
the
to
Kenya Colony and Uganda
policy of
At any rate
Napoleonic Wars
and
after
the
NATIONAL BANKl
-
occurred
to
fort "was
failure
Mining
African
even
munity which
has
growing during the last 20
years all over the
world, and the
war made
heavy inroads upon the
most
and
World
is quite dif¬
capacity
,
V-
the
late
the
be
can
cover
As
40% tof
nature
i
** »
which
employees.
,
Teletype NY
r
STREET
out-of-pocket
drop in demand
or the
lumber regions of
economy was composed
Great Lakes or the
largely of
South or
the Pacific
self-employed.
Northwest) could pro¬
duce substantial
(4)
A
basic
effects upon raw
change has occurred
in the public
material prices.
Even after the
policies of the com¬
First World War the
munity
since
the 19th
opportunities
century and
to bring about
even since the
First World War.
great increases in
raw materials
relative to the de¬ The price declines which occurred
mand for
after the
them were still
Napoleonic
Members N. Y. Stock
Exchange and Other Principal
115
WALL
NEW YORK
the
Goodbody & Co.
N. Y.
99
negligible
riods of depression.
(such
River
Mississippi
LAMB0RN & CO., Inc.
prices was
downward, most of the
decline was concentrated
of supply and the
opening
important new regions
valley
-
entirely
drop in
Today only about
one out of five
gainfully employed
is self-employed.
During periods
when the
long-term movement of
sources
the
or
self-employed.
the
States.
capacity of the world
%
Enterprises
main
to
about
made
United
the
ployed in the United States
Britain
limited
4-5879
which most work¬
at
of
lytn
industrialization
WOrth
,
per¬
siQh of output. Concerns which
hired
employees,- however,
ordinarily limit their output
World
the
in
composed
Broadway
New York 5
must
century
First
most
one
120
,
usp
the
capacity
today from what
the
Frank L. Hall Co.
,;
costs.
Hence a
has little effect
upon the willing¬
ness of
the concern to
maintain
production. In fact, a
drop in de¬
mand may even
induce an expan-
material
during
even
of
country to the
employees.
t
m o s
between
capacity
the
the former
type of concern has al-
be
"
are
branch offices
our
large
by owners respond to a
demand in a very different
way
from enterprises
operated in the
main by hired
employees because
time
r
relationship
fabricating,
was
will
before in
of
a
self-employed
in
one
operated
upon
the
industrial
the
world
ever
"peace." '
(2)
and
parts
important change
economy from
ers
democratic
demands
most
in the main of
to
to
Securities
occurring
sons
Russia is de¬
Exchange Bldg.
YORK 4,
GENEVA,
armaments.
Trade
Exchange
the
armaments. Other
capitalism
Canadian
Exchanges
its
wires
Over the Counter
hak
in the nature of
the costs of production
as a result
of the
gradual transformation of
drait
greatly
An
been
in only
Y. Cotton
NEW
the
industrials
South
N.
on
raw
Canadian
Exchange
Exchange,
Board
the
expand
in
;
(3)
of
United
NY 1-1557
Birmingham, Ala.
substantially
cities.
in
Exchange
products,
world, but there has been
are
than
We Maintain
American Markets For:
Members
York
increased
worsening
introduce
tion of industrial
H. Hentz & Co.
New
in
economic
institutions, and in pub
lie policies.
'
1948
socialism,
There is no sign that
Russia will abandon this
objective
at an early date. In
the meantime
of
that
1946, and they
Food
movement from the
to overthrow the
eco¬
nomic and political
institutions of
as
ment.
Standard Oil Ky.
on
both
of
decade.
date.
termined
assump¬
"high" employment
during
The Bureau of
Agri¬
cultural Economics
regards "high"
employment as more
likely than
"intermediate" or "low"
employ¬
the
tne
convert raw materials
into manu¬
factured goods,
discoveries of new
10% v below
prices about
tion of
Ashland Oil & Refining Co.
V
tures
little
prices
metals, and fuels;
Western Europe will
undoubtedly be compelled to make
large increases in their
expendi¬
and
re¬
early
forced
to
expenditures
the
Eco¬
an
in
has
to
century
during the
consumer
at
steady
and
War.
long-
agriculture,
that
wholesale
below.
the
on
an
Stock
Mobile, Ala.
Direct
it is true, will become
far more
abundant relative to demand
than
they , are today, but there is no
immediate prospect that
they will
become as abundant
relative to
demand as before the
war. -Not
only has population
countries in
and
prices.
Agricultural
study
cently estimated
decade
1955-65
prices
Common
States
world
and 1951
in
end
is very different
of trade of West¬
ma¬
truce.
The
it
estimat¬
im¬
raw
armed
194-7.
the
experts
are
many
armed
strained
>
European
Europe between 1948
assume
27
1946-50.
will
again
the
slightly below
Cooperation, in
ern
Members Nat'l Ass'n ol Securities
Dealers, Inc.
be
that
is
sign that this
more
of
quinquennial
Committee
Economic
Low Priced Industrials
stein & company
in
War
which
of
is
no
capacity of
greater than
economists
TRADING MARKETS INs=
there
relations
the
level in the United States
has risen higher than
ever before.
Most economists
appear to believe
that history will
repeat itself, and
that the Second World
War will
be followed
by. an, extended
parts
in 1947 than in
to 65
1948,
World
World
Now Orleans. La.
prospect is that many
materials will be scarce in
relation to demand for
maay years
to come. This
appears to be par¬
ticularly true of lumber, most
United
wholesale
of
summer
First
York
raw
Relations between Russia and the
States were more strained
a
price
Broadway, New York 6
DIgby 4-3122
index
Second
sources
is
truce
1932.
In
Exchange
Chicago Slock Exchange
39
usually
drop from 154 in 1920
a
world
There
long de¬
cline in prices.
The Napole¬
followed by • a
were
the
the
terials) and in other parts of
wars
prices in the United States from
155 in 1814 to 60 in
1849; the Civil
War by a
drop from 132 in 1865 to
47 in
1896; the First World War
Joseph McManus & Co.
New York Slock
by
Prof. S. H. Slichter
2-7815
The
many,, the
Napoleonic Wars, the
and
(including
UW&
have
BROADWAY, NEW YORK
War,
portant
Great
*
New
the
were
Civil
War.
will be followed
period of peace—
by peace. Guerilla warfare con¬
tinues in many parts of the
world
of
years.
frjC pONNELL & fO.
War
Members New
'25 Broad St., New York
4, N. Y.
HAnover 2-0700
over, but it has hot been followed
has
Request
on
World
an extended
as
appraise
how
Prospectus
Steiner, Rouse & Co!
outlook for
Teletype NY 1-583
Lonsdale
Bought—Sold—Quoted
These remarks will be divided
into five
parts. 1
prices; second, I wish to analyze the
120 Broadway, New York 5
BArclay 7-5660
Louisiana Securities
in
Indeed,
Members
61
Toronto
Broadway, N. Y.
throughDirect wire
page 30).
•
Charles King & Co.
*
Stock
Exchange
WHitehall 4-8980
to
Toronto
i
Volume
168
Number 4738
THE
COMMERCIAL
INDEX
Articles and
News
The Surrender to Inflation—Walter E.
The "New Look'' in
Cover
H.
Oil—Eugene Holman_ Y__^-Y-Y-_i„_CoVer ;
Slichter.
_
_
.1
Inflation—More Than
a
Monetary
—Thomas. B. McCabe__:
/
Problem!
August
;6
"Stocks in
selling
7
quite
Theory of Relativity in Selecting Railroad Bonds
—George M. Grinnell_____:__
8
Situation—E. M. Bernstein__
Political
14
15
for Money
Rates—Marcus Nadler..
Don't Kill the Fire Insurance Industry!
/
.
tify.
Y
'.'\M Y* Y
—Shelby Cullom Davis.—
Y '
if
.....^..,16
Y: What To Do About Inflation—Gov. Thomas E.
Dewey _YY-.-Y
'•
If another
huge
v.
Says Floyd y Wy Muhdy-- Li
John J4
McCloy Reports
—- *
-
19
/
.
-
World Bank Progress.....
on
Y
'3 Y
and
existed in the
as
have
con¬
be
sus¬
to
time
some
and
to
the
margin
use
has
16
19
-•
•"Our
to OcL 1,
1949LL%r-. 31
Employ eesYYIY-. 3l
i
i
n
ditions
.___
1*
Canadian Securities
Coming Events In the Investment. Fields.
have
capital,
seen over
which
seemed
to
be
safe
Reporter
Utility.
'-Railroad
.....
of the fears which
-
-■
f
Securities Now in
.".
.
i
.
.........
had shadowed
*
See article
Published
on
Twice
5
1
Drapers' Gardens, London,
and,
%
The
COMMERCIAL
and
c/o
Edwards
&
E.
C.,
Eng-
Y>f
Smith.
a
individual
time like this
Broadway
Teletype N. Y. 1-714
Empire State Oil
to
Equity Oil
the
of
course
Mackinnie Oil & Drilling
Utah Southern Oil
BOUGHT
SOLD
-
QUOTED
-
be that the strength
times has been mani¬
that
already
the
OrvfeBiotheissGi
14 Wall
REctor
SCNew
2-493^ v
low
Utility Income
discounted
stocks
of
will not
.
Bond
be
YIELD S%%
it is today,"
as
York 5, N. Y.
N«!F_York 1-1434
will
market
largely
been
earned
since
issuance in 1944.
and
paid
1947 coverage 4.79 times
'
Business Statistics for New York
an
State Economic Areas and
a
pent-up
demand
quite
itself
in
other
generally
inflation
which
of
is
Operating
Retail
George Birkins Company
40
Exchange Place, New York 5
WHitehall
4-8957
Tele. NY 1-1404
Y.—
N.
Results
Jewelry
David
J.
Illinois
of
Stores
Trading Specialists in
to
-Luck—University
III—paper.
1
All
1947—
in
of
UPSTATE
Illinois College of Commerce and
Business Administration, Urbana,
NEW YORK
.
Indeed
Plowshares
felt that,
thur' P:
financial
would by no means
request,
Y, *Y;Y- Y••
paper.
fields.
found
Albany,
Commerce,
on
for
recognized
is
Coun¬
ties—New York State Department
having regard for
strength of repre¬
sentative companies,
their high
earnings and the generous yields
on their stocks, the market is defi¬
nitely on the low rather than the
high side.YYYYY
•YYV**'*
Y'"I think that a moderate reces¬
sion or readjustment in business
page one.
Weekly
is
that
it
(Walter Whyte Says) ._YY-Y—-Y—• 38 Y
You.
_._i
Y
48
and
It
the
Tomorrow's Markets
Washington
investors;* then
exist in the stock market.
44
Industry
of
«
16
....
Registration......
The State of Trade and
1908
REctor 2-4500—120
Bell System
Data
prevail in other markets does not
46
Securities.YL^-_......._L4Y—..........Y—L-.lY25\*'
.
'
.
rl
no
Bookshelf
presented. It seems to me we
would
discover on the part of
thousands and thousands of in-
manifested
%
Y...-.—,....,',24' 'i
——_ .
Established
Members N. Y. Security Dealers Assn.
Business Man's
stocks, corresponding to the post¬
war
pent-up demand which has
21
—v
minds
vestorsj
*
......L--
_
J.K.Rice,Jr.&Co.
5% annual interest has
be
12
46
Offerings....._........^....Y.......
.
request
on
delayed, because
cushion,; a backlog
Y
future
price level
as
"If, however, on the other hanc
should
one
day find that
providentially, light had begun to
pierce the clouds and dispel some
15
;..-;4-Yil.Y-L..Y_-^
Securities • Salesman's Corner.
-
we
,20
...
Securities.....
*Prospeclus
the changed situation and that the
v,
-
41
May—.
Governments.
on
Prospective Security
-
w™
..........
Our
Public.
Bargeron...
and.Bankers...Y—---
Wilfred
.
Texas Eastern Trans.
Corp.*
Tennessee Gas Trans. Co.*
beyond
6
Reporter's Report
Dorset Fabrics
well
have
'
From Washington Ahead of the News—Carlisle
Observations—A.
the
experience
ordinarily
altogether different picture would
'
might
con
4
Our
discern
these
Einzig—"Question of Sterling Convertibility"..:-Yl
—
.
An investor could
the
NS.TA Notes.
'
.
Pfd.
Capitol Records
up
8 ;
News About Banks
mar¬
&
Finishing Com. & Pfd.
it
a
who is able at
investors and,
are
peradventure.
27
.......
dollars^
sellers'
a
"We know there is
of-equities, has sought refuge in
holding of cash and govern¬
ment or other high grade bonds
14
Dealer-Broker—Investment Recommendations —iL.Y
Mutual Funds
is still
of demand.
the
'
3
......
indications of Business.Activity.
ter than were
as
would be directed to the
purchase
which
Sec^ It (Ed!torial>_^^...;LLL---------------------.--~Coyer''.',
and Insurance ■ Stocks—.. .Jl:.
;_ _.10,
.-Business Mante Bookshelf.:
as we
years,
;
As We
Bank
his
of
early readjustment would be bet¬
causes/Therefore, under such
Regular Features
('.
value
to optimism. * When we as indi¬
iii his mind the
viduals know that conditions are
fear of injury to capital
through
better, we may conclude from past
confiscatory *: taxation
or
other
.:25 "
—
clients
easily conjure
Marshall Plan for Latin America 23
Samuel £. Neel Foresees Million House Units Started
This Year
^YYYYY;;Y"''->
purchasing
quite different from
postwar periods
Capital Outlays in 1948'Estimated at $19 Billion by SEC and
Commerce Department „•
L-,
.
of
any
stated, capital hasbeen thor¬ which at
oughly frightened for1 years—in fested inYhe market this year're¬
the ,'30s and during the war anc flects a gradual change from fear
31*
_______23
a
belong to
There has existed
as
30
Fund__^>...jL-,..
Bank, of Montreal Warns Canadian Upward Price Trend,
James S. Kemper Decries
Com.
U. S.
v
—«...
May Continue
not
market; but if more reassuring
activity, due conditions for capital are ahead,
to more money
being in circula¬ the market itself may be expected
tion than ever
before, and to the to give expression
to
such
z
existence of large pent-up demand
change, influenced doubtless by
for 4,. all
sorts
of
manufactured the very impressions which take
goods.
shape in the minds of people. It
:
Views._^._...._LLL_L 18 Y
Home Insurance Company Honors 35-Year
mean
United Piece Dye Works
-
lief against the rising cost of livf
ing,and the concurrent lowering
played
has been
does
requirements
of listed securities
other types of business which have
been enjoying great
Extended
he
the powerful pressure
groups, has
not been able to achieve such re¬
connec¬
New York Savings Banks Deposits Up $13 Million....
Bogota Bond Exchange Offer
we
WALL STREET, NEW YORK
Telephone: WHitehall 4-6551
whole, economy of the
The white collar worker,
ket, not only in labor but also in
business, to the severe disadvan¬
tage of the general public. "An
ness
Financiers At Meeting of World Bank and
if
come. *
restrictions in
99
upset the
country.
its part. A sort
of 'cold panic' has seemed
to grip
the market. The investment busi¬
14
Preston Delano Reports Rise in National Bank Deposits
Y and Loans
'
return
And, So It Is! (Boxed),.15 Y
"Latin America Demands More U.- S. Goods Than Cab Be
Supplied, Says John J. McCaffrey
.
to
are
financing by the
would
with
also
NAPA Group, Headed by Robert W. Swanton,
Reports Back /
%\ Orders. ■Reduced. ...^_--.--i~.----.---i-L..LL__^...LLiL_"'18'■
-
we
collateral in borrowings; taxation there
13
...
Mid-West Stock Exchange Merger to Be Discussed
Defends His Tariff
serious
r
latter have been able to demand
higher wages,-,.which of course
were desirable, but too
frequently
these have been won by threats to
would jus¬
is coming, or
war
deficit
severe
tion
Treasury Secretary Snyder Reviews World Bank and Fund.. 13
Alexander Wilson
by
Who does not belong to any of the
powerful pressure groups.
The
do
during recent
years Stock Exchange business has
been extremely
dull, there being
decided timidity on the part of
capital. Then, of course, we have
J-1
YY...: Y'"';
Y Y- *- Y™
WORLD SERIOUS!
-1'
"
evil; it certainly would affect favorably the man in the middle
"At various times
had
"Cold Panic" Seems to Grip Stock Market,
fears
our
pended for
''ITf.--
Private Industry Can Provide Economically Sound Housing
YyY—John C.; Thompson__:_...^_.____.^.,
than
jectures
'
17
Faran.iPriees-^Hoger.
indeed
future, I
'30s,- -then all opinions
'
fj,
the
government, such
V;i
:
about
in, peacetime
to
The Question of Oil Reserves—R. J. S. Pigott—16
.
unmixed evil.
an
BET ON THE
in'
notY
are
heights,
the
better
Problem—Joseph Stagg Lawrence. Y 11
Railroads—Victims of Gigantic Squeeze—Donald VI Fraser__
market
our
dizzy
feel that the market from
its pres¬
ent: price level
might act much
9
The Outlook
at
confused
9
Money, Credit and Inflation—Kenneth K. Du Vall___„
a
be
contrary.
While natu¬
rally I am, like countless others,
The Groundwork for Foreign Investments—Curtis E. Calder, 10
Y Money Rates
not
readjustment
or
—and
The
:
moderate, recession
business would
5--;
Middle Classes.—H. W. Prentis, Jr.__
The Latin American Exchange
Holds
Floyd W. Mundy, senior partner of Jas. H.
Oliphant & Co., mem¬ BIG! You can get important
bers of the New York Stock
Exchange, has made public his point of money here for your obsoview regarding the stock market
in a letter to a friend.
In his letter, letes—a -sure win to
begin
Mr. Mundy states:
J
V ' Y '
with.
Tnde^J1^'Ji;''f/!'
McChesney Martin,
As It Affects
uncertainties.
'
«
,
,
Inflation
AMD COMPANY
r
Ihiefeld
Foreign Aid Programs and U. S. Foreign
■-Wra.
i i
,
4
__
3
LlCHTEflSTfin
"
Oliphant & Co., lays timidity of investors to confiscatory taxation fears, severe margin requirements and political
Y^'^rVY:Y-;v Y,;.j
; Mutual Savings Banks, Inflation and Public Debt Policy i
(1311)
.V Partner of Jas. H.
^2
__
CHRONICLE
Crip the
Stock Maiket: Mundy
j
Managed Economy Worldwide Keynote—A. Wilfred May.CoVer
; ' Price Trends and Capital Demand and Supply
i'v
—Sumner
FINANCIAL
"Cold Panic" Seems to
race
Spahr__.._i___
&
Into "Swords—Ar¬
Chew—Harper
&
SECURITIES
Bros.,
49 East 33rd
Street, New York 16,
N. Y.—cloth—$3.00.
United
vestment
Lewis
—
States
GRODY & CO.
and
Foreign
Problems
The
Cleona
—
Brookings
In¬
Institu¬
tions,"Washington 6, D. C.—cloth
be an unmixed
$3.00;
-
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40
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Exchange Place, New York 5
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: "T'''.•■v1*?'' "V " V '" ('' *'• ■'
•
Copyright 1948 by William B^-Dana
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'
FINANCIAL
f
■
"
-
Reentered
U. S.
Reg.
CHRONICLE
Patent
Office
js-
"
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B.
DANA
COMPANY, Publishers
Y
25 Park Place, New
Y :'YY- REctor 2-9570
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of
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President
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Thursday* ig'eneraL
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4
(1312)
THE
Inflation—More Than
7
&
FINANCIAL
CHRONICLE
Monetary Problem!
a
••
Chairman, Board
of Governors
of
Federal
New head of Federal Reserve, though praising structure of
By PAUL EINZIG
Reserve
System
System, maintains it alone is unable
to
with number one problem of inflation. Describes recent action on interest rates and credit curbs,
but deplores reduction in budgetary surplus as offsetting effect of these moves.
Upholds pegging of
v
When the President asked
;
and my
I'
"■n.m
It
S
u
IS
life
strenuous
■
and
th
in
e
Banks 'are
d
men
the
When you consider that half
our industrial
capacity was taken
Government.
up
also
LONDON,
sterling is
with the
Once
flight "positions
that
-
Thomas
B.
area
phia
roots.
^rtem
my
the
to
at
Bank
was
great As one columnist
so
aptly said, "I
was
ball."
curved
office
did
I
not
a
recovery has been
orderly. I think that, is a greal
our pri+
vate enterprise system. In- \<> Uj I
AtL present, the supply of
money
could
be
done. I
still
am
opinion.
three main
dispose
to
men
madness
the
Reserve
-
■
The
Federal
Federal
passed in
Reserve
1913, is
piece
of
credit
is 'due
.
country an elastic
to provide
facilities
discounting > commercial
banking. Over the
tem has developed
cur¬
for
and
and
Of
are
over
analyzing the prob¬
question- is—How
we
that
The
to
there
the
use.
^
our
While millions of people were
into
than
money
possession
any
of
more
people had
ever
had to spend and save, there was
lion.
for.
posits
are
the
the
held
Federal
These
commercial
by
banks
reserves with the
Banks.
.,
The
,
a
de¬
members
Reserve
member
of
scarcity
their
Federal Reserve
moval
Reserve
*An address by
Pennsylvania
the
Mr. McCabe at
Week
Philadelphia
Luncheon
Chamber
things to
of
controls
spend
this
spending power, plus
edented
4
of
it
Consequently two great back¬
logs rapidly accumulated—a back¬
log of unfilled wants and a back¬
log of money savings. With re¬
System.
keep
Federal
the
volume
of
pent-up
an
in¬
current
shortages.Prices,
profits
Sept. 27, 1948.
of
wages,
,
was
on
to
Struthers Wells
U
Potash Co. of Amor.
•Prospectus
on
•
:•
at
high
a
Bought
—
^Research
Sold
—
aid
Item
on
taxes
I
Telephone BArclav
7-0100
Teletype NY
1-672
would
.
Paul
Dr.
Einzig
be derived
from
the Mar¬
Even if Britain were to retain
the
full
benefit
deliveries
of
it
the
Marshall
would
be
not
stiff icien t to cover the
gap
balance of payments. That
of the
likely to widen
result
now
as
gap
a
is
A
large
Geneva
ments
and
it
become necessary to import
additional raw materials. The de¬
of
releases
of
from
men
upon.
Notwithstanding this, the
ernment's
decision
relinquish
much of the ERP receipts for the
benefit of France and other West¬
ern
European
form
of
the
most
situation
in
Certainly
this
autumn.
weaker
faced
Area
by
dilemma.
a
anxious
naturally
is
It
far
too
and
political
1
•
or
deepfor
interest
' '
'
An
increase
in
the
'
redis¬
count rate.
Restoration
of
restrictions
installment credit.
An
increase
in
bank
re¬
requirements.
will not
moves
You
are
all
are
with
to go
me
explanation
of
limit the supply
credit, because they
the
rather
familiar,
conditions
of
instalment credit, reimposed as
tive
than
a
authority granted by
will
prevent
in
wartime,
much
and
yet
unsound
overreaching
we
that
can
from
a
v
(Continued
on
the extent
by
balance
no means
of
clear.
payments
page
31)
is
Quite possibly
the increase of unrequited
exports
to the continent would not neces¬
mean
of
a
support the
exports
currency countries.
hard
to
and
reluctant to attack meas~;
are
which
ures
of
suance
taken
were
this policy.
less they feel
hand, the accept¬
ance of the
principle that sterling
allocations to Western European
countries
those
to
would
of
should
to
which
result
gold.
be
made
countries
The
in
jt
This
provides
to
ex-,
pro-Soviet
us
used
as
Marshall
bought at the cost of
disadvantages and that the
derived
from
much smaller than
it
is
really
expected.
was
In Socialist circles the prospects
of
making heavy economic sacri¬
ment
the
in
in
interests
pursuance
of
of
rearma¬
the
"pro-
American" policy are viewed with
growing disapproval.
It is feared
than
that, should the gold
reserve
allocated
direct
a
British
pur¬
trans¬
other
was
to
in
Neverthe¬
impelled to register
material
benefit
fices
On the other
ex¬
pansion policy of the Soviet Union,
corresponding de¬
British
loss
net
Treasury is
be¬
come
exhausted Britain would be¬
come
entirely dependent
Amer¬
on
afraid that, if France, for
instance,
is entitled to use the
sterling for
ican f inancial
purchases from Belgium, the net
result would be an increase of
position to interfere with British
of
the
limit
maximum
of
excess
inconvertible
£27,000,000,
whereupon
Belgium would become entitled
demand
was
gold for
the
for fear of this
London
refused
surplus.
to
It
happening that
to
join the
the
For this reason
gold
litical
bor¬
this is refused
European countries. Since
in the
in
be
a
a
a
decline of
likely to
be
growing trend
of Socialist opposition to the gov¬
ernment's
con¬
between
is
reserve
accompanied by
freely
as
would
economic, social and political pol¬
icies.
ground
transferable
assistance, in which
Washington
case
tinental clearing
arrangement un¬
der which
sterling would become
they
for
greater
do
In any case
the
Western
goods.
say
European
Belgian sterling balance in
permit
detailed
Western
are
policy aiming at resisting the
grave
the
ferable
-
of
to
are
They
aid has been
life
Higher short-term
convinced
are
and?
arrangements
fect
.
*
Empire; Preference
ling to these countries would af¬
the supply of credit. These moves
have been:
anything
of
Sterling
What
to check further growth in
me
strongly against the liquida¬
tion
that
Treasury have recently made four
.Let
Conservative circles which feel
very
it
that. However, within their fields
the
Federal
Reserve
and
the
rowing
relinquished in favor
of Europe.
show
sarily
a
trade will be
since
cline
Time
and
Area, since part
evidence
which
rooted in the complexities of our
(3)
British
exports has
unrequited
quarters
economic
on
with the Sterling
of the benefit derived from that
propaganda,
authority
one
no
alone.
(2)
the
agree¬
also expected
arrangement under
which Britain would allocate ster¬
agency can accomplish the desired
;
in
Prefer¬
OEEC
are
find
we
to
be done about it?
rates,
countries
.
The
Paris
cellent
ourselves
(1)
to
Pact.
in
the
That's
moves
gov¬
Empire
oi
a
to be detrimental to Britain's trade
,
acceleration of the pace at which
the gold reserve has to be drawn
issued
providing for
rates, in confirmation of the
to
requirements,
just
decrees
of
reduction
growing part of producing
capacity will have to be diverted
military
has
government
number
the
countries.
result
price paid for Marshall aid is be¬
ence
committed.
concern, espe¬
coming increasingly evident. The
ain: is
now
received
cially since in- the meantime the
of the rearmament to which Brit¬
ferment
assistance
their protests.
What Can Be Done About It?
can
the
.The
reserve.
through ERP is whittled down is
causing widespread
shall Plan.
Plan
have to be covered out of
the dwindling gold
way
to
losses could
they
o r
about one-third of the ben¬
rope
the
year
be covered out of. the proceeds of
the American loan, at present
the benefit of
efit
last
re-
smaller scale. Ani
on a
the necessity for Britain to assist
same
the Special Session of
Congress.
These conditions are less restric¬
Members N. Y. Stock
Exchange and Other Principal Exchanges
J15 Broadway, New York
105 West Adams St., Chicago
while
re¬
linquish 4 f
peat itself
Communists and their supporters,
technical.
Goodbody & Co.
.
just-*
to
Western Europe,
to
the experience of 1947 would
time income
defense
.
.
,
to in relation
m
lowered,'
thereby
reducing the Treasury
our,European
were
sharply
surplus.
of
Request
convertibility. ,Tt is
expected that, should - a limited
degree of convertibility be agreed
wr
pro¬
grams. At the
into
;
r
met
with very little criticism in Brit¬
ain. While it is denounced by the
how these
; ;
and abuae of
»•
pri¬ Sterling! Area
increasing,
ate
result of the
Quoted
continuing
Government ex¬
because of
and
national
(4)
Texas Eastern Trans*
Texas Gas Trans*
also
marily
its way.
Corp.t
Tidelands Oil
v
Request
are
rate.
;
penditures
however,
South Jersey Gas*
while at capacity
a
expenditures
!
Ferry Cap & Set Screw
current incomes, the
on
remain for
serve
y
'"wJL *
a
past savings, and borrow¬
ing, also has continued to exoand.
Construction volumes seem likely
and
rapidly, and the spiral
rose
inflation
at
mar¬
a
ket characterized by scarcities and
of
Comme.rce, Philadelphia, Pa.,
Argo Oil
continued
in¬
of
use
unprec¬
come, was turned loose in
of
strong
Individual
labor force. Consumer spend¬
ing, based
war
State", with total^ de¬
posits of approximately $154'bil¬
of
have
of
during the
pressures
future.
doubt.
no
capacity of the
largely devoted to war
for almost five years. At
more than 50% of
production was for
coming
14,000 banks in
be
peak,
record
and a ris¬
can
agreed
has
convertibility "most unpopular jn Britain; Large amounts of
dollars were, lost through the use
-;
poncesr
has
-
made
high the armed services will reduce in¬
level, with a tendency to increase dustrial man
power. All this must
as
prices and wages have risen mean an
aggravation of the prob¬
and employment has grown with
lem of the trade deficit, and an
was
purposes
the United
85%
continuation
?MIpf
a.;
afford,'.
especially'ay
she
goods have been
no
received from the continent.
The
experience
of
1947.
—
ill
can
will
productive
nation
do its share in creating conditions
to sustained high em¬
There
first
the
is
ling for which
-&0'
*
-
which, it
is fel€"Britain "
indicate
a
<®>~
sion
and'
comes
<
get in this position of high
continually
rising prices?
Basically, the cause was the war.
favorable
ployment, stable values
ing standard of living.
*■;
...
such,
of certain soft spots
occurring in the price
structure, the economic prospects
are
levels, with possible further rises
in prices in this field. Business
and
prevent
deflations
In
lem,
did
the Sys¬
help
spite
immediate
host of data
knows, the number
problem before the country is
inflation.
un¬
demands, expanding
inflationary
cor¬
As everyone
one
broader ob¬
a
jective, namely, to
In
which
One Problem—Inflation
.
of
pressure
credit, and rising prices.
■
paper,
years
ad¬
prob¬
public interest.
Number
and to improve the supervision of
inflations
the
its
the
rency,
satisfied
great
author, Carter
Glass, for his foresight and wis¬
dom. Its original purposes as con¬
ceived by its founders were to
give
their
collect,
a
than
standing the great
And the System is al¬
ways working to maintain steadi¬
ness and
strength in the field of
money,
banking and credit. In
doing this, it has achieved a real
status
as
an
independent body,
free from politics,
serving only
Act,
and
research groups
larger
emphasize, is
capacity.
There
the past year and a half, notwith¬
the
on
re¬
to
regions,
chinery.
;
monumental
a
legislation
that
is
agricul¬
about every "moving part" of the
financial
and
commercial
ma¬
ex¬
Reserve Act
found
judgment
relate, and interpret
actly what Mr. Leaf had in mind.
The
have
respective
half
a
in
leaders
and
commerce
their
and
serve
Fed¬
know
I
the
of
over
have been only small over-all in¬
creases in physical output during
regional bank
and
the
Board's staff, in Washington are
watchfully feeling the pulse of
the economy, for the Federal Re¬
worgt. After some
Board," I
-
little
important
practically
at
Each
love,
five months in office at the
eral
production of goods and services
majority of whom are
by
the
local
member
represent,
with
their
directors,
an
excellent
of
vice
study of mone¬
tary problems. And,he added that
was
years
it
and
ambition, and the
the last
several
lems of the System are invaluable.
that
—
for
the prewar maximum. Production,
of that
causes
three times the prewar level. Yet
the over-all physical volume : of
12 banks, a
ture
;
are
Reserve
elected
finance,
Leaf, the eminent Eng¬
banker, once declared that
there
Federal
is
cross-section
Walter
lish
regional
the
took
branch
the adequacy of its tools. My ap¬
praisal convinced me that the job
potential money readily avail!
able to
buy the current output
of
goods and services is about
or
Philadelphia, of which I
I
banks,
searching ap¬
praisal of the responsibilities in¬
volved.
This
appraisal included
the job the Federal Reserve has to
perform in this critical period and
12
is
bound- to
There
our
appointment in
Washington. The directors of the
assume
without
these
Chairman
was
so
sucker for
a
of
is ? the
of
before
time when the need
a
One
more
which
withstood
so
and remain close to the grass
banks
in
blood and I could not resist
challenge and the opportunity
serve
the
sev¬
was
well
so
tribute to the strength of
nomic, and financial needs of each
eral years, the
McCabe
was
—
in'PhiladeL
convertibility of
more in the foreground. It has
arisen in connection
negotiations in inter-European trade and
payments.
Britain is pressed to
agree to a degree of
convertibility
losses of gold.
and
war,
policy.
the
of
once
many
economy
and that
-
for
of
question
Paris
millions in our labor,
very; strong
force were paid to turn out ar¬
f £ eling " in
ticles they could not»buy, it is
L o u' d o n
amazing Uhat the shock to -our
again s t any
businesses even' though you;
'afe Subject to
may not always be aware of its
t h e
sharpest operations. It;was established
oh;
V kind of Httadk
parallel lines-with our political
and 'criticism.
government as a federated system"
bine e I had of
12
regional Reserve [ Banks
v been
coij- rather- than on a single Central
mected
Wi t(h bank
just so that it could be
t h e- Federal
quickly^ responsive * to the eco¬
your
Reserve ~ here
tools
ENGLAND—The
sult in further
long with making the
so
nonproductive
The System is close to you and
'
for
move.
fices in interest of
pro-American
a
depositories and
fiscal agents of the United States
spot-
Says convertibility is unpopular in Britain and
liquidating Empire Preference
and Sterling Area, while Socialists oppose making economic sacri¬
;
the Potomac,
con-
may
feel strongly against
conservatives
Q
place on the Federal Reserve Board of Govern¬
become its Chairman, I was frankly reluctant to accept.
Many of my friends here
family were apprehensive about having me go back again to fight in the battle of
and
ors
to take
me
arise from this
V
>
help to solution of inflation problem, restraint in spending, both
public and private.
■■
Commenting on pressure on Britain to agree to some sterling
vertibility, Dr. Einzig points ont opposition and difficulties that
v
cope
government bonds and advocates, as
Thursday, September 30, 1948
Question of Sterling Convertibility
By THOMAS B. McCABE*
.
•
COMMERCIAL
foreign policy,
that
it
country's economic and
independence.
servative
circles
on
endangers
even
Even
fear
the
the
po¬
Con¬
that
the
of
choice is between two evils, since
sterling balances arising through
security against Communist dom¬
even
case
than
goods imported by Britain, there
ination
gov-
is, it is felt, much stronger
reason
sacrificing Britain's position in the
of ster-
Empire and in the Sterling Area.
for refusing it in the
case
can
only be
achieved
by
THE
X
v
Carloadings
■
Retail
"
'
a
Auto Production
Industry
'"{I
Business Failures
$/
'-v-;
.
•
•
.
record
level
as
-
.
flying start in September reaching
a
month
above
a
a
The chief economic
problem that confronts our nation today is inflation. We have
through a great wartime credit inflation, in the course of which the nation's money
supply was tripled; It would be unfortunate indeed if, on top of this wartime inflation of
a new
The present
announcement
seek
inflationary spiral
on
Friday of last
additional
an
8%
after
was
week
given
that
the
rail
in
carriers
Committee,
said
the
freight
1
had
rates
In
current release from the Association
of American
a
advance reports from
on
represent 81.1%
road
operating
month
same
enues
of total
1947.
class I
The
only, and does
revenues
not
operating
take
into
rev¬
account
substantial increases in
since August, 1947, as a
result of increases in
wage rates and material prices.
Estimated
freight revenue in August, 1948, the Association
reports, was greater
than in August,
1947, by 18.5% but estimated passenger revenue de¬
creased 3%,
operating
that
expenses
have taken
place
Instalment purchases rose
slightly in the early
Wholesale volume was steady at a
high level and remained frac¬
tionally above that of the corresponding week a year ago.
New
orders and re-orders of Fall and Winter
apparel increased somewhat.
Trading volume in textiles moderately exceeded that of the
previous
week with an increase in orders for future
delivery,
X -r'-y
,
At
HIGHEST RATE SINCE
WEEK OF MAY 24
With
the
companies
railroads
are
placing
seeking higher rates
on finished
steel, steel
emphasis on other means of transporta¬
Age," national metalworking weekly, in its
more
tion, states "The Iron
current summary of the steel trade.
If the
Interstate Commerce Commission
sought by
now
allows the 8%
the railroads the rate for moving the
increase
bulk of the
nation's iron and steel products will be about
70% above the prewar
level and steel company traffic
managers are using every means pos¬
sible to find ways other than railroads to
transport a larger and
part of
larger
steel
shipments. •'
The increase asked in
on
pressure
higher
raw
amount to
as
for
higher
material
much
states the trade
-
costs
$1
as
a
,
prices.
may
ton
on
Steel
pass
'
companies
are
increase
finished steel.
magazine, it will be in addition
The chances
and iron
the
on
will pay if higher rates for finished steel
'
r
.
freight rates for coal
steel
are
will put
ore
faced
with
which
will
If this is passed on,
to what the steel
user
(Continued
r
i
of
c an
on page
would lower
its
of their
bonds,
the
purchasing
power of whose savings would be
further impaired.
It would also
bring on another "boom and bust"
7••:
industry will break
of
mutual
an
savings
banks are
government obliga¬
and
the
lessen
banks
have
shifted
out
their
of
government security holdings to a
far lesser extent than any other
major group of financial institu¬
v
a
$1.20
Kerr McGee Oil
Roosevelt Oil &
\
; ,
v
tions.
y >
Secondly, mutual savings banks
could, contribute to
inflation
also
b,y lending money freely on real
estate
mortgages based
on
in¬
flated
property values.
As the
net increases in their
deposits
expanding mortgage and corf
porate bond holdings.
M
However, some switching has
taken place as was to be expected.
I
stated
last
November
to
the
Savings
Banks
Officers
Forum,
Group IV, that there would likely
a deficiency of current
savings
be
that
and
this
.
that
inflation
be
checked
and
a
relatively stable commodity price
level
be
achieved.
y
panded
,
>•
Savings Banks May Aid Inflation
72
WALL
Nat'I
X
savings
banks
do
not
add to the money
supply of the
nation by the creation of new de¬
posits,
do
We
thrift
as
hold
than
demand
check
that
commercial
banks.
deposits, rather
deposits subject to
constitute
the
largest
part of this country's money sup¬
ply!
Nevertheless, savings banks
could
market
portfolios
permanent
values
by
a
the
inflated
of properties pro¬
temporary
severe
shortage of housing.
In the third place, mutual sav¬
ings banks could contribute to in¬
flation
sale
to
lated
carefully, refusing
folios
are
acquired by the Reserve
new
reserves
for member banks.
laid
for
created
are
A basis is thus
additional
bank
credit
expansion.
It is quite
that
significant, therefore,
mutual
held
their
savings
banks
government
have
security
*An address by Mr. Ihlefeld be¬
fore
Group Five, Savings
Association
of
New
York,
Banks
New
City, Sept. 28, 1948.
Moreover, where
sound
Securities
mortgage loans and corpo¬
it,has usually insisted
a
on
the
substantially higher return
latter.
This, again, helps
fight on inflation, for an in-
the
continued
J
;77
on
page
32)
obtain
a higher return.
In this
funds available to business
for speculative
expansion could
be expanded further,; adding to
in very
amounts.
To
?
sum
past two
up,
years
we
;
-
.
find
have
Dominion of Canada
Government Bonds
moderate
that
the
witnessed
Mexican Licht & Power
1st 5's 1950
a
great expansion of the supply of
mortgage loans and corporation
bonds
than
affording
government
seemed
a
ment
higher
bonds.
yields
It
has
tempting, at times, to con¬
large part of the govern¬
bond
portfolio
into
HART SMITH & CO.
52 WILLIAM ST., N. Y. 5
.
t
for his article.
Bell
•
7"
mort¬
and
corporate obligations.
But mutual savings bankers have
recognized that, by doing so, they
gages
HAnover 2-0080
Teletype NY 1-395
Private
New York
Wires Connect
Toronto
Montreal
Royal Bank of Scotland
Incorporated by Royal Charter 1727
"...
V
Time Inc.
&
>
"
•
'
n
.
'
.
"
'
'
;
-
«
Corp.
8
.
Bought—Sold—Quoted
■
"■/
•
West
4^
64 New Bond Street, W. 1
'yf:
FREDERIC H. HATCH A CO., INC.
Dealers, Incl'
,
Y.1
Teletype: NY 1-2B13
rX'-V
83
'--w
/>r
TOTAL ASSETS
MEMBERS N. Y. SECURITY
N)
X
,
£153,656,759;
...
|—
Associated
•../ Established 1888-
Wall Street. New York B,
Smithfield, E. C. 1
Charing Cross, S. W. 1
\
~
OFFICES:
Bishopsgate, E. C. 2
Burlington Gardens, W. 1
American Maize Products Co.
-
throughout Scotland
LONDON
3
Kingan & Co.
STREET, NEW YORK 5, N.
Telephone: DIgfey 4-5700-.*<-
savings bank
way,
Wilfred
May has been attending the
meeting of the Governors of World Bank and Fund in Washington.
cover page
a
rate bonds,
on
by investing on a whole¬
in corporate securities
"OBSERVATIONS"-—A
See
accumu¬
war.
scale
acquired
banks,
during the
has shifted from governments into
intensify present day Infla¬ the amount of
money corporations
tionary pressures in several ways. have to bid for the limited
sup¬
First, mutual savings banks could
plies of capital goods available.
contribute to inflation by selling
But
the
mutual
savings banks
large
amounts
of
government have limited
purchases of cor¬
bonds they hold to the Federal
porate
issues
to
those
of
the
Reserve Banks. When bonds sold
highest quality, and these have
by savings banks from their port¬ been
Dravo
HICKS & CO.
Association 04
up
.
.
caution to the winds and
as
duced
v'Mutual
' ;
Roosevelt Oil & Refining Corp..
Member$
made
HEAD OFFICE—Edinburgh
Refining Corp. (Common)
# MERCER
be
government securities
their mortgage
gradually and
to throw
i
Preferred
Preferred
could
Federal
Advisory Council of the in part through some switching by
Federal Reserve System has said: financial
institutions from gov¬
business cycle of great violence.
"The capacity of the building ernment securities held
to other
The conduct of any
Attempts to investments with results helpful
group of industry is limited.
financial institutions is judged by force building
the
beyond that ca¬ to
economic
well-being of
its effect on the economy of the pacity by excessive loans
lead the nation.
to
shortages of labor and mate¬
country.
Our primary duty, as
The mutual savings banks have
savings bankers, is at all times to rials,
higher
prices
and
poor shown a
prudent restraint in the
our
depositors.
But we are not quality construction by specula¬ volume of this
switching as wit¬
doing our full duty to our depos¬ tive and unqualified builders."
ness the fact that
they retain vir¬
Here again, the record of the
itors unless our policies contribute
tually intact the very large port¬
also to the national welfare.
The mutual savings banks has been folio of
approximately $12 billion
national
welfare today requires highly creditable. They have ex¬ of
Industries, Inc.
•} 7 \- Convertible 6%
.
Refining
Convertible
over-all
the
29)
TRADING MARKETS MAINTAINED
Ashland Oil &
quality
liquidity
average
for
Branches
;
the
portfolios, as well as con¬
invested
in
tribute to inflationary pressures
tions, as against 30% before the in the whole economy. They have
war.
And
almost
75%
of
the preferred to keep virtually intact
Treasury securities held by mu¬ the government bonds they accu¬
tual savings banks mature in 10 mulated in
large amounts during
years
or
more.
Mutual savings the war, and have used
mainly
investors
in government
August Ihlefeld
York
approved.
excellent that the steel
;
A
e
largely intact to date,
Today, almost 65% of the depos¬
vert
all-time record this year' in finished steel
output.
"The Iron Age"
estimates that more than 64,000,000 toris of finished steel
will be pro-
\
the
army
—
portfolios
accept
Retail volume in the week
slightly exceeded that of both the
STEEL OPERATIONS SCHEDULED
un-
to
t
X';! V;*'-v-vV;V-i
preceding week and the comparable week of 1947. Cohsumer
price
resistance continued to have a
restraining effect on the purchases of
luxury items,, the cool weather stimulated consumer interest in Fall
and Winter apparel.
part of the week.
be
u s
and
j*
,
*
>
bank
This
savings bank
depositors and
policy-holders
"failed
Railroads,
railroads, whose
new
would
Am
would
operating revenues, it estimated that rail¬
in August, 1948, increased
15.2% above the
estimate it states, covers
revenues
in
82
a
j
vast
v
present
em¬
of
credit.
further lift with the
a
period to produce adequate revenue
despite the heav>
volume of traffic that is
being handled."- Should the Interstate Com¬
merce Commission
grant the present request it will
inevitably mean
higher prices for almost all goods transported
by rail. Touching upon
pending wage demands of the rail unions and their ultimate
effect, ii
granted upon railroad operating
costs, Mr. Dana stated that it "is a
bridge that will have to be crossed when we come to it."
based
to
upon
great
v
.I:
trial
a
were
bark
tion
freight rates. SpeaKing for Mc
of Chicago, Chairman of the Western
Traffic
carriers, W„ H. Dana
Executives
increase
'
y<e>
we
postwar infla¬
by between 8 and 12% according to early spot re¬
ports made by Dun &
Bradstreet, Inc. Unit volume in some lines
remained below the 1947
level, but there was a spurt in the demand
for fall apparel with
emphasis on back-to-school clothes and acces¬
sories.
Resistance to high-priced foods remained
strong, but total
food volume was almost
unchanged at the very high summer level.
*
mone
supply,
year ago
:-'V^;'vsv *7^'—$ •''•""
Points out
come
retail dollar volume continued
consequence,
or
a Treasury
debt refunding policy which would raise
by shortening maturities, without adversely affecting outstanding issues.
interest rates
buying during the early part
as
assist
may
Advocates raising one-year Treasury rates to
ll/2% and increasing
requirements.
reserve
consumers
and
requiring end of inflation, Mr. Ihlefeld tells how savings
as
rupting government bond market.
further bank
responded very favorably to the frequent
promotional sales of Fall merchandise.
Cool weather in many sec¬
tions of the country helped to
stimulate
of the
Policy
Executive Vice-President, Savings Banks Trust Co., New York City
President, Institutional Securities Corporation, New York City
the
Fall buying got off to
;r;]
5
hinder this objective.. Lauds restraint of
savings banks in holding bonds and in extending mortgage
loans. Holds chief problem is to
gradually restore flexibility in long-term interest rates, without dis¬
ago.
the week.
/
,
.
Stressing national welfare
While labor relations in the main have been
tranquil
the prolonged shipping strike on the
West Coast has proved to be a
retarding influence on manufacturing activity in that area. Not¬
withstanding such scattered disputes, employment
generally con¬
tinued at a high level
accompanied by steady and high payrolls in
year
(1313)
By AUGUST IHLEFELD*
Food Price Index
The over-all performance of industrial
production for the nation
in the past week reflected little if
any change from that of the pre¬
ceding week. On a comparative basis it was slightly above the level
of
CHRONICLE
And Public Debt
Trade
Commodity Price Index
(
•
FINANCIAL
Electric Output
'
Stave of Trade
and
&
Steel Production
XX''-
The
;
COMMERCIAL
DEAI^S^ASSOmTIOJf^/vj;'-;
Teletype PfY: l-897r~
Glyn
Mills
|
„
-I,
|
".7
Banks:
&
Co.
.jyiHiami Deacim's Bank, Ltd,
J
6
(1314)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Foreign Aid Programs and U. S. Foreign Trade
By
WM.
From
McCHESNEY MARTIN, JR.*
Chairman, Export-Import Bank
in
|
By CARLISLE BARGERON
imports, and outlines Export-Import Bank policy in fostering imports of essential materials.
develop the subject assigned to me by your President, namely,
Economy and the World," it proved just a bit too large for me and, hence, with
yourj
permission, I am going to change it a little and discuss with
you the relationship of United
aid
to
foreign
that
from the spe¬
cial vantage
point
of
United
the
me
matter
a
of
to
seems
vital
ing the rest of the world to
that
aid,
both
world
War
II
was
only
to
of
of
the
our
and
1945,
But
its
industry
were
*An
under
leaving
was
address
by Mr.
the '47th" Annual Conference
the National Association of
towards
the
the
of
Su¬
pervisors of State
Banks, Louis¬
ville, Ky., Sept. 23, 1948.
wars.
sive
on
of
Eu¬
allies repay for all United
for the
even
shot
1
and
enough
scale
Reconstruction
ment.
The
British
and
in
1946
and
1947
straight loan basis. There
DENVER
British
RICHMOND, VA.
loan
of
port-Import
$3%
Bank
was
COLD
FOR
of
forty
acres
records
will
mines
on
with
ranging
NORTH and SOUTH
two
$4,000,000.00.
the
Denver 2, Colo.
Bell
mmmnmimTTTTV
coming to
RICHMOND, VIRGINIA
System Teletype: RH 83 &
84 *:
Telephone 3-9137
Paget Sound Power & Light Co.
Maryland Drydock
on
Stix
Request)
&
Kent-Moore Organization, Inc.
(Prospectus
Available)
509
CORPORATION
1420 Walnut St.
,
Philadelphia 2
PEnnypacker 5-5976
Private
Philadelphia,
44 Wall
New
York
•
STREET
;h'
••
; \
emer¬
early in 1947
the
as
SPOKANE, WASH.
Botany Mills Com.
Buda
&
NORTHWEST MINING
SECURITIES
Pfds.
Company
Dayton Malleable Iron
For
or
Gisholt Machine
Immediate Execution of Orders
Quotes call TWX Sp-43 on Floor
Exchange from 10:45 to 11:30
A.M., Pac. Std. Time:
Sp-82 at
Parker Appliance
other hours.
H. M.
STANDARD SECURITIES
CORPORATION
Byllesby & Company
PHILADELPHIA
OFFICE
Stock Exchange
Bldg., Phila. 2
Telephone
RIttenhouse 6-3717
Teletype
PH 73
Members Standard Stock
j
Exchange
of Spokane
Brokers
-
Peyton
Dealers
Underwriters
Building, Spokane
Kellogg, Idaho
and
doing
and
to some
re¬
were
entitled
Tennessee
is
elect
:
credits and the British
lines of credits were the
interim
aid grants to
France, Italy and
Austria in the winter of 1947
and
the
ECA
being
of
the
grants
and
loans
processed.
The
emergence
European
me
Recovery
Executive
gress that the
remaining postwar
the
dollar aid requirements
might ex¬
over
a
further
four-year
period, might
$17 billion
as
amount to
and
as
would
much
have to
be met
on
largely (upwards of 80%)
a,. grant rather than a loan
basis.
Despite
United
a
the
States
grant
fact
aid
basis,
(Continued
that
will
on
the
further
be
largely
long-term
page
39)
.
P
can
who
/
V;
•
Manney & Co. Being
Formed in New York
W
1
Manney & Co. is being, formed *
with
offices
New
York
at
41
Broad
City to act
as
Street,
brokers;
and dealers in corporation securi-
of
the
votes
in
sales
coming
tax.
this.
Instead
he
I'll
He
a
won't
to
peo¬
com¬
new
firm
are
ney.
Mr. ; Irving;
formerly
with
Manney
Eisele
&
was
King,
Libaire, Stout & Co. In the past
he conducted his
business.. "
'
i
own
-
investment
'
it out.
Now, .that's being fair and honest,
aint'
ties. Partners in the
Irving Manney and Julius Mari^
out
intends
in favor .of cutting
be
Irving Manney
revenues
He has been told that there is
it?'5;$^f;;;|f';
fflhe^mericaiLRediSross;
Roy's opponents make mockery
of his
"running on the Golden
Rule and the Ten Commandents."
But certainly running on that is
less
costly
than
the
promises
of
his opponent.
'
Roy, dubbed a hill-billy, but in
reality, a very successfu business¬
man; he's worth probably a mil¬
lion, is far more conservative in
speech and promises than is Har¬
•
ry
is
Truman, the President. There
nothing radical or flamboyant
language, He has not men¬
in hi«
tioned
.
his
single time.
on
lot from; this fellow
I will
governor,
of nossible
commission you will
represented."
Wealth
■
the
so-called; statesmen*
not
on that
against
now
Proconviction of
Branch and Con¬
reflected
grain
,
come ask¬
«
ing in, I'll be in favor of cutting
it; if v/e don't need it at all, then
States
recon¬
ever to
a commission to look into
the question
be met, they would have
to be
Bank
probably; the
cost upwards of
do
Export-Import
first candidate
.
small
a
study, it, "along with all the
ple. and if there's too much
at
Yakima, Wn.
that the
agrees
that, if the remain¬
ing dollar needs of Europe were
-
Branches
Browning has
unavailability of private financing
tend
Purolator Products
Stromberg -Carlson
if you
be
Government. I Accordingly, P the
logical and necessary bulwarks to
j
;
"Fm
says:
„
Roy
ihey
are
But
appoint
loan basis. The British
directly by the United
elected.
"Now mind you, 1 can't guaran¬
that the State can pay
you
bonus. But I promise you this
i
of
met
the/
not
$80 million."
credit, expected to last
until 1951, was
largely exhausted
by the end of August,: 1947. The
of
Haskelite Mfg.
„
$250 bonus will
credits
to
has
of everything
among them."
He then says that "even
required for fur¬
struction
Atlantic City Electric
-
off
bonus.-
and!
on a
,
Truman is running around
country screaming that
heavens will ; fall if he is
/"Othe.r states," he continues,
"have
given
their
veterans
a
ther reconstruction
needs, nor did
it appear
likely that the countries
involved could service, additional
line
Mr.
the
;
market
open
He
payment from their state.". '' *
were
a
in
premising.
the hope
whatever
raise
amounts
Out
went
tee
funds
more
promised it.
The
latter
institution,
however, found it irtipracticable to
the
Angeles
far
several thousand young men and
women who "whOri war came left
for
made it clear
Members St. Louis Stock
Exchange
between
Los
m
end
about
of them except study them^
Browning,
There is the hotly agitated ques¬
national Bank, which was
just be¬
ginning to operate, would assume
responsibility for this type of
'•
WHitehall 3-7253
and
OLIVE
St. Louis 1,Mo.
f
Street
New York 5
Wire System
Co.
INVESTMENT SECURITIES
BUCKLEY SECURITIES
an
do
went past high school.
record,
tion of the bonus.
available r resources were ' ex¬
hausted and in accord with the
understanding
that
the
Inter¬
in the
(Reports
Bank
will
never
on
His opponent, Gordon
jai study.
credits.
ST. LOUIS
PHILADELPHIA
Export-Import
he won't
says
he
candidate
VRoy tells the folks that frankly,
h£ doesn't know, but he will make
dollar aid require¬
Europe had to be found.
gency reconstruction credits
CRAIGIE&CO.
Joe Dandy Mining
Company
Bldg.
The
what
i.
held
financing the
BONDS
■F. W.-
References exchanged.
Engineering
supervision if desired.
Write.
315 Colorado
'
ments of
MUNICIPAL
to
ihen
con,<
a
is
,
basis
new
the
to
any
Roy
billion; Ex¬ to everybody.
<
some
the "sun
and
learn
•
p By the middle of 1947, however,
it has become
generally f recog¬
that
promising
pro
promise
them nothing at all.
He is un¬
doubtedly the most unpromising
*
reconstruction
,
j
not
of "over
$2 billion;
and
surplus property and post V-J
Day lend-lease credits of nearly
$3 billion.
'
;
l\. '
nized
production
past
to
CAROLINA
Cripple
long-
grant
from
Specialists in
VIRGINIA-WEST VIRGINIA
company, owners
well-located
properties,
leases
Since 1932
LEASE
several
Creek
I
MINES
Long-established
term
CREEK
He
speaking.
conservative
campaign is ing
yoii to vote for me who will
being conducted in the coun^
not say that i( you don't vote for
try today. There: is the show of
Roy and his seven Smoky Moun¬ me;- your crops will fail,: the roofa
tain Boys to get the crowd out. of your house will fall in or that
Of that* there is no doubt.
Tennessee will be doomed;"
—j
But Roy in his speech promises
Our
more
credits
CRIPPLE
Bargeron
The plain fact is that perhaps a
this
on
campaign.
He gives the lips and downs of
the various issues, discusses them "
agoguery.
through a separate line of
credit. As you
may. recall, a large
measure
of dollar aid was ren¬
dered
the
people of the hills and the valleys
Tennessee State. It is, one
would believe, the same old dem-
to
were
"it. wouldn't
,
an¬
of the
be
hope
has explained.that :T want to
talk
to you man to man."
V
Carlisle
is
the
the
inevitable but she
The show is through then and he
Fulsome,
Alabama,
Fiddling Sam Jones of Louisiana,
and Pappy O'Daniels type.
The
assumption is that,, as they did,
he
was
conde--
realized
The fact is that Roy is
making a
of
Develop¬
needs
as
comparison
she
far more dignified
of
of
saying
paper
that
tells noxjokes when he is
Jim
'that
so
d s,
a
other
a
go too far.*'
and
singer
to
scendingly
expressed
mountain bal-
cur¬
would
gub-
fiddler
a
repayment
States for¬
Britain)
the
ernatorial
they
could
be - met
entirely
through loans, in the first instance
by the Export-Import Bank on a
stop-gap
basis
and
then
prin¬
cipally by the International Bank
bility of repayment, that
aid,
United
Great
small
a
be met
States
the
wrote
pic¬
candidate, Roy
Acuff, nationallyknown as
a
(exclu¬
for
ropean
of
States. This
of
for
view
construction needs of the war-torn
areas of Europe and Asia
After World War I we
insisted,
without any regard to the feasi¬
our
of
aid, it should be noted, is
contrary to the original hope of
this government. It was
thought
in 1945 that, apart from
UNRRA
type relief aid, the emergency re¬
whole
repayment
problem after the two
at
ture
eign
clearly than in the contrasting at¬
titude
country
Martin
that
me
estimate
prospects
on
taken at the end of World War I.
In no area is this reflected more
lend-lease
this
to
seems
point
emendous
,They
only approach the
foreign lending problem
the
r
parison of his campaign with that
:p;
the famous Taylors, Bob and
Alf. The daughter of one of them
of
to
crowds.
can
from the United
rent
as
it has
been
by both
major parties and the American
people as a whole, contrasts most
favorably
with
the
approach
by the early part of
exports
alone
earnest
own
ported
geared primarily to the domestic
market.
their
the
to
approach taken by the American
Government after this war, sup¬
country and to
large. When World
we
whole
Repayments
It
cru¬
postwar
began, the United States
moderately active in
world trade
of
essential
Change in Attitude
i
this
at
assistance
t
growing appreciation of the fact
realistic appraisal of the borrow¬
ing countries' capacity to repay. In
the case of
Europe, there is a
growing recognition that we can
not reasonably expect
Europe to
repay all, or perhaps even a ma¬
jor part, of the total aid required
have before
evidence
expended
•
really remarkable degree of world
recovery,
especially in Western
Europe, the United States ' pro¬
.
importance
been
from
self-aid efforts.
we
had
after
ministration is
the
con¬
Win. McC.Martin.Jr
operation,
which
the field of battle. After World
War II, in contrast, there has been
a
completion
Economic Co¬
operation Ad¬
renewed
shell
playing
on
thus expanding, the war was forc¬
tional
cial
was
capacity is such that the
people of the world still de¬
pend upon it to provide the addi¬
Now that the
us
time
free
us.
in full
same
machine
ductive
con¬
all of
to
cern
industrial
our
tract. Now, more than three years
V-J Day and despite the
States
ExportImport Bank.
This
staggering rate of $16 bit-
lion per annum. At the
seen
as
the
at
foreign
our
trade,
governor, and
how they are
<£-
programs
E
One of the most
amazing campaigns in the country is going on
down in Tennessee.
The newspapers and several of the
Nationally
circulated magazines have carried stories
about how Carroll
Reece-,
former Republican National
Chairman, is running with a hill-billy
candidate
for
When I attempted to
'Our
States
Washington
Ahead of the News
of Washington
Stressing disequilibrium in U. S. foreign trade and the need for increased
imports to ease dollar short¬
age, head of Export-Import Bank urges
positive action to encourage increased flow of imports sufficient
to enable
borrowing countries both to meet service charges on obligations to us and also to continue to
buy our products on scale essential to their welfare. Cites factors
operating toward automatic in¬
crease
Thursday, September 30, 1948
icism
opponent's
He has had
name
no
a
crit¬
for anybody.
Inevitably .in this state where
fiddling has often been the vehicle
to
political success, there is
a
com-1
-
\
;
.
Volume
168
Number 4738
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(1315)
7
r.
Inflation As It Affects Middle Classes
By H. W. PRENTIS, Jr.*
President, Armstrong
;
I
Contending middle classes, such
.
up
j
of
lost
but
trying to make
time
the
since
ever
productive
are
V-J
capacity
have provided
many
our American
system, prominent industrial, executive1
points out extent to which these
have been adversely affected by current inflation/ Sees threat in
this to democratic govern¬
ment and step on road to
dictatorship. Lays down measures for combating inflation.
tions.
'
The
in
The
hours;
the
that
and
summer
fall
tions
of
in
wage
pay¬
on
in
of the skilled
many
(Continued
on
page
38)
In the presence of the two other speakers on this
program tonight—the first espe¬
cially distinguished in the field of banking and
public service, i and the second noted
/
both
as
practical and academic economist—I
a
am
,
of
my
limitations
as
businessman.
a
However, I
have
main-
tained
for
years that it is
the
bounden
who
and
H.
W.
Preutis, Jr.
before
today
the
than
di¬
primary
is
cause
most
abstruse
tackled.:
The
four
a
man
pressing
a
fifth, the
'
•
monumental book in 1651
a
entitled,
"Leviathan—or the Matter,
Forme,
& Power of a
Commonwealth," in
which he holds that the state is
a
necessary but dangerous monster
which always devours men's free¬
dom if it be not
constantly sub¬
jected: to
appropriate
controls.
"The Leviathan of Inflation" is a
It
is
eating
today at the vitals of
and* unless
with
our
checked
it
The
be
the
V
that
fail
men
is
money
*,
■
a
to
of
the
Qur
The
ago, I was on vacation
from Can
ercise
operation.
that
templated,
head
.
walked
"He
of
soon
our
SCHERCK, RICHTER COMPANY
Landreth
family units with incomes be¬
tween
$3,000
In
and
$5,000'
were
a
ST.
year;
13,165,000 such
1941, 1,564,000 family
over
$5,000; in
as
staffe
lars
created
a
thought
SL
by
L.
the
banks
when tion
of
'
peacetime
goods
could
v'
•
•
generaly speaking,
in
to
meet
the
Is.
-V
*
•
'
.•
.
.
u
additional
Arid thus this talk
McKEE NUNNALLY
,
V/\l|
"
FRANK B. SITES
-'
r<.
hl
-w—
ex¬
.!'
.
'r
f.
*•
•
•••.'►
HAVE BEEN ADMITTED TO PARTNERSHIP iH OUR FIRM.
v
<irT
H
We
are
v|
MR. IIAKOLJX B.
SMITH
PRESIDENT,
MR. MEANS. FORMERLY VICE
;
pleased to aririourice that
.I
v.
,
'
TRUST COMPANY OF GEORGIA,
WILL MANAGE OUR MUNICIPAL BOND DEPARTMENT.
,
associated with
now
MR.
NUNNALLY
us
|
J
AND
MR.
SITES,.LONG ASSOCIATED WITH
'
US,
WILL CONTINUE TO SPECIALIZE IN
;
CORPORATE SECURITIES.
.
Manager of
as
the
alwaysdarted,
our
UNLISTED SECURITIES DEPART3IENT
a
Teletype NY 1-750
'
WW
Telephone WOrth 1-4300
he
&
e.
investment
was
was
■
Pershing
;
■
i
a
pencil for Hobbes' in-
genius writing device!
! '
bankers
120
of
■
,
underwriters
i;.
■
problem
that
'!
;
V-'fe.,"
Boston
,
Chicaoo
;
V
other
national
'vf
.
>:T
.
^
and
distributors
of
■
.
municipal
bonds,
securities
stocks, commodities
home office
,
• //V
Clevelanp
.
..
brokers of
BROADWAY. NEW YORK 5. N. Y.
.■'/ '
i
r
I
i
corporate and
Trade
Private Wires
J
and
>
exchanges
i
;
I
exchange
stock
\;|f
atlanta
eminent as¬
sociates
the discussion. of the
broader aspects of inflation. My
objective is to carve in high relief
my
york
■
New York Curb Exchange
Chicago Boa^d
,
.
Co.
new
'v? '
New York Stock Exchange
prepared,
members
.Mempers
.
/
&
•
J
«
although I confess I substituted
.
'
ii
marietta
eastern
v
,
new
street
52
office
york
broadway
\*
Detroit
Montreal
•
'
•
;
it
...J
,
poses for our so-called middle
class—the group which has been
the gyroscopic stabilizer ofC the
American Ship of State ever since
that vessel was launched from the
We take
.William H; Jones
Under the impact of inflation-;its
is,now associated with|us
stabilizing influence is now wan¬
ing and we already see our na¬
tional
caravel
seas
wallowing
in
the
of unwise fiscal
pol¬
known.
i
/
,
'i
:
First
are
clarify the
me
,
use,
its
causes
.
,
_
:
and manifes¬
.
'
is
now
associated with
address
Board," Inc.,
;
-■/'[.
"
1948.
Y.
C„
-/f
Sept.
23,
f'.
■'•"
us
in
:'
"■
'f-
THE
charge of
v
••
-
i', J
'•
.
:
;
•
'
'
''
'•
•
OF
DEPARTMENT
MANAGER
••
TRADING
YORK
•
MANAGER
TRADING
OUR .NEW
THAT
KRANZ
-■
APPOINTED
CORPORATE
IN
V
FRANCISCO
SAN
BEEN
"•
'
CORPORATE
HAS
•
.
t
~
DEPARTMENT
OFFICE
Kaiser
ii
,■ ■
Members l^jew York Curb Exchange
;
BAN
:
rRANC IB C O
fv
t,
/
-
New York 5, N.-Y.
,\
.
'
*
.
LOB
ANGELES
Co.
STOCK
EXCHANGE
sf
NEW YORK
.
Russ Building
.
.
172-173
2D
Pine Street
teletype 1-2678
•'
new york
September 27, 1948
EXCHANGE
FRANCISCO
teletype
Telephone: HAnover 2'7900
STOCK
'
SAN
•
&
mchbkrs
Members "Hew'YorJi Stoc\ Exchange
by Mr. Prentis be¬
N.
r*
Vilas •&.; Hickey:
•«
-•
49 Wall Street
*An
fore the 298th Regular Meeting of
the Natonal Industrial Conference
"•
ANNOUNCE
GEORGE
.•/
OUR
v.and-
TO
r;:" " INDUSTRIAL RESEARCH m
-;'
tations? What is the middle class?
,
OF
terms
What is inflation?
7
our
'•
never
-
PLEASED
MR.
of
as manager
CUSTOME^
.
What Is Inflation
let
that I shall
What
has
.'/•
ARE
FORMERLY
icy, ^top-heavy government ex¬
penditures and mounting prices,
with a rising tide of class envy
and hatred in the offing, the like
of y which / America
WE
pleasure in' announcing that
Cradle of Liberty in Philadelphia
a century and
three-quarters ago.
troubled
-
.
JAMES W. MEANS
'
and-
pen
(the Leviathan)
/-made/CCCte
can—the
0225
123
(
•
I shall leave to
D.
WE ARE PLEASED TO ANNOUNCE THAT
-
•
be
spent for battleships, aircraft and
demand-created, by this phenom¬
all
the
othbr
paraphernalia / of enal shift in buying i>ower. ' In-
...
I
Garfield
con¬
that book
a
MO.
45<J
.
.
and
Z,
Teletype
During the war period, unfor¬
tunately, facilities for the produc¬
dol¬
were new
is
and
had
carried
a
Building
LOUIS
units had incomes
years,
$96 billion of which
presently entred
it
into his
booke, or otherwise he might
perhaos have lost it.
Thus
—if
Louisville, Ky.
million
,
much
and he
his
inke-horne,
,
Berwyn T. Moore & Company,
of
increased
14
to
dollars varies with the supply of 1947 the number in this classi¬
those other commodities. The Fed¬
fication had increased to 6,921,000
eral Government spent over
$350 ifamilies;
•/.
billion during the five war
note book© in his pocket, and as
cane
A Direct Private Wire
serv-
few
a
has
over
announce
installation of
the
r
000
of other commodities
expressed in
I
Hobbes that:'
also pleased to
are
buying
ments of
in 1947 there
the author of the original "Le¬
viathan," for it is said of Thomas
.
and
recovering
All the
We
a
tried
J
by
families.
was
permitted was • to
bit every day, and here I
to emulate the
procedure of
walk
for
power of large seg¬
population has been
enormously enhanced.
For in¬
stance, in 1941 there were 4,139,-
to
might well be the ultimate means they purchased government bonds. 1 could.
not,
of destroying pur free
These
bank credit dollars were
society.
increased
;
When Dr. Jordan's invitation to
address you reached me a month
in
monetary
souls.
the' value
as
of
mention
population
1940
ply
dollars, just
result
me
expressed in other
commodities varies with the sup¬
of
us
St. Louis Office
our
rose.
advance
demand
Let
since
dollar
a
in
number of factors that have ai-
ices.
commodity as well as
exchange. The value
a
supply,
them:'
medium of
a
is becoming associated with
stupendous
supply of existing goods and
re¬
seems
realize
the
as
fected
'
.
Murphy
ac¬
inflation has been accentuated by
I would add
of the matter
crux
dollars
inevitable
prices
upon
of mankind in
those
This
and the way of
maid."
a
money
KITCHEN
became
of
terms
ship in the
a
such
our
bank
or
T.
formerly of Kitchen &
cheap
and
the
prices of commodities expressed in
things
serpent
a
of
sea;
a
way
gard to money!
political philosopher—published
behemoth.
of
way
rock: the way
to
dollars
recall
y°u
With
addition
were
too
wonderful
for
The way of an eagle in the
American
the
of
W.
that
announce
of October I
as
circulating around
somebody's pocket
subject I
writer
still
pleased to
are
credit dollars that paid for
are
count.
a
unwonted increase in
midst of the
Thomas Hobbes—the old British
•economy
the
the
air;
a
dangerous
problem of inflation.;
away
and
were
no - more
similar
Its
money
which
certainly
people
in
him:
questions.
lemma
them
j?8F1
Pver^s>
.said that there
of vital public
is
money in
people outstrips
supply of goods and
the available
ever
called upon in"
the discussion
And
supply of spending
the bands, of the
ered
part wheh
there
of the
We
the bulk of which has long
since gone up in
smoke, but most
supply.
When I was
in college I had a course in the
theory of money, which I consid¬
industry to do
our
the
the
are
commerce
war,
sudden
engaged in
than ordinarily conscious
more
To my way of
thinking inflation
is the condition that results when
Services.
duty of all of
us
naturally
own
telephone:
at
working
corresponding in¬
in
productivity; limita¬
output and lack of ap¬
prentices
1945
the
on
factors
without
creases
born
were
other
increases
ments
same
calves
coming
the
work have been reduced
thing is par¬
tially true in the field of agricul¬
ture.
now
dressed beef.
as
Among
segments of the econ¬
has not even yet been able
to adjust itself to the new condi¬
owners,
only
market
omy
stability to
groups
for
Day
Cork Corporation
professional pejple, farmers, and business
as
dustry has been
whitehall
3-9015
'
«
(1316)
THE
The
COMMERCIAL
FINANCIAL
&
CHRONICLE
Theory of Relativity
In Selecting Railroad Bonds
By GEORGE M. GRINNELL*
Dealer-Broker Investment
Recommendations and Literature
It is understood that the
#
Partner, Dick & Merle-Smith, Members of New York Stock Exchange
legal investment of their securities by savings institutions. Concludes present New York and Mas¬
sachusetts laws have been improved, and railroad bonds of the better roads are excellent
savings bank
I
hope that the title of
sion.
I
talk has not lured
going to explain Einstein's theory
not
am
here under a misapprehen¬
or even suggest any method of applying
The theory of relativity which I have in
my
it directly to the selection of railroad bonds.
mind
IS
is
that
employed
$
in
available at bargain prices,
and one-half times
paid dividends equivalent to savings banks would have been
25% of its fixed charges in five restricted to bonds of relatively
lew roads except for the mora¬
out of the six years preceding in¬
vestment, including the year pre¬ torium provisions. It became ob¬
ceding investment. There was also vious that the old standards had
a
provision to qualify even the broken down and that something
debenture obligations of the larg¬ must be done about it.
.V.:
er roads
with exceptionally good
I would like to say a'word here
earnings records. There were of in defense of the old laws. When
course other provisions relating to
they were first adopted and for
the size of the property, etc., but
many years thereafter they worked
railroad bonds
savings
invest-
in
ments
Massachusetts.
I
have
used
the
phrase
"theory of
vity"
rela ti
in my
title be¬
cause
the fun¬
damental
la
new
those
the
George M. Grinnell
is
important question in
analyzing railroad bonds is not
"how good are the earnings of a
particular railroad" but "how good
are they relative to the earnings
other railroads." Naturally all
railroads earn more in periods of
the
that
one
mentioned
which
above
the
are
but also the Baltimore & Ohio and
charges one but were able to do so under
one-half times in 1932. Today
Chapter 15 of the Bankruptcy Act.
practically all of them do. If you
.The law in effect in Massachu¬
bad been restricted to bonds of setts in 1930 contained
special pro¬
wads with this coverage in 1932 visions
regarding New England
yoti would have been prevented roads.
The principal provisions
irom
buying
many
thoroughly regarding other roads were that
sound bonds when they were ex- for each
of the ten
fixed
their
(earned
preced¬
years
ifcremely low in price. Today such a
.provision would pernfut you to buy
ing
investment
earnings
must have been at least equal to
five times fixed charges and that
|
gross
almost any railroad bond not in de¬
fault. Under your new law you can
dividend payments each year must
ibuy bonds of only the better than have equaled at least 4% on
the
-average railroads but you can
them when they are cheap as
as
when they are high
Hut
before
buy
well
priced.
discussing the
new
total
outstanding
stock.
There
were
also
qualifications
as
to
mortgage position, ; size of the
property, etc.
;
:
;
law further I would like to point
why
out
essary.
of the
that
a change was vitally nec¬
Let us review the record
1930's.
You
law
a
will
all
regulating
agree
savings
banks investments should do two
things.
It should
prohibit the
purchase of unsound bonds at any
time
and
it
purchase
should
of
sound
times—including
permit
bonds
periods
the
at
all
of * de¬
pression when prices are low and
yields attractive. The savings bank
investment laws in effect in many
states did just the
opposite.
They
permitted, in periods of prosper¬
ity, the purchase of many railroad
bonds
which
subsequently
went
Under
this
law
certain
obliga¬
tions of 27 roads qualified in Mas¬
sachusetts in 1930 and three years
later only eight met the
require¬
ments of the law in effect in 1930.
Of the 27 roads which
qualified in
1930. five went into
bankruptcy or
receivership and defaulted on most
or
all
of
the
been legal.
issues
Two
more
which
had
put through
plans of readjustment which, how¬
ever, did not affect the specific
issues on the Massachusetts
legal
list except for an extension of
maturity in
instance.
one
Obviously
these are not good
Massachusetts recognized
records.
this fact and amended the law in
1941 but this amended
law was
purchase
similar to the New York law and
of many thoroughly sound bonds.
its record would have been no
•Qualifications for the Legal List
Just how bad
was
the record is
well illustrated by what
happened
to the roads whose bonds
were
ondhe legal lists of various states
in 1930.
I am citing the Massa¬
list
as
cause
list
and
the
New
York
examples, the former be¬
you
are
most
interested^ in
it and the latter because
it is
the
better
The New York law
provided in
brief that fixed interest
mortgage
bonds of a railroad would be
the
road
charges
in
one
nine out
had
earned
and
of
the
legal
its fixed
one-half
ten
times
preceding
years,
than
the
^An address by Mr. Grinnell be¬
fore the Savings Banks' Associa¬
of
Massachusetts,
Swamps-
*cott, Mass., Sept. 18, 1948.
record
of
So many bonds would have re¬
removal
from
the
legal
lists in Massachusetts and
New
quired
York
that
both
moratoriums.
states
In
enacted
analyzing
the
merits of the law in force in 1930
the effect vof these moratoriums
should obviously be ignored.
new
was-that
When it
It is
clear that the laws in
now
York, Massachusetts
and many other states in 1930
per¬
mitted
the
purchase
banks
of
which
should
cluded
in
many
not
the
by savings
railroad
bonds
have
portfolios
been
of
in¬
such
Furthermore, the
methods of selection permitted the
purchase of these bonds
during a
and
many
sound
bonds
Sulphur
adopted different methods.
sylvania,
Connecticut
Penn¬
Mining Corp. of Canada LtdL—
N. Y.
Leading Banks and Trust Com¬
Aiso available
are
panies of Northern New Jersey—
Comparative tabulation—Parker
follow-up
and
General Electric Co.
Pacific
Weissenborn, Inc., 24 Com¬
merce
Street, Newark 2, N. J.
Market
Outlook
—
current situation and
Leaflet
and
and
the outlook
Cohu & Co., 1 Wall
Street, New
National
Outlook for the
let—Frank
Market—Leaf¬
Ginberg
&
Co.,
30
Broad Street, New York
4, N. Y;;
dustry—with
panies
—
Fenner
data
36
on
in¬
com¬
Merrill
Lynch,■ * Pierce,
Beane, 70 Pine Street,
&
New York 5, N. Y,
Railroad Developments — Leaf¬
let of current developments in the
industry—Vilas & Hickey, 49 Wall
Street, New York 5, N. Y.
Also available is
comparative
a
list of Public Utility Bonds.
;
Chemical &
Chicago 3, 111.
Review
Baker,
Weeks &
Harden, 1 Wall Street, New York
—
discretion
of
the
indi¬
institutions, prohibiting
now
statistical
agencies. The Connec¬
ticut law provides for a commit¬
tee to determine legalilv.
All of
individuals, either in the insti¬
tution itself
in
the
or
in
success
committee,
a
statistical
agencies.
failure
or
of
or
The
such
laws
will
depend on the ability of in¬
dividuals to resist the
feeling, in
periods of prosperity, when rail¬
road
earnings
have
good,
are
that
all
problems
been solved, and
that the railroad
industry is in a
new
and the feeling during
of * depression,
that
the
era,
periods
railroads
are
going
the
the trollev lines and that
of
way
rail¬
no
bonds are any good. You are
all familiar with the
psychological
effect
investors
on
prosperity
the
on
of
periods of
hand
one
periods of depression
on
the
and
intrinsic
this fac¬
under-estimated.
security of a bond
should not change with the busi¬
ness cycle.
If, in a depression, a
bond is vulnerable to
in
a
not
default, then
period of prosperity it can¬
be
bond
considered
matter
no
earnings
may
New York
a
a
.
how
too
.
grade
the
retains
the
Well
However, in 1931 it
moratorium which per¬
list provided the road was not in
default.
At the end of 1932, oui;
of $7 billion face value of railroad
on
the
New*
'
List
'
Place,
^
Pittsburgh Forgings Co.—Circular
—Emanuuel, Deetjen & Co., 52
William Street, New York 5, N. Y..
Seaboard
Finance
Co.—Memo¬
randum—Crowell, Weedon & Co.,
650 South Spring Street, Los An¬
geles 14, Calif.
v
York
State
legal list only $2 billion complied
with the original requirements of
viding yields ranging from 5.4%
to
9.3%—Goodbody
&
Co.,
115
Broadway, New York 6, N. Y.
Also available is
a
a
leaflet
item
on
are
Publications,
Dividends
Stocks
,
data
and
on
Mac-
Inc.,
Ex-
Central
&
and
a
Yields
on
and
100
list
"Eligible" Stocks
of
Canadian
con¬
sidered eligible for investment
by
Canadian Life Insurance compa¬
nies—a supplement to the "Eli¬
gible
Hay,
Book"—Cochran, Murray &
Dominion
Bank
36)
Salle
Co.—Cir¬
&
Co., 135
Street,. Chicago 3,
g; Studebaker
Corp.—Recent re¬
port—Freehling, Meyerhoff & Co.,
South La Salle Street, Chi¬
cago 3, 111.
120
port
available
Inland
on
is
a
special
re¬
Steel.
Warner
Co.—Analysis—IT. 1VL
Byllesby & Co., Inc., Stock Ex¬
change BIdg., Philadelphia 2, Pa,
Winters & Crampton Corp.—
Analysis—C. E. Unterberg & Co.,
61 Broadway, New York
6, N. Y.
Also available is
an
analysis of
Miles Shoes, Inc.
Building,
Toronto, Ont., Canada.
'■'■•W.-',} -vf
American
Thomas
Buslines—Analysis—
E. King &
Co., 39 South
La Salle Street,
Chicago 3, 111.
Arkansas Western Gas Company
-Detailed information for dealers
—Comstock & Co., 231 South La
Salle
Street, Chicago 4, 111.
&
Co., Liberty
Trust BIdg., Philadelphia
7, Pa.
Bingham
-
Herbrand
Corp.
New
York
f
listing producing properties
giving details on recent de¬
velopments— Tellier & Co., 42
and
Broadway, New York 4, N. Y.
?
dated
their
Bulletin—Laird, Bissell & Meeds
120 Broadway, New York
5, N. Y
Fuller
Salle
Street,
Chi¬
4, 111.
James
an¬
Smith
is
as
of
manager
the
unlisted
de¬
partment.
Mr.
Smith
was
formerly
resident
man¬
in
New
ager
York
City for
Collin, Norton
&
Co.
Well-known
in Wall Street
many
years,
Smith
Harold
B. Smith
Mr.
is
a
Vice-President
Security
La
B.
with
firm
for
Fireman's Fund Insurance Co.—
South
Exchange,
Harold
a s s o -.;
securities
letin
cago
Stock
that
nounce
—
Memorandum—Wm. J. Mericka &
Co., Inc., Union Commerce BIdg.,
Cleveland 14, Ohio."
Pershing & Co., 120 Broadway,
Yorlj City, members of the;
New
now
Bingham-IIerbrand Corp.—Cir¬
cular— Hecker
Harold B. Smith, Now |
With Pershing & Co.
.
209
The other $5 billion
the' list through the pro¬
visions of the moratorium. Later,
South La
Stearns
pre¬
stocks
common
Production
research
the statute.
on
Southern
cular—Bear,
Pacific,
Struthers Wells Corp.
-Selected
ferred
Oils
on
&
were
on page
Fadden
Also
memorandum
Chicago, Rock Island
Manufacturing Company
—Study—William A. Fuller & Co..
(Continued
Also available
111.
Protected Liberal Income
of 32 selected issues
pro¬
Deardorf Oil Corporation—Bul¬
ole
mitted all the railroad bonds then
on the legal list to remain
on the
bonds
Exchange
good
look at the time.
still
40
other,
and I do not believe that
tor
should
be
The
Co.,
New York 5, N. Y.
on
leave the
now
eligi¬
bility of railroad bonds for sav¬
ings bank investment largely up
to
•
■
Co,,
—Analysis—Ira Haupt & Co., Ill
Broadway. New York 6, N. Y.
—
on¬
the ratings of the
uses
these states
/;
.
'
Southwest Corp.
5, N. Y.
ly bonds of roads which had been
in default within five years. Ver¬
mont
Manufac¬
New England Public Service
Unpopularity of Common Stocks
•
Birkins
vidual
of
Ver¬
idea of in¬
yardsticks
in
their
Pennsylvania now leaves it
the
analysis
turing—Circular—Smith, Burris &
Co., 120 South La Salle Street,
'
Petroleum—Analysis of the
Utility
Income
Bond
High
yield—Data on request—George
all gave up the
to
Southern
on
an
York 5, N. Y.
laws.
uo
circular of
a
comment
Co.
Minneapolis
Gas
Company —
Special report—A. C. AUyn & Co.,
Inc., 100 West Monroe Street, Chi¬
cago 3, 111.
on
corporating
mont
Co.—
.
.
period when
bond
prices were New York Save the Banking Board
generally high. On the other hand, authority to admit bonds to the
when bond prices were
thoroughly savings bank legal list which
deflated
Gulf
Analysis—Eastman, Dillon & Co,,
15
Broad
Street, New York 5,
N. Y.
became
apparent that
something must be done to mod¬
ernize the laws, different states
yardstick.
Defects of State Laws
effect in New
5, N.Y.
the
situation.
adopted
including the year preced¬
ing investment, or had earned its institutions.
tion
actual
the New York law.:
state with the largest savings bank
deposits.
if
trouble
road
into default and
prohibited, in pe¬
riods of depression, the
chusetts
The
present
prosperity than they do in periods Lehigh Valley which were forced
of -depression.
Only a few roads to scale down their fixed charges
Mexican
Analysis—George B. Wallace &
Co., 15 William Street, New York
Coming Blue Chips—Discussion
of qualifications—E. F. Hutton &
Co., 61 Broadway, New York 6,
most
are
firms mentioned will be pleased
parties the following literature:
■
well.
bonds of 39 railroads
the
w
were
pertinent to character of the railroad
industry
discussion.
In 1930,: changed. "Railroad * net
earnings
qualified as became more volatile,
partly be¬
legal investments for New York cause gross revenues had become
savings banks, and three years more sensitive to the business
cy¬
later only seven roads met the
cle and partly because the margin
1930 requirements.
Of the roads of profit had been
materially re¬
which qualified in 1930, nine had
duced. -But these changes went
to be reorganized. By reorganized
unnoticed in the "new era" of the
I mean not only roads which went
1920's and no changes were made
into bankruptcy or receivership in the
savings bank laws to fit the
ones
con-
of
cept
you
and
governing the
eligibility of
bank
of
any
_____
charges
your new law
as
•/
interested
Canadian Gold Stocks—Study—
Milner,
Ross
&
Co.,
330
Bay
Street, Toronto 1, Ont., Canada.
for
•
send
to
Railroad analyst reviews working of laws restricting investments of savings banks in railroad secur¬
ities, and points out disadvantages of rigid yardsticks.
Points out conditions facing railroads have
changed and railroad industry has become highly cyclical, thus necessitating flexibility in qualifications
investments.
Thursday, September 30, 1948
the
of
Traders
National
Association,
which he is also Chairman
Advertising
Committee;
former President of
the
of
of the
he
is
a
Security
Traders Association of New York,
Manufacturing Co.—Spe¬
cial report—Loewi &
Co., 225 East
Mason Street, Milwaukee
2, Wis.
and is
a
of New
member of the Bond Club
Jersey and the Corporate
Bond Club of New York.
-
Volume
168
Number 4738
.
THE
COMMERCIAL
The Latin American
&
CHRONICLE
FINANCIAL
A
By KENNETH K. DU VALL*
v
>A.
,
i
•
Vj
0
■
:Sf
*
I'
By E. M. BERNSTEIN*
:
V
After
American
is
countries
several
"
Latin
;
aggravated by European dollar shortage,
says primary cause is excessive imports,
<
out of balance with international payments position.
programs
entered
genuinely grateful for the opportunity to discuss with yop
the exchange situation in Latin America.
We who work for the In¬
,with
the
Fund
Monetary
frequently discuss exchange problems
of our Latin American members.
Once in a
while we get<S>
officials
chance to
a
"discuss
•
change
1
with
Latin
Ameri¬
business¬
when
men
to
come
.
ex¬
prob-
e m s
can
we
your
countries
to
consult your
$1,650
million
in
1938
to
$5,840
million in 1947. All Latin Ameri¬
countries, with the exception
Chile, Peru and Bolivia, have
receipts from exports approxi¬
mately three or four times their
can
of
dollar amount. And
prewar
is double their
prewar
dollar amount.
helpful to talk
b
these
t
o u
problems with
M.
Bernstein
-
:
problems
businessmen,
Exchange
V
v
not theoretical ques¬
are
tions that can be solved by dis¬
cussing statistics with government
'officials. ; They touch every as¬
pect of ) the economic life in a
country. You who see exchange
problems in your everyday busi¬
ness
be
can
influential
in
secur¬
exchange policy suited to
and helpful to its
dong run economic development.:
an
(Latin America
It is unnecessary for me to tell
■
that it is
-you
a
mistake to
assume
that all Latin American countries
have the
'Latin
-20
exchange problems.
same
America
republics,
is
collection
a
each
Problem of Excessive Imports
of
with
of the
has
the
being
time
Latin
some
who
free
for
are
from
any
doubling of dollar import prices,
this represents a very large in¬
with
American
been
expand.
Their
ex¬
proceeds are still adequate
for their import needs. In
these
few
still
fortunate
true
countries
it
that
by and large
.exchange is provided freely to
those who must make payments
abroad.
>
«'
For
Bad
Exchange
in
But
.
many
countries
is
bad.
quence
American
the
exchange
part, this is
In
the
of
serious
While
tries
all
some
sell
payments
world.
Latin American
their-products
coun¬
to
Eu¬
they cannot now secure from
Europe full payment for their
exports in dollars or in imports
that they need. Their dependence
on
United States
increased
sources
of supply
than
more
in
pro¬
portion to their capacity to make
dollar payments. Europe's dollar
the
re¬
coun¬
the
at
end
of
1946.
As
reserves
drawn down.
were
loss in reserves
in 1947
was
nearly $700 million. And though,
on
the whole, it has now been
stopped, this has been largely the
result
of
import re¬
of con¬
serving their exchange resources
has compelled many countries to
very
strictions.
severe
The
take drastic
the
urgency
to
measures
put their
payments into order.
inflation
the Latin American exchange
America.
a
nanced
to
through
credit.
countries
some
not
considerable
a
bank
have
yet
the
extent
While
inflation
made
in
may
exports
un¬
profitable, it has resulted in a
tendency to over-import. In time,
however, unless the inflation is
checked exports will also become
unprofitable
and
the
exchange
situation
will
No
A:
then
become
We
the
at
International
of
as
an
vent
be
-
*An
-before
cil
of
a
group exports rose from
address
bv
Dr.
Bernstein
the Inter-American Coun¬
Commerce and
Production,
reached
..
,
caption
change
reserves.
Nor
an
entirely
a
(Continued
on
page
42)
these
I
;■■■
to
propose
of the problems—I
to have all
the
of
banker—and not
a
as
professional economist.
Most
of
nature
to
con¬
economy. Thus, it is
reasoned, increased bank loans are
inevitable result and therefore
not
a
the,
economy.
World
made
figure of
a
the
at
some
close
1945.
in
the
1920—a
gain of
about
or
billion
doubt
Surely
to
June ' 30
on
some
37%.
1918
195%
to
Bank
rise?
Credit
the
period
be,
may
immediate
the year 1947 makes a statis¬
tical record that casts considerable
on
increased
30.
of
of
sults
..June
this,
more
$22
on
loans
other indices
However
shorter,
World War I, loans rose from some
billion
almost $31
bank
Effect of Increased
gain in these two
about 42%. Going back
comparable period following
a
open to challenge.
equally logical to con¬
for instance, that the in¬
crease
The
prem¬
clearly
caused
years was
to
upward spirals in
The logic in draw-
not
$43 bil¬
1947, .01
roughly, a gain of $13 billion over
the figure established at the end
of
it
clude,
of
*
is
ises
Is
States
United
of
cause
|pg this conclusion from the
II
War
fol¬
have
an
ques¬
rcord
loans
nation's
dangerously
of
end
bank
gain perspective
the
at
that
in
the
proposition that the
of
use
bank
credit
appreciable
no
re¬
inflation¬
ary pressure.
Between January,
1947
and
January, 1948, while
$8 billion
the 42%
bank loans
were
increasing by
only a gain following World War II com¬ some 21%, commodity prices rose
very few years/ ago
the bankers pared to 37% following A World by 17%- but industrial production
of the country were being openly War I is not alarming and neither moved up by
only 3%. ,To assume
criticized for their reluctance to is the total of $43 billion on Dec- a simple, direct
relationship of
take
risks—fort their failure
to 31, 1947 compared to $31 billion
cause
and - effect1 between
bank
adopt courageous and aggressive on June 30,'1920 a cause for real loan, increases and price increases
concern.
On
the
other
hand, need would be an unjustifiable simpli¬
loaning policies. In 1944 organ¬
ized banking became aroused and I remind yod that the inflation of fication of a complex situation.
.
minded
need not
fact that
you
of
the
be
re¬
in a country-wide cam¬ 1919-1920 was followed by drastic
>; V
v a*
A
paign exhorting bankers to make deflation ill 1921.
credit available to every worthy
Passing on to the next question
borrower for every worthy pur¬
Has,; the expansion
of; bank
pose. -v Av'a, > {%:•
;-;A ! a a {J a A a-a: ; credit—post World War II—been
a
A Contrast, if you will, this 1944
major cause of inflation?—we
On
the other hand, there is no
denying that the considerable in¬
engaged
enter
month
Republican
a
dominated
-
Congress empowered the Federal
Reserve
Board
and
serves
raise
to
bank
impose controls
credit.
consumer
somewhat
more
controver¬
shorter-term'
year
of view,
1947. A ;
say
A
the: longer
to
As
re¬
point
calendar
the
period—1939
be observed that
over
to
1947—it may
The issue is not
in
the year 1947
the dollar value
merely political. It has deep roots
of
in the nation's economy,
was
"gross national-product''
estimated at 254% of the fig¬
ure
set
What
'
this
in
crease
,
has
happened
to
cause
rather
abrupt and complete
change in the thinking and atti¬
our
down
for
tional income" in
of
1939;
1947
our
was
"na¬
280%.
bank loans in
din
1947
add to available purchasing, power
—
point of view with that prevalent
today! In 1948 bankers are being sial ground. Let us start by meas¬
criticized for doing too well, a job uring the growth of bank loans
they were .accused of neglecting against some of the more com¬
only four years ago. .Twice, in monly used yardsticks of general
less than a year, the President of economic
activity.
It might be
the United States has urged Con¬ well to look at this phase of the
gress to enact laws aimed at con¬ subject from two angles, namely,
trolling! and
restricting
bank the longer-term point of view,
credit. At the special session last say,, from 1939 to 1947, and the
and
evidently did not result in
larger production.
.>•
As I have said, admittedly we
are on controversial
ground when
we try to decide whether or not
the
increased
table
do
use
inflation
causes
result
not
wish
of
of
or
bank
is
the
inflation.
to
labor
credit
inevi¬
While
the
I
point,
let me make one further observa¬
tion. Quite obviously, more money
is
needed
by the economy as
prices rise and more dollars are
tied up in accounts receivable and
dollars must be invested in
more
inventory
volume
even
though
physical
remains
unchanged. This
reasoning is familiar but, it seems
to me, the logic behind it is much
the same as the logic behind the
plea of labor for higher wages to
offset a higher cost of living and
the argument of the manufacturer
who
justifies higher prices by
1947 the
production"
of government?
closing figure in
Are bank loans
pointing to higher costs. Thus all
dangerously high? Has the expan- 1939; the index of: "commodity
of us disclaim responsibility for
prices" rose by the end of 1947
inflation and righteously claim to
*An address by Mr. Du Vail be¬
to 211% of the Dec. 31, 1939 index.
be victims.
Meanwhile, none of
fore
the
American
Institute
of Bank loans, in this same period,
us
does anything about it.
Our
Accountants, Chicago, 111., Sept. 22, increased by 195%?—modest
>
(Continued on page 33)
1948.
■',AA>-^
enough in comparison to the other
tude
of
leaders—in
our
out
and
at the
1939;
index
was
of
close of
"industrial
171% of the
Arkansas Western
Gas
Company
Common Stock
Minneapolis Gas Company
GROWTH—
Ex¬
Net
Year
Ended
99,752
$0.38
Profit
$
1945-,
1946_;_
6
Months
1948-
per
133,336
0.51
214,428
0.82 per
238,825
0.91
per
per
1.17 per
1947307,049
Common Stock
sh.
sh.
sh.
sh.
sh.
BOUGHT
Ended June 30
0.84
220,133
per
-
SOLD
-
QUOTED,
sh.
Current dividend $0.20
quarterly.
Writeup
on
Request
Approximate Market 13%
ex¬
such
satisfac-
Vail
My discussion must of
necessity be limited by my quali¬
Descriptive
to
bulletin
interested
available
dealers.
COMSTOCK & CO.
as
be
Du
answers.
multiple currencies,
Involving penalty rates for some
imports,
1943
K.
--aa. aa-a
Is
fications—as
may
all banks in the
lion
Kenneth
Brake."
suggest.} some
don't presume
necessary
can
Taft
Says New In¬
AJCAIXYN»®COMEANY
Incorporated
CHICAGO 4, ILL.
231 So. LaSalle St.
*
c
.Chicago, 111., Sept. 22, 1948.;
ap¬
Bate
be done
can
of
comparing it to a like period
following World War I. The loans
of
terest
the
and
the
Inflation
we
the
since
stories
that
as
crisis. But it is difficult to
measures
first
looking
pearing under
Mone¬
should be able to add to their
the
high?—
front -page
is
concern
it?
to
by
of inadequate foreign exchange
see how exchange control .can be
receipts. The dollar value of exregarded as a suitable policy in
Aports of Latin America has in¬
countries whose exchange receipts
creased enormously, partly as a
are
at record levels. This is the
consequence of a larger volume of
time when Latin American coun¬
-exports, but primarily as a result
tries should not only meet their
of very good prices in world mar¬
current
payments
freely,
but
kets. For Latin American coun¬
;
founded, what
such
emergency measure to pre¬
a
our
tions—Are bank loans
quite
America.
may
Finally, if
ground
upon
which .is cast
news
observers
some
lowed and not led the pattern of
As
recent
led
——■—
this
of
credit?
about
;t
has
we
are
Evidence
clude
plore with
you
Why
indices.
major
a
concerned about the trend of bank
the -:back-
out of the exchange
Latin
change control
I
'
been
inflation?
of
cause
well
tary Fund do not believe there is
difficlties
as
that
*«•
sion of bank credit
propose to ex¬
Easy Way Out
any easy way
tries
<£
•
is for these
reasons
critical.
problem arises out of Latin Amer¬
exchange situation
Latin
inflation
to
ican conditions.
in Latin America ii not the result
in
in turn is largely
relatively high level of
private and public investment fi¬
America's exchange problem; they
not caused it. The fact is
The difficult
American
from about $850 million
end of 1938 to about $4
imports began to increase in 1946,
'have
A
im¬
Latin
of
the
difficulties have aggravated Latin
A that
and
unavailable,
foreign exchange
still
rose
billion
due
the
over
increased
exports
were
and
serves
The
rope,
lhas
a
ports
conse¬
'
difficulties
have
VAA\AAAi;.A
of
when
situation
a
would
.
The principal cause of the pres¬
ent difficult exchange situation is
Situations
Latin
greater,
time
this large
vol¬
imports could be financed
by drawing on reserves.'During
and immediately after the war,
;
ume
current
,
.
countries
even
monetary reserves, their holdings
gold" "and U. S. dollars have
to pay
compared
as
Furthermore, if it
were not for restrictions imposed
during 1947, the imports of Latin
The
port
volume
prewar.
these
to
in
crease
serious exchange problems. Their
of
than
more
a
at
are
countries
even,
from $1,560 million in 1938 to $5,850 million in 1947. Allowing for
-neighbors. There
American
imports of these countries
increased,
tries
own,
dollar value
their exports. For Latin American
countries as a group imports rose
-economic problems that differen¬
it to some extent from its
-continued
J
cessive imports. The
gold
tiates
a
The exchange problem of Latin
America is primarily one of ex¬
national
each with
peculiarities of its
.is
-
of
War II.
"Senator
Frankly, I be¬
a
It
even
lieve it is very A
ing
with
end
World
in these three countries the value
of exports
governments.
E.
became of large government bond holdings, to intensify inflation by excessive
if money market is drastically tightened.
am
ternational
.
in position,
are
.
Accountants, because of their increasingly important function of advising and coun¬
selling top management in business, have a vital interest in—and a real need to understand
the problems involved in
managing money and credit in the critical period our nation
the
I
^
^
loans.- Sees serious depression
no easy way out of situation and condemns
"multiple rates'' and exchange controls as no satisfactory solution.
Lays Latin American currency inflation to industrial development
-
,
and banks
v
,
by credit. Holds there is
-
•'
A*
intensified by bigh level of private and public investment financed
v
a a;
,
President, First National Bank, Appleton, Wis.
v
Referring to change in Administration's policy from credit expansion to credit contraction, midwestern
banker contends postwar credit expansion is not alarming and is largely result and not cause of higher
"prices/A Says primary cause of inflation is huge government spending and most of bank credit expajK
; sion has been helpful to the economy.
Warns, however, undue bank credit expansion can be harmful
.
pointing out serious exchange difficulties in
World fund economist
A
A
-
Director of Research, International Monetary Fund
y t
9
Money, Credit and Inflation
A
a
"
(1317)
Dearborn 1501
Teletype CG 955
Chicago
New York
Boston
Milwaukee
Minneapolis
Omaha
V
10
(1318)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
.
The Groundwork for
Bank and Insurance Stocks
By II.
E.
This Week
;
JOHNSON
—
Bank Stocks
City bank earnings for the quarter
Sept. 30 and to be released next week will, in general, com¬
While
the
available
V */,'
investment
for
and
lending have
this period because of the higher
requirements and retirements of Treasury securities, higher
generally
reserve
interest
.
funds
been
smaller
have
rates
during
helped to offset, in
creased amounts.
•./■
part,
the
the
effects of
de-
i
-
It is believed that income from
investments from here on should
While the Federal Reserve officials have authority
increase reserve requirements
tend to stabilize.
to
further
the
.
case
national conferences.
of
use
higher
reductions
in
Reserve
this
City banks, New York and Chicago,
is
power
expected.
should
rates
help
holdings.
investment
On
the other hand,
minimize
to
further
any
.
.
—p e ace
and
no
the
h
resulted
in
outstanding.
free; of
1,<?>—';■*■■■,•
t
peak.
larger
than
This
'
bank
in
most
year
a
is
fact
t
r
y
,
and
cases
outstanding
loans
are
now
considerably
most
important from
the
As a result - and with expenses lending off, the
larger volume of loans at higher rates should be reflected
a
income.
net
~
'
;
,
on
the
over
Rye, New York,
conference
and
of
52 nations
ward
progress,
based upon a
of
ness
investing money and
dustrial
know-how
forces
1946.
and
LOANS
ANI)
DISCOUNTS
OUTSTANDING
•
Percentage
/
:;
Change v
from
June 20,
March 31,
1943
1.948
8425,815
$434,482
8426,782
539,228
576,407
623,056
28,755
31.455
Dec.
000
Bank
of
Manhattan
-Bankers
Trust--——
Brooklyn Trust
Central
Chase
•
—_—
Hanover
450,288
418.158
1,461,070
1,405,757
_
National—
—
^Chemical Bank & Trust-
Commercial
Corn
National—i.
529,393
-j
Exchange
First National
—i
52.644
V 73,765
"94,088
—-
Guaranty Trust—*—•—£.--/■
Irving Trust—
v—
!
*
>
1946
449,401
357,234
52,362
48,229
79,964
76,,768
851,4051
747,370,
+
6.3
+
2.9
+
6.4
and economic
in less devel¬
398,798
377,810
J 290,729-
496,449
484,036
•'
1,309,220
1,276,311
1,216,370
rec¬
the
on
contribution they make to
the general welfare of the
people.
Nations which need the assist¬
it
establishing records
been
ment for
,
and
as
I
meet
fellow
Americans,
painful postwar
of
to it
have
wholeheartedly
then,
more
Daudt and
however,
subjept, but
all have made
strongly than
I
us,
of
intelligently, will
effort
make
attract
to
it
a
by
of fair treat¬
existing investments and
by establishing safeguards for its
future
I, at opposite poles of
in serious disagreement. -To
foreign investments were a
well-being.
Nations
courage
■?;
r:,
which
available
for;, export
its
<
...
have
,
,
should
productive
<
»•
capital
en¬
employ¬
mutual
benefit, in the ment abroad, knowing that in so
form of greater
productivity, in¬ doing, they should be prepared to
creased trade, and the higher liv¬ receive additional
foreign goods
ing standards which, derive from apd services in an amount comsource
have
sharp conflict of
ideas;
but- Dr.
never
been
less visionary
with the broadest
one
implications
a
a
and
the foreign investment
axis, were
TS■
asked to speak on
for
set
viewpoints
difficult
more
we
ever,
+ 16.4
413.238
555,347
responsibilities,
ognizing that the welcome their
investments receive will depend
in¬
conscious
my
Today,
>,
foreign», capital
should be conscious of their social
a
velopment. One "m ight have
thought that here the stage had
+ 48.2
-
1,;
-
of foreign capital, and which
year
—I hold
11.2
+ 29.7
■V- 88,444
90,510 '•
:
+
'
seek
ideal
this
of
summary
ance
believed
you,
fair
earlier stages of its industrial de¬
by the mistakes
~14.5
400,986 "
with
a
of
frus¬
would
adjustment—made
7.8
+
I
in
%
+ 10.4
1,126,462
'
810 ,"900
TV"
33,634.
411,395
'
June, 1948
.
500,098 "
36,149
,
..
$385,765
ideal.
in that
Dec., 1946-
—
1,324,264 '
/" 77,143
870,077
Dec.>31/
s
432,571
51,277
<78,964
.
n
31,
1947
■>
our
to¬
recipient
hopes of.realizing this
which
trated
the
I believe that the follow¬
Investors
,
1947
rec¬
directed
investor,
their contents:
as
In this connection, it is interesting to compare the record of free and constant interchange of oped areas of the; world.
Dr.
outstanding loans of the leading New York City banks.
Presented goods, capital and ideas. At that Daudt, a citizen of a debtor coun¬
"in the
time,
the
American
republ
ics
were
following tabulation is the record of loans and discounts out¬
try, represented commercial in¬
standing at the end of the last two quarters and at the year-end united in a struggle with -alien terests of a great nation still in the
of
there
positive
investments
ing^ would be
great creditor country, in the busi¬
Calder
.
discussions
country, and the capital-exporting
then in session
representative of Interests in
a
welcome,
series of
the
nation.
businessmen
I attended
more
these
a
foreign
of
Investments, under the
Chairmanship of my good
friend, Dr. Daudt d'Oliveria, at a
able
great
——
ommendations for the
encourage¬
ment
and
proper
utilization
of
En¬
Protection
and
at
social
1944, I had the
Vice-Chair-
as
Section
of
»
evolved
Foreign
economic
E.
Curtis
\
•
the
high degree
of
standpoint of
vestments
OuKof
would
have achieved
-a
considered
of
couragement
nomic cooper¬
ago.
inadequately developed, for¬
eign investments might mean eco¬
man
———:
——
which should be
developed by for¬
eign investors to make their in¬
resources
nomic salvation.
pleasure of serving
u s
ation,
earnings.
benefit of
-
In
r-
whose
•by their in-
thrift, and
through intel¬
ligent eco¬
a
nation
a
In the autumn of
e
-
war
inclining to belief U. S. Governhas surplus capital
supply.
are
are
peoples*
d
The high level of business has
~—11
of
zen
a
misphere
hose sepa-
r a
sharp expansion of bank credit.
After a period of
•seasonal decline
during the first quarter of 1948, commercial loans
of New York City banks have expanded and are
again near the post¬
■
u
e
«w
v.\
^
1
pros perous,
minor
.
Attacks government interference with
private enterprise and unfair treatment of
7\ Some
Another
in the volume of loans
"•' r"'
:
.
Share Company
fpur years ago, in New York City, it was my
privilege to address the Second
Plenary Session of this Council on the theme of "The Economic Future of the Western
Hemisphere." In that talk I presented my conception, frankly idealistic, of a future America
consideration and one which has
helped to maintain a
generally satisfactory level of operating earnings over the past two
years while earning assets were being reduced has been the increase
•
". :.
'
,
and
foreign investors, and expresses view foreign undeveloped nations
/
ment will liberally supply them with funds. ' Denies U. S.
;
by 4 percentage points in
Central
of
immediate
existing
Chairman of the Board, Electric Bond
-
unfriendly actions of
favorably with previous periods.
pare
By CURTIS E. CALDER*
Utility executive, experienced in Latin American enterprises, sees our foreign investment
discouraged by
extreme nationalists against foreign enterprises. - Stresses need of
International
Code of Fair Practices and deplores distrust and muddled
thinking exhibited at ITO and other inter¬
/
It is expected that New York
to end
Foreign Investments
1'
V
Thursday, September 30, 1943
.
the' economic
development which (piensurale with the service charges
Equally, on these investments..;. ,':.Vv. ^
These principles,
sphere, involving the essence ox important, they were to us a means
252,275
applied to our
248,900
241,716
+15.5
218,395
for
,iPublic* National
146.573
that intelligent economic
135.597
I 138,865
developing that better under¬ separate nations, embody the es¬
124,182
-:+' 5.6
'cooper-*
;U. S. Trust—
32,397
25,600
32,144
+
16.1
ation which is an essential
.**••,27,915
part standing among nations that comes sence of intelligent economic co¬
of our American ideal—the sub¬ only when we work together and operation—the
*In-the second quarter of 1948 the Chemical Bank
progressive devel¬
merged with the Continental
.Bank & Trust Co., taking ever certain of the latter's
know; each other better.
ject of foreign investments.
opment of the resources of a hemi¬
assets and liabilities,"
}
If,
fIncluding figures of City Bank Farmers Trust Co.
As we saw it, the task of our sphere
during my talk, I depart from my
through foreign invest¬
•/"With one exception, all of the banks listed have shown an announced topic to affirm and re¬ study group at Rye was not to ment,
production,
and
trade—»
affirm my belief in private enter¬ decide
■achieved
whether
by free men, in a free
increase in the volume of loans
foreign invest¬
outstanding between December, 1946,
prise,
it is because I am convinced ments were to be encouraged an3 society, under private enterprise.
and June, 1948.
In most .cases the increase has amounted to more
that the present day drift toward
protected, but to investigate the However, it is one thing to make
Than 10%.
'
'
:
an
statisrn is the most serious threat nature of the
objective analysis of a prob¬
obstacles which were
When this fact is considered
along with the firming in interest that all private investments, do¬ impeding their flow, and to dis¬ lem, and quite another to obtain
mestic
and
! rates, the trend is favorable for bank
foreign, have ever cover means by which these bar¬ the coopeiative action needed for
earnings. While two years ago
laced.its solution; and it is
riers
(T V'--'
^
might
be' overcome.
We
especially
the rate to prime commercial borrowers was
!%%»■; it is now 2%.
I suppose if we were to take a started .with the sound thesis that difficult in the atmosphere of in¬
The full effect of this rise in rates has not been
reflected in operating
tense nationalism and social un¬
public opinion poll to learn what borrowing and lending countries
rest so •• prevalent
earnings as yet.
It takes time for loans made at lower rates to.be
tcc-ay.
If the
foreign investments mean to the have a mutual interest in encour¬
refunded at higher rates or for the funds made available from
the international flow of action,required to end the existing
average
maturman, we would get a va¬ aging
riety of answers. To the unin¬ productive capital.
It • was self- foreign investment impasse were
ing loans to be placed on more favorable
terms;However, the
formed, foreign investments would evident, in the light of all the ex¬ entirely in the hands of practical
effect is cumulative and it will be some
time before the full impact
business statesmen, mindful of the
mean little or
nothing. To an iso-: perience of the past, that the re¬
of the present loan volume and
higher interest rates are ^reflected in lationist in
long-range, implications of their
my country they might sponsibility for making this capi¬
the earnings statement.
*■
•
,•
•
~r represent an unnecessary drain tal available, where needed, for day-to-day decisions, this cooper¬
?
ation
In a recent
might be readily attained.
analysis of the earnings and expenses of New York on national resources.. To a po¬ the development of latent re¬
The policy decisions in this
sources and industrialization, was
field,
City banks made by the Federal Reserve Bank of New York in its litical demagogue in your coun¬
however,
are usually political de¬
try, they might symbolizeUieart- primarily that of private enter¬
Monthly Review, during the first six months of 1948, interest on
cisions,
influenced
bv
less exploitation. To an
prise. We knew that private capi¬
political, as
investor,
U. S. Government obligations showed a
well as
decline of 10.1% as com¬ if he were a fortunate
economic, considerations.
one. for¬ tal; in a free society, is no re¬
Manufacturers
Trust,
,
tNational City —
New
York Trust
—Ht-
-
+ 42.1.
475,066
+ 14.7
j
1.094,614 '
+ 19.6
>,
the future wel¬
fare of the peoples of this hemi¬
for
these investments foster.
.
"
•
—
■
,
•
,
>
■
-
pared to the similar period of
discount
the
two
on
loans increased
main
sources
of
1947.
At
by 24.4%.
;
the
-
-
same
time, interest
and
As these categories represent
for
the banks, this trend is
sig¬
Taking this and other factors into
consideration, the out¬
look for bank
operating earnings is believed favorable.
v '
revenue
nificant.
eign investments would mean in¬ specter of national boundaries, but
come; if Jie were an unfortunate will venture wherever a reason¬
one, and there are many, they
would mean a continuous head¬
ache. But to the
thoughtful citi-
.
*An
address
by Mr. Calder at
the Fourth Plenary
Meeting of the
WHOLESALE MARKETS IN i
Inter-American
BANK and INSURANCE STOCKS
merce
Council
and
Production,
111., Sept. 21, 1948.
MHUCI.
of
Com¬
Chicago,
We
9
JO Post Office
HUbbard
NEW YORK 5
Square
2-O650
67. Wall Street
international boundaries; to
specific, it is not flowing
in ' adequate
volume
from
the
reservoir
CLEVELAND
Outlook for
: <
-•>
Schofield Building
superior
ANGELES
michigan
CV-394
2837
PHILADELPHIA,
:
SAN
FRANCISCO
Russ
Building
yukon
6-2332
NEW YORK, BOSTON
New
-
Detroit. Enterprise
«Of,6
York
Slock
Telephone:
Bell
(L. A.
Y.
l-124S--'9
Manager Trading Dept.)
ients
to
ment it
give
it
the
encourage¬
requires.
Our
discussions,
therefore,
centered
which could
on
Similar
since
and
on
the
recommendations
been made at
of
ences
and
a
was
have
number of
businessmen,
investors,
foreign traders; and proposals
for the elaboration of a code
submitted to the Economic
Social
Council of the United
were
and
Na¬
tions, the Inter-American Confer¬
less
attitudes
It
national and international confer¬
developed countries to make their
investment opportunities more at¬
tractive;
Ethics.
Conference, confidence in for¬
eign investments could be restored.
measures
be taken by the
Business
the
no
inability, or the unwill¬
ingness cf the prospective recip¬
BArclay 7-3500
Teletype—NY
Gibbs,
(and are)
and
economic principles enunciated at
with the
Exchange
BROADWAY, NEW YORK 5, N.
CHICAGO
ST. LOUIS,
LOS ANGELES,
SAN FRANCISCO
Hartford, Enterprise 6011
Portland, Enterprise 7008
Providence, Enterprise 7008
request
Laird, Bissell & Meeds
SF-573
121)
:
on
were
concluded
hoped that by adherence to such
a
code, in conformity with the
Investment Requires
Encouragement
there
confidence,
International Code of Fair Prac¬
tice
impede this flow, it followed, log¬
ically, that the difficulty must lie
4
Members
LA-1086
PRIVATE WIRE SYSTEM CONNECTING
CLEVELAND,
14
available
restrictions in the United States to
Stocks
7535
CG-105
210 W. Seventh Street
7644
TELEPHONES TO
FRANKLIN
Circular
LOS
mutual
Foreign
Since
Rye
their final reports with recom¬
mendations for the adoption of an
capital, the United States, to the
underdeveloped areas, where the
Fire Insurance
CHICAGO 4
NY 1-2875
15
of
the
of the international flow of
investment capital could only be
created
by
the, restoration »j of
more
greatest
at
tion
across
be
Fair Practice
businessmen
meeting, realizing that an atmo¬
sphere conducive to the resump¬
the
need is greatest.
231 S. LaSalle Street
whitehall* 3-0782
BS-297
wit.n
fact, however, as we are today,
that private capital is not
flowing
INCORPORATED
BOSTON
faced
were
of
r
employ¬
ment.
Code
•
The
able expectation exists that it will
find safe and profitable
ence
at
Bogota, and international
conferences
:
at
(Continued
Geneva
on
page
and
34)'
Ha-
^
Volume
Number
168
4738
THE
COMMERCIAL
&
^
CHRONICLE
FINANCIAL
Board, in
serve
Money Rates
;
Political Problem
a
By JOSEPH
Dr. Lawrence argues that as
be counted
can
*
rates
to
on
the
factors,
there
student
little
gree
seems
doubt
the
that
in
of
price
of
politics and
also of
siderably
higher than it
ment of rate
in
fact
definite
in
all
is
In
and
proba¬
still higher.
The
eco¬
nomic
factors
I
money
■Jos.
[market
ward
rate
to¬
higher
a
are
Stagg Lawrence
first
it is hardly
place,
necessary to note the fact of infla¬
tion. . it
'political
has
amply
become
issue.
orthodox
acute
an
According
to
reasoning,
economic
buttressed
inflation
almost
by
experience,
invariably
money rates to rise.
in the
classic
causes
The general
period 1935-1939.
theorist
points
The
that
out
when the value of
money declines,
the lender usually insists upon a
higher rate to compensate for his
of
real
principal.
Whether
loss
<this
is
in
debated.
h reasonably
firms
The
evidence
:
is
conclusive
the
effect
and
con¬
inflation on
of
rates.
; money
!
actual
or
stronger money rates
period of inflation need not
a
be
adequate
-an
for
«reason
desire
our
to keep the cost of
living within bounds."
first
place,
there
is
a
the
between
particularly if in
prices
fact
higher rates rbecause
shrinkage
in the
value
of
causes
to
tackle
the
inflation
authentic
because
».
thorities
it
be
words,
deflation
and
counted
if
a
to
reverse
can
imme¬
offending large, politically- diately. their
present stand ' in
important groups.
He dare npt favor of firmer money rates. /
/
remove or reduce drastically Fed¬
In fact, the possibility that a
eral support of farm prices.
He high level of interest may be
dare not agitate openly and offi¬
charged
with responsibility for
cially for restraint by labor in such deflation induces the utmost
demanding wage increases.
On circumspection on the part of cen¬
the other hand, he is confronted
tral bank spokesmen in instituting
by angry consumers who raise higher rates.
Allan Sproul, of the
embarrassing questions about the Federal Reserve Bank of New
price of potatoes.
It; is, there¬ York; .Marriner
E c c 1 e s
and
means
.
that he make some Thomas McCabe, of the Board of
may
seem
like Governors, in their testimony be¬
serious efforts to check inflation
fore
Congressional
committees,
which at the same time are politi¬ made it
very clear that any atcally innocuous. For this purpose tempt to
check inflation
by
and up to a point the money rate
changes in Federal Reserve credit
is
an
ideal
subterfuge.
Since policy,
including
money
rates,
rising rates in classical theory are would have only a very limited
necessary
which
gestures
supposed to discourage the expan-!
sion
of
credit, this' legislator, can
point to
rate
effect
and
a
rise
These
the
in the rediscount
It
short-,term, government
"Here is
an
pric.es.
on
are
men
.
all conscious of
post-World War ^experience.
may
be
spring, of
earnest
u
recalled that
in
the Federal
1920
the
Re¬
the
feats
of
self-levitation
of
good, confident
a
ket
must
such
In fact,
public
political
market
be
to
capital funds.
In 1939, U.
spent in the aggregate
billion
on
new
plant and
This announcement is not
an
natural
rate again
purely eco¬
money
by
factors.
Grim Prospect of War
an extortionate and discrim¬
Finally, we have the grim pros¬
inatory rediscount rate had been pect of war. Opinions may differ
the weapon used.
as
to the gravity of this danger.
The present leadership of our
Very few men will deny that the
Federal
Reserve
System is un¬ danger is real.
Certainly this is
willing to expose itself to a repe¬ true among the leaders in the top
tition of this charge and will not
echejons
of
our
government.
only move with great caution in These men know very well that
raising rates, but will also re¬ an outbreak of war will involve
verse itself promptly the moment
again huge financing for arma¬
the first signs of deflation appear. ments not
only for ourselves but
In the third place, the govern¬ for our allies.
;
'
conscious of the substan¬
ment is
tial burden which
national
debt
It is almost inconceivable in the
servicing of the
entails.
It
is
a
pressing item in the budget, run¬
ning between $5 and $6 billion,
the
and
to
crease
service.
In
maintain
larly
to maintain such a
for government financing
market
extremely conscious of the
possibility of a depression in the
namely, that the
in the event of war.
If
are
the
of
thought
few
next
is
being
contingency.
a
by
then
an
political
a
economic problem,
conclusion
that
ojjer oj securities for sale
the
is
almost in¬
movement
that
day
solicitation oj
an
lion.
The volume of such outlays
maintained
v
the
face
has been
year
1947
this
of
in
crease
the
at
level.
three-fold
demand
other things being
& for
the
more
likely prospect to¬
is for stable
declining rates.
and
ojjer to buy securities.
September 50, 1948
New Issues
In
in¬
capital,
R. J.
equal, certainly
rates would have to go up.
:
is
There
third
a
factor
,
might, in terms of orthodox think¬
ing, play some part in bringing
about
firmer level.
a
enjoyed
try has
for
matter
a
Granting
some
coun¬
prosperity
the
deferred
V
are
demand,
many
believe
who
about to
ration
run
has
careful students
this period is
that
out and that its du¬
been
extended
fear of another war
ticipation
by the
and the an¬
controls by buyers
to protect themselves.
of
wish
who
V
J
4 ■
-
k
•
-
r
„
*
/
r
i
y'v-
$60,000,000 3% Debentures, due October 1,1973
260,000 Shares Preferred Stock, 4.50% Series
.
There
•.
1
nine years.
importance of war
this is an
unprecedented cyclical experience.
and
?
of
This
peak
Reynolds Tobacco Company
that
„
,
,'
* (Par Value $100 per
"
These shares of Preferred Stock
its Common Stock
Common
Stock,
4.50% Series
1
.
being offered by the Company to holders of
:
C+t ]
(other than stock held by the Company) and New Class B
upon
may
are
Share)
exercise of Warrants,, at $100
be offered by the underwriters
per
as
share. Preferred Stock,
set forth in the prospectus.
•
early termina¬
coupled with
profit' margin
on
which many business enterprises
operate today, induces a spirit of
caution''upon lenders.
This re¬
This
prospective
tion
the
of
?the
boom,
narrow
sults not only in a more careful
screening of loan applications, but
j also in a firming of rates because
of greater
risk.
..,
-
,,
-
'
»
Price 100% for the Debentures
;4'
plus accrued interest from October 1,1948
Vi
Copies of the prospectus
may be obtainedJrom either oj the undersigned (who are
the underwriters named in the prospectus) only by persons to whom such
underwriter may legally ojjer these securities under applicable securities laws.
among
Politics Moves In
The
I
kind
foregoing represents- the
of reasoning which would
have been valid
a
generation ago
considering this problem.
In
the interval politics has moved in,
and the rash analyst who under¬
in
takes
the
to
the course of
market must be a
prophesy
money
'
*An
address
at 35th Annual
by Dr. Lawrence
Convention of the
Mortgage- Bankers
Association,
New York City, Sept. 23, 1948.
,
Dillon, Read & Co. Inc.
of
rates in an upward direc¬
tion must be severely limited and
question in the ipind
or a
premise,
of money
money
/
of anyone
tary
the
this
course
primarily
escapable
with the most elemen¬
political instincts and the
There is po
is
rather than
top-level leadership in both par¬
ties to
appropriate therapy for
such
accept
we
rates
years.
given
in
paper
seek
place, the men
who hold public office today and
those who seek to displace them
Much
favorable
a
for government
the event of depression will simi¬
•>
course
needs
completely
to
natural
same reasoning
that
outlook
the burden of this
prospective
The
to
seeks
fourth
the
such
government will relax its
controls and expose the
market
or
will aggravate
our
forces.
to tolerate any in¬
in the rate structure which
promote
of
that
present
is not anxious
Treasury
face
.equipment, and in 1947, $16.2 bil¬
.during the current
no
the
forces
expose
S."
business
With
mind,
ating today and tending to push
•rates higher is the great demand
'$5.2
mar¬
elementary
will
developed
nomic
and
the
in
with
sense
allow
and
money
maintained.
official
money
to
be
requirement
a
A second economic factor oper¬
for
per¬
formed by professional magicians.
The fact is that the appearance
that
we
becomes
a
reason¬
even
though
the
getting such
credit
may resemble more or less closely
poli¬
authorities
by
have
not
of
rabble-rouser,
Reserve
used
does
terms,
process
John Shelton Williams, a talented
Federal
in farm
politicians
our
on
able
a
who was Comp¬
troller
of
the
Currency under
Wilson, stumped the country
charging that deflation had been
deliberately engineered
by
the
today as it did after the First
World War, our central bank au¬
The politician today does
of
and
on
the crash came, our
,
Board at the time.
serve
doing it in-
so
other
In
of 87V2%
that
ready access to credit at
District,
Atlanta
the
cannot be
means
government
ticians immediately sought scape¬
goats
and
found * them
in
the
membership of the Federal Re¬
■
substantial crack
a
calling' for
paper and say,
j'.j'.
versed.
haVe
Such
These
small bank in Alabama.
When
the trend of prices is reversed and
moves
in
the
other direction
of *
purchasing power of the dollar
today is only 58% as great as it fore,
was
In
policy.
connection
money.
as
presence, importance and
influence.
the
the
not dare
reasonably clear both
jto their
In
psychology.
of
tionship has little to do with the
more
or
less
classic
reasoning
disposing
the
de-
a
a
high cost of living and the trend jures the economic position, of
of money rates which Washington important political
groups—then
is disposed to promote.
This rela¬ the formula is immediately re¬
bility'; would
go
mass
to
in
discount rate
a
knowledge of politi¬
motivation that the treatment
depression will be
prescribed largely in the form of
huge outlays of public money.
Federal Reserve Bank advance to
weighing the outlook for money, . it is obvious that this motive
through the lenses of politics, the can operate on a political mind
lollowing are the factors .which, only "30 long as the cost of living
will play a part in the develop- \s
or js
going higher. Once
money
today
would be con-
r
instance,
Spring of 1920, when discount
blamed for, resulting depression.
<S>-
economic''
,
Cites experience of
was
against errhnt bankers, per¬
Congress
to
pass
the
Amendment
authorizing
alty
11
of an economic
applied in four of the 12 dis¬
tricts and resulted in one isolated
question of the money rate trend is no longer economic but, rather, political.
If
evolution of political authority in the field of finance which has taken
place during
past 15 years could be reversed, and the. money rate outlook appraised on the basis of
the
■
stand.
cal
pen¬
were
The
,
'
reverse
selective
progressive, discount rates.
as
raised, and Federal Reserve
were
most limited
desire to apply
Phelan
living costs rise, political action will be taken to increase interest
rates, but if deflation sets in and injures economic position of important political groups, central bank
authorities
,
long
a
;he money rate as a
suaded
STAGG LAWRENCE*
Vice-President, Empire Trust Company, New York City
■
(1319)
Reynolds & Co.
possibly
.
\
12
THE
(1320)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, September 30, 1948
Contributors to Series of Articles in the "Chronicle" Entitled
"IfI Were
Retail Salesman"
a
KENNETH
By IIENRY HUNT
\,
i
Trot pectin
upon
Thank You,
request from
*
securities
research
corporation
MOADWAY. NEW YORK 5. N. Y.
#
We appreciate the effort that these gentlemen expended during the
months and feel sure that their ideas were helpful to every¬
take
>
courtesy in responding to our invitation. Our contributors are
in the accompanying box in the order of the appearance of
•
,
.
EMERSON W. AXE
.
...
,
•'
.,V,Y;
.
President, Axe-Houghton Funds
.
' r
:
.
"• JAMES
W.
BRIDGES
Partner, Keystone Company of Boston
opportunity to thank each and every one for his
this
,
"
"
business who read them.
the
in
.
;
WOODFORD A. MATLOCK
summer
We
'
Y
.
."Y *
YY;YY:YYY
t
President, Broad Street Sales Corp.
articles
one
YY
Vice-President, Calvin Bullock
leading mutual fund sponsors for their contributions to the series of
titled, "If I Were a Retail Salesman," which appeared in
these columns during the period from July 1 to Sept. 23, inclusive.
/Y
Y
ROBERT E. CLARK
Gentlemen
past 13 weeks we have been indebted to executives of
For the
•
GASTON
President, Distributors Group
■
YY'YY^-'Y-
four investment dealer, or Iron
National
j
j
YyY;
DOUGLAS K. PORTEOUS
•
Vice-President,. Herrick, Waddell & Reed
listed
theii
articles in this column.
HENRY
T.
v.
»
VANCE
••
Fund, Ltd.
Dividend Shares, Inc.,
Nation-Wide Securities Co.
fact
The
4
Bullock
writers
the
that
sponsor
corporations
with
which
•
guest
our
Partner, Vance, Sanders
associated control mutual fund assets of some $1,200,000,-
are
CRAIG
000, approximately 75% of all mutual fund assets, is indicative of
the broad representation of the business in this series of articles.
DOUGLAS
"Aluminum is
in
available
general
classed
or
CALVIN BULLOCK
Established 1894
composing
:
1
a
highs within
Manhattan
Bond Fund
Not much more than a half century ago it could be
rare metal, its price being quoted in dollars per pound
a
Second
to
market, The combination of these two factors, it
was
But these gloomy
freely predicted, would demoralize the industry.
as
badly confounded
as were
similar forecasts
concerning other metals.
"There are a number of other
light^metals but up to now their
costs of production are comparable to those of aluminum in its very
early years. Thus, it seems that aluminum's fight will be with the
older metals and with which it is now in a more favorable position
from
the
standpoint of price relationships than it has been at any
time in its
HUGH W LONG & CO.
WAU
lot
STREET, NEW YORK S. N Y
*N0iut
Chicago
We
are
corporation
many
securities—
indeed
and
to
intelligent judgment
He
lacks
the ability,
•'
Selected Invest¬
YY Y-YY Y' % YY
as
v
f
,.c\ r
V
*
'
f*Y
\
y
YX
'A X
NJ
'
"If
year.
invest $1,000 at 5%, he will get a return of $50 per
But if he can borrow an additional $400 at a cost of 2Vz%, and
a man
then.invest the $1,400 at
5%, he.will get
a gross
return of $70 and
BONDS
(Series K1-K2)
' "' /■
,
four
ing paragraphs
/
Sales
Corporation's
For clever,
'
YY
for
on
Selling
Sept.
selling
15
Keystone
of lioston
man's
Prospectus
$
may be obtained
"Securities
Corner,"
feature
v
may
fieldY recentfurther
automobile
prices, accompanied by
car
a
tightening in install
bring closer the time when the automobile
*
parable situations in other industries.
tion exists with respect to certain
'
'
some
For
example, the
are
com¬
condi¬
same
products in the electrical appliance
manufacturers of high quality products have
ad¬
vanced, prices faster than their competitors and, therefore, are mojre
vulnerable with regard to future profits. Such analysis also indicates
that it is not
always
many
the
necessarily the larger companies in the field that are
least
vulnerable.
It
be
would
extremely difficult for
individuals to ascertain these factors for themselves and such
studies
are
additional examples of the
potential advantage of
con¬
stant, competent, organized security research, which is made avail¬
able to investors
company
a
large and small through the'medium of investment
shares."
Y
Golf Winners At
the
Field
Day
Club of New Jersey,
at
the
Echo
v
Lake
of
Low Gross",
R. S.
Nichols, Jr.-——74
the
Bond
in
a
regular
or
every
Thurs-
County
SELECTED INVESTMENTS COMPANY
day's
issue
"Chronicle.",
of
Class A Low Net
R. S.
'
§
D.
McLaren__._93
Winners in Kickers'
Y
Robert
Class B Low Net
Benjamin 'Fairbanks-—94- -27—67
Pyle
147
Handicap
YfY S
,
Yi Net
71
70
....
Edward T. Purcell
*
74— 6—68
Total,
;
.
YY. Y
IY;5Y ®
'
.
Class B Low Gross
Kenneth
;
*
--
Morley winner on r' Harry Zimmer
of coin)
; ' J. Clark—
toss
135 South La Saile Street
CHICAGO 3, ILLINOIS
76—14—62
Nichols—...97—18-^79
:
,,
Morley
88—20—68
Norman Brassier..—.86—18—69
score:
;
Member Guest Price
S.
the
Williams
Russell
Club,
Ludlow Van Deventer.80
(Tie
.
Low Net
held Sept. 23
Class A Low Gross
Sales¬
.*
^
■
Guest Prizes
Outing
H. L. Rost and
.
from authorized dealers,
4,
discusses
The follow¬
"Similar analysis of other fields indicates that there
C.
50 C.
"Letter"
been;\nd;.aign^|-'of va^jf0tufcn.-fo/'.
conditions In ;the
market becomes competitive.
helpful hints
selling securities read
the
INC
Y'Y"'
'
are excerpts:
Y "Although there have yet
local invest/mint dealer or
■
.Tk.
f
^
Street
were:
Protfterltis fnm
1
f
Pointers
COMMON STOCKS
f
would
'
the outlook for the leading automobile manufacturers.
at
;
v
capital
own
Fund.
Winners in the golf tournamenl
[ PREFERRED STOCKS
i
his
on
"It is not feasible for many investors to apply leverage them¬
selves, because they do not have ready access to sources of funds to
borrow at low interest rates, nor are they equipped to give expert
selection and careful timing to their investments. Leverage is quite
feasible, however, when the investments of thousands of people are
combined into a single investment compariy, which can command
borrowed money at low rates of interest and can employ professional
supervision."—Quoted from a Lords Abbett bulletin on Affiliated
Of Bond Club of N. J. ;
(Series Bl-B2-B3-B<0
(iSeries SI-S2-53-S4)
the percentage gain
can
IN
T
'V'
What Is Leverage?
INVESTMENT FUNDS
I
$400,
The investor should, of course, select
and time his investment with great care, because a 25% decrease in
value would, with the above leverage, become a 35% loss.
field, since
1950 expects 150
Through spot checks predicts changes in popula¬
follows: Slightly more women than men for
first time in U. S. history; 15-million growth since 1940; definite drift
to west coast with California third state in
population; marked drop
in farm population, growth in cities; substantial rise in number of
children and persons over, 65."
million population.
tion characteristics
Certificates of Participation in
j:
additional
have been 35% instead of 25%.
terms,
these
Population Forecast
|
an
ment credit
For the average investor to make ah intelligent
"These Things Seemed important,*' issued by
ments Company states that the census bureau "By
inventing their capital
in value of a $1,000 investment is $250;^of a $1,400 investment it is
$350. Therefore, if the investor with $1,000 had borrowed and invested
Broad
upon a single one—is ordinarily impos¬
the facilities, the training and the time
essential to making a proper investigation. He needs the advice of
an expert who, combining special
knowledge with judgment, hps the
facilities and the incentive to make a thorough investigation."
I
.
new
pass an
.
"When borrowing is used with the objective of
obtaining greater
capital appreciation, it is called Capital Leverage. A 25% increase
advances in
sible.
ust
Leverage.
issues
from
BRUMELL
net return, after interest cost, of $60 per year, or a return on his own
capital of 6%. " This method of increasing income is called Income
normal
available.
K.
Manager, Investors Syndicate of Canada
"There,'are listed on-the' New York Stock Exchange some twp
thousand, seven hundred securities;, a hundred thousand unlisted
selection
]
J.
Sales
Quotable Quote
indebted to First Investors Shares Corporation ^ for the
a book by Louis D. Brandeis, former Jus¬
of,"the,United States Supreme Court:
'
*
:
■*' -
are
HABAS
J.
Outlook for Motors
following quotation from
tice
EUGENE
history."—Quoted from Calvin Bullock's "Perspective
A
Prospectus from your Investment Dealer or
ABBETT
Vice-President, Hugh W. Long & Co.
World
prophesies have been
48
LEON
President, Lord, Abbett & Company
few years.
War, however, created what may be con¬
sidered an entirely new phase in the history of aluminum. At the
war peak the industry was capable of producing some seven times
its prewar output.
Many of these new facilities were constructed
without regard to costs of operation—the major item 'being electric
power—and were not designed for operation after the war. Some
have since been dismantled while others have been placed in 'moth¬
balls.'
Nevertheless productive capacity which could be operated on
a competitive basis was still some three or four times what it was ir
1939. In addition a tremendous amount of scrap metal was expected
to return
LAIRD
use.
very few hundreds of tons. This appar¬
ent paradox was brought about by the fact that the metal does not
occur in pure form and a process for extracting it on an economical
basis was not developed until the early part of the twentieth century.
Once costs were reduced to a reasonable level the peculiar qualities
of the metal began to create a demand > which grew steadily until
shortly after World War I. Even the decline in production which
occurred then was of short duration and output went on to attain new
"The
;
A. J. WILKINS
Director of Sales, Wellington Fund
it is a relative newcomer to the roster of metals
f and its production counted in
Investment
Dealers
as
-
Vice-President, National Securities "8c Research Corp.
of the most abundant of materials
one
the earth's crust, yet
Company-
Sales Manager, F. Eberstadt & Co;
The Aluminum Industry
Prospectuses
and
SEVERANCE
—
70
—70
Editor's Note: Pictures taken at
the
outing
Section.
appear
in the Pictorial
Volume" 168
lnUi ~ COiVUVXJCilU^xniJ'
Number 4738
oc-rxixrxxiv-xn.u
viiituin xo juia
Number 4738
168
Volume
THE
COMMERCIAL
McCloy Reports on
World Bank Progress
:•
In third Annual
loan
situation
economic
therefore tasks of Bank and Fund
own resources and credit of beneficiary nations
permit.
Says Bank's effectiveness is not so much in number and amount of
loans as in influencing sound attitudes for development by members.
extent its
;
Fund's advice, and
/
was
as a governor of both institihjoint session of the International Bank for Reconstruction and
Development
the International
Monetary Fund in Washington, D. C., on Sept. 27, reviewed briefly
and
tne
problem^———*——-—
and
difficul
on
Sept. 29 by the Bank's President, John J. McCloy.
Its
States,
spent
substantial amounts were
in other countries.
As of
June
June
30, 1948; other
report
deal
with
a c c o m
ments
the
plish-
of
million
1948,
United
the
million
in
through
Aug. 31, 1948.
million
in
Bank
Europe; and $3.5 million in
Africa, the Near East and Far
East.
:.V7
eco¬
Loan
various
One of the significant develop¬
areas
the
and
WOrld
John J. McCloy
these
of, action
lines
meet
to
problems.
addition
loans
to
there has
mandate
been
already made,
impressive in¬
an
in the number of projects
brought to the Bank for its con¬
that
Covering a great va¬
riety of fields, these include such
projects as power developments,
transportation and communication
The Bank has sent missions of in¬
the
of
.
Bank's
,
,
several
ized the
for
Chile.
to
The
pattern
by this financing, the report
states; is promising.
The
year also
Bank's first loans
or serv¬
Here
have
we
examine
the
international
climate
of
■
,
of
tions in
which
ally carried out in the borrowing
country by the Bank's field repre¬
Governors.
''
j
also
in connection
of
with
the
crea¬
broader market for
a
the
bonds/' The Bank sold its
issue
bonds—an
non-dollar
Swiss franc serial bonds
of 2 y2%
to
million
17
the
the
Bank
en¬
states
a
private United States
banks of the greater part of the
notes evidencing the loans under
group
for
loan
International
operations,
that
taL
from
Total Loans
total
A
on
of
by
the
million
to
the
Nether¬
made during the period
covered
by the Second Annual
Report; and the following during
the period covered by this report:
$40 million to Denmark; $12 mil¬
lion to Luxembourg; $16 million
lands,
in two loans authorized to instru¬
mentalities of the Chilean govern¬
_
,
,
are
Agreement
entrusted
the Executive
propriate
for
This
inate
a
existing
vide
was
ments
were
put;
the
on
report
some
In
for
transportation" systems,
mills,
etc.;
materials.'
as
well
as
steel
basic
While most of the
raw
ex¬
penditures financed by the Bank's
loans
our
of
more
that
ap¬
Governors
The ability
the
as
Dislocation
of
places.
vestment
than
v
must
have)
only that its loan^
will be repaid but that they will!
be expended efficiently for pro-)
ductlve purposes which will fay
cilitate repayment without unduly;
burdening the international ac-i
not
counts of the
borrowing countries!
the
for
the
affect
'
'
..'
,
reviewing
Bank
the
over
be
must
;
work of the)
last few years, it
the
borne
mind
in
that
making good investments for de-jj
velopment
purposes
is
by
ndj
means an easy task.
The projects*
must be given careful study.
The);
conditions in the borrowing couny;
try should be favorable to under-,:
taking international obligations.]
Before the Bank
can
reach its de¬
cision, it must have available to it
large amount of data about the
a
long-range pro¬
country concerned
can
supply
the
needed information.
Countries in
project
and
of
gram
which
the
the
alone
of
need
economic
-
development
difficulty
formulating,their projects since
they often need technical advice
in practice,
may,
have
in
and
for
ful
private in¬
also
market
In
my
foreign
affect
Bank's Task Not Easy
ir
industry
considerable degree the fac¬
which
Bank
The
•
assurance
say
prevailing
private- capital
in
Bank.,-'.'
postwar economic disloca¬
to supplj
goods
i;.
conductive to the
were
flow
a
tors
serious
will
I wish I could
conditions
the world
to
investment
and
To
more
developmenl
we may assume,
limited.
aspects of their policy.
been
to
an
greater importance
great.
are
funds
to
powers
Directors, it is
of
turning to
the activities of the Bank expand
The opportunities for investment
have
we
extent
which,
become
We must
of policy
Z
assistance
their
as
projects.
well
-
as
finance
The Bank, in
opinion, has proven very helpy
in sending missions to coun¬
tries requesting aid to assist them;
in
planning their programs of
development
formulating
/and
These invest
their loan projects.
tigations will, we hope, soon lead
the Bank's!
The Bank, of course, can-;
to further expansion of
loans.
The Bank, if it is to continue ifc
(Continued
on page
32)
] |
New Issue
400,000 Shares
Tennessee Gas Transmission
Company
Common Stock
Value #5 per
Price
be
fields,; full realization of
potentialities cannot
$30.25 per Share
Copies of the "Prospectus may be obtained from any of the under,
signed who are qualified to act as dealers in the respective States.
Bank's
the
expected, the report states, as
long as economic and financial sta¬
bility in large areas of the world
by po¬
says,
with
with
"both
respect
to
to
As it continues to
Blyth di Co., Inc.
acquire experi¬
of
and
to
gain
its members,
,
an
(Continued
ort page
:>
W. C.
Langley 8C Co.
■"
/
.
•
\
White, Weld & Co.
& Co.
Ripley &
-
'
,
•
•
•
•
Lehman Brothers
• -
.
•'
Bosworth, Sullivan 8C Company
in¬
September 28,1948
/
Union Securities Corporation
Paine, Webber, Jackson Si Curtis
>
;
Glore, Forgan & Co.
Incorporated
Smith, Barney & Co.
the Bank should
creasingly effective role in help-
Harriman
Harriman
'y
the confidence
gradually be able to play
Corporation
The First Boston Corporation
Goldman, Sachs & Co.
•
ence
;
..
the
respect to the techniques it
employs
Stone 8C Webster Securities
unrest.
Bank has grown in
strength and stature.
equipment
increased
Directors
investment
has
provide
reconstruction
were
Now it is
war.
free
tion
to
economies had suffered most frorr
by the Articles
Economic
Internationa!
able
loans made to the countries whose
the
the
investor; it serves to fa¬
cilitate private investment and to
direct
funds
into
the
proper;
spite of its activity in these
varied
ment, the
flexibility,
machinery;
loans
with
profit of approximately
$3 million on June 30, 1948.
productive
ricultural
its
compete
net
a
made for the purpose
of
first
$1 million
-assisting in financing large
general programs of reconstruc¬
tion by supplying essential capital
goods such as industrial and ag¬
disburse¬
con¬
inquire into the operations of the
The
The
Naturally enough, in the
period of its operations most
institutions and to consider broad
Postwar
below the po¬
are
been
oi
nationa".
fields.
June 30, 1947, and pro¬
channel capital into
international invest¬
of the
the
Boards
not
sufficient to elim¬
deficit of
size and character of its loans and
been
today
whose
ndtable assistance in both of these
reviewing, the
the
the
of
and
the
does
of approximately $4 mil¬
lion.
With regard to the uses to which
most
of
life
development
levels.,
has
borrower^
private
amount
required to restore
countries
tential
the
have the im¬
Although
most
of
economic
economic
Bank
the
Th£
Bank
no
countries, and to finance
ended June 30, 1948,
of income over ex¬
year,
"By developing its activities in
different
directions," the report
that
to
be
by
an excess
litical tensions and
have
the
other
incomes
of
Executive
reserved
will
the
war-torn
j?4 Million Annual Surplus
anteed
by
the government of
Chile; and, $12 million in six loans
to four Dutch shipping companies
—a total of $525 million.
•
states
which
fully
really
are
•
continues to be threatened
loans
of
repaid
Set¬
ment, which loans are to be guar¬
■:
we
be
since only in this way can it con*tinue to make new loans.
i.
estimates
precise
The financial statements for the
penses
Bank
made
$250 million to France
are:
$195
of
loans
are
and
which
will
'
fiscal
and
.
of
show
Bank
r
,
Interest, of the International Bank.The
a
opportunity to
phases oi
we
under
Even today there
who
on
economic
conditions
they have had to operate in the
settled
opinion
stand¬
next
decades, must make loans whicft
last few years.
the report
long-range
a
r
the guarantee, as to principal and
:
be
the
of
the
the
over
francs
Basle, Switzerland.
Although up to the present time
the Bank has had ample funds for
to
to
of
terms
from
both
■
career
tlements, at
its
sale
the
for
it
useful
(approximately $4 million), which
was purchased in
its entirety by
the
subsequent
casion
:
terprises and its first use, of its viewpoint it is clearly desirable
guarantee powers, in loans to four that the Bank should supplement
leading Dutch shipping companies its borrowing in the United States
secured
by "mortgages on ships, by tapping other sources of capiwith
political
the past year.
several matters
Subsequently the Bank
conducts an investigation, gener¬
,
oc¬
the staffs of these institu¬
ments.
to which
in
important
Governors of the Fund
act
tion
these bodies were established and
an
.
As
must
point of the objectives for which
provide
problems with which
cerned.
we
of
Boards
financial policy.
Iexchange views anc
impressions of the
world
the Bank
and
ove mors
countries
an
Fund
invest¬
review the work of
we
the
broader
is poss.ble to
to gain some
ices authorized in the loan agree¬
use
the
As
examine
must
the
witnessed
private
issues
urgent
to
of
rarely see each
when immediately
and of
be made for the pur¬
specific goods
annual
will
except
work
amounting
granting of its first cred¬
development purposes, in
loans
two
otherwise
other
of
been or will
upon
return
stability.
The political
of the period have
contributed to the difficulties of
Sec¬
representatives
number
task
only
Bank's
types of financing operations
during the past year.
It author¬
large
mediate
first
new
the
among
are
During the past year there have
encouraging
developments
member
on
loan
a
been
;
The Bank embarked
of
the goods are put.
Altogether, the
active discussions
being conducted concern¬
productive projects in more
20
proceeds
sentatives, of the end
planned for
states,
countries.
the
the
uncertainties
interchange of
ideas and the discussion of issues
satisfactory cer¬
tification that expenditures have
are now
than
in
the
granted.
John W. Snyder
Bank, however,
future,:
near
ensure
As
this system of
Bank
requires
was
step
chase of the
vestigation
to
13
countriesy: in
JLatin America, Europe, the Middle
and Far East, and a number of
report
to
hindered
meetings
G
subject to withdrawal by the bor¬
rower
facilities, irrigation and other ag¬
ricultural projects, migration pro¬
grams, mining development, ship¬
building
and
industrial
plants.
are
first
the
supervision,
sideration.
missions
year
charter
its
of
the loan
which
crease
similar
past
that the proceeds of any loan are
used only for the
purposes for
points out that in
The report
the
has been
the establishment of procedures
whereby the Bank carries out the
'suggests G,
ceitain
of
ments
Established
Procedures
has
ment.
The
Latin
nomic problems
facing
set
extent
was
economic
his
stated:
America; $12.5
Canada, $47.7 million
•
—-———
Bretton
retary Snyder international finance and
States; $50'
in
Italso analyzes
situ¬
In
address,
out
in the United
the
major
financial
of the $470.1
million disbursed by the Bank, the
areas
of expenditures in round
figures were s. as follows: $356.4,
of
the
30,
in
made
destruction
present
ation.
the fiscal year
cover
sections
from
;
sec-
ended
its
The
at
nels
were
ing
arising Woods.
———■'
anticipated
international
loans
the
been
presented to the Board of Governors at their annual meeting in
tions
}
had
of physical
greater and the
disruption of normal trade chan¬
Washington
i
chief problem is to restore international balance of payments.
says
unba1anced
iinancial
Of
more serious than
anticipated and ,V
Hits indirectly at France's action in not following-
not easy.
are
by its Executive Directors,
struction and Development, as approved
13
a
The Third Annual Report of the International Bank for Recon¬
,
(1321)
Secretary of the Treasury John W. Snyder, speaking
tions before
ties
:
CHRONICLE
flful 'HWOLJ,
«
Snyder Reviews World Bank and Fnnd
surplus,of $4 million in year. Reviews European
and says bank intends to supplement ERP to
a
FINANCIAL
•-»**«
Treasury Secretary points out postwar economic dislocation has been
Report he tells of impressive increase in number of
projects and
&
T3T
\L6Z6)
W
Central Republic Company
(Incorporated)
t\;
4tr U
I ?•
■Ul-x-
14
(1322)
Railroads—Victims oi Gigantic Squeeze
Canadian Securities
"
j
V;',
^
By DONALD V. FRASER*
President,
By WILLIAM J. McKAY i
versely the short-term situation presents
wealth of
mous
as
major
a
ctustrial
rise
to
On
the
of
source
supplies,
only
for
hand
the
at
a
enor¬
:
—■
free
The
financial
Canada
between
country would
warmly welcomed
011
strangling the normal
growth of world commerce.
is also pos¬
Canada's
the
natural
sterling
trade
of
and Europe
by a mounting
regulations and bureau¬
of
cratic
area
restrictions.
ford
Cripps
Sir Staf¬
indicate
that
with
which'
result of the removal of the
a
Furthermore
!
Britain
liquidate
will
the
S.
U.
Canada and
increasingly withdraw within
the Sterling area.
As a result the
normal tendency should be in the
likely to lead to
tal
further
to
suggest
economic
undergo
that
pattern
is
At
Can-
o'f
the
British
sys¬
tem
of
rigid control would be
replaced by a stronger impulsion
be
the
the
Canadian
more
eurrent
current
that
in
is
now
self-imposed
cramped
the
rather
than
_
.
desire
volume
J.
,
.
to
increase
of^ .U.S.-Canadian
patiently by the Canadian people
during the war is now giving rise
5
s
..
.
.
mounting irritation and wider
criticism.
It is
difficult
current
state
ity with
any
restraints
on
to
reconcile
U.S.-Canadian trade
"
considerations
there¬
fore might
eventually induce
a re-
removal
^,
free market it
of
en„
.!
-.
were
1
per¬
level in
own
one
is, possible that the
immediate consequence would
A
be
temporary decline. Subsequently
fundamental
Canadian
'°
freely for all
,
to
of the
the Canadian dollar
should lead
improvement.
purposes
eventual
an
strength
economy and the ability
1
During
the
week'there
was
a
continued demand for high grade
external bends but the turnover
negligible in the absence.,of
«"pply. (The - internal
w?s
Dominions were again on the firm
side largely as a result of the ardemand
in',
connection
!with the Imperial Oil offering of
! International Petroleum
necessity for irksome I Partly
and financial operations.
Political
the
the
likely be in the direction of
becoming increas- ! bitrage
of internal
prosper-
With
mitted to find its
to
Furthermore the necessary
regimentation which was borne
ingly
-Con¬
in
sympathy
strength
of
free
however
of
the
cline
stock and
with
funds.
free
In View
approaching de¬
of) large-scale
mand. for
the
tourist
Canadian
de-
dollars
and the end of the month deadline
of the a Imperial Oil
arbitrage
op¬
eration, it is possible that this
CANADIAN BONDS
tion
of
the
reached
mostly
GOVERNMENT
PROVINCIAL
market
its
peak.
lower
in
the trend
sec¬
now
Stocks
were
sympathy
with
in New York but there
was
continued activity in Western
oils
following confirmation
Red water field.
CORPORATION
metals
of the
the
golds
eased
new
Among the base
Mining Corporation stock
encountered
strong
after
demand
earlier
and
strength
little
place it in the
In-most
nands of gov-
A. E. AMES & CO
INCORPORATED
TWO
NEW
YORK
5,
San
N. Y.
4-2400
NY
1-1045
members
Stock
Such
D. V. Fraser
been
/
voiced by some
f
'
tnat
government
control
would
better living conditions for
mean
all of us.
Yet
.i,
.,
;,V
-
-
j
they fail to realize that they
effect, trying to strangle
in
are,
their
ment,
of
world, the
wealthiest in the world, and pro¬
vided the highest standard of liv¬
ing in the world for its citizens—
Exchange,
few, but for every
and is, willing to
give a fair day's work for a fair
day's pay.
And the country be¬
came the power it is
through one
great medium alone—the fact tnac
men were given the
greatest free¬
of
appointed
department
corporate
in
the
New
who
dom
to
was,
exercise
advanced
man¬
their
abilities,
standards
of
office, 20 Pine Street, New York
City.
«. ;.v3:
:, ' .• -."V.
.<
value.
'
earned
a
this
-
included the
years,
prog¬
;.vv
inflationary conditions
*
have proven utterly inadequate. Aiding in this "squeeze" J
the
powers
of ■ government\
agencies.
On one hand, wages r.
are
war
have
averaging
only
and
capital. Out of
return
meager
a
railroads
return
invested
on
in
they have
interest, rents and other
fixed
charges, finance improve¬
ments, and pay dividends If there
is anything left for that purpose.
Vast
capital
expenditures
have
made
by
the
railroads
power to authorize rate
been
for
be
serviced
operating income,
both
The railroad
to
take
financial
within a price bracket the public
is willing to, and can, pay. How
can
the
railroads
meet
their
mounting costs and still hold to
low transportation cost?
The
liberty today of telling you
something about the problems of
the railroad
Strange
industry.
it may seem, a large
part of the public, as well as many
within
as
to
the
railroad
our
victims
of
country are today the
a
gigantic "squeeze
play" which threatens the wel¬
fare of the greatest of our nation's
basic industries.
It is a situation
that
has grown
and
out of prevailing
conditions
government
dip into savings which should be
for
low
production
years.
This is not a bright pic-
on
side
one
regulations
and
controlling
influences
on
the
other.
It is a situation that de¬
all
and
with
the
industry
the
of
plan of merging
and
are
biggest
history.
pros¬
money, and
ever
han¬
taking
showing un¬
precedented peacetime gross revr
enues, a quick analysis of the in¬
come, requirements indicates that
:::An
group
on
page
-
35)
by Mr. Fraser to
of Southwestern business
Wichita Falls, Texas, Sept;
.
",v
Exchange Merger
hold first
to
'
J.
R.
Buhler,
Co.;
Horn blower
&
Minneapolis, Clifford S. Ashmun,;
C. S.
discussion
and
Louis. The
Ashmun Company.
Mr.
this time." The committees 3
from the six cities expect to con-,
fine themselves to the develop-would
be used
fecting
a
of
by
floor member;
interests.
floor
will
Charles
Weeks;
R. Perrigo
Jess
Hal-
Detroit, Armin H
.
upon at
ment
is
repre-
*
the meeting will,
be of a preliminary nature and
it is not expected that a "concrete •.
plan will be developed or voted.
Chicago Stock
be
>
Day said
Exchange
Representatives from the other
cities will be:
Cincinnati, Joseph B. Rey-"
Benj. D. Bartlett & Co.; and
in
member;
Ralph W. Davis, Paul H. Davis &
Co.; William A. Fuller, William A.
Fuller &
nolds
to
to
Burciick,
Russell & Co.; St. Louis, John A
cities
sented
Walter
land, Richard A. Gottron, Gottron,
participate
neapolis
John
to
Isaacs, Jr., Semple, Jacobs & Co.,'
St.
Day
Oct. 1
on
Inc.;
one
are
Chicago,
Cincinnati,
C level and,
Detroit, Min¬
James E.
,
or-;
sted, counsel, and James E. Day.
address
16, 1948.
(Continued
into
the
peace¬
While it is
their
The
unusual
true that the railroads are.
more
profit motives, a-
spirit,
and
a
genuine sympathetic understandmg and support of the railroad in-
ganizations
large
exchange.
railroads
an
time volume of business
dled in their
selfish
exchanges of six mid-west cities will meet in Chicago
V.'.: discuss the^ ~
-j;
.
materials, whose very
livelihood depends upon a
healthy
and progressive railroad
plant. •
problems of
of
cooperative
CHICAGO, ILL.—As predicted in the issue of the "Chronicle"
of Sept. 9 (p. 23); it has been announced by James E. Day, President
of the Chicago Stock Exchange, that representatives from securities
and
peculiar
rifice
Representatives of various exchanges
meeting on October 1.
particularly
that
segment
that
supplies the railroads with equip¬
ment
by labor, by the suppliers of railmaterials, the government,
industry in general, and by the
jpublic. There must be some sac-
To Discuss Mid-West Slock
deep and sympathetic
understanding of the public and
of railroad employees in particu¬
lar. Especially, it is a situation that
concern
•
railroads
dustry if it is to survive as a
symbol of our free enterprise. The
,
mands the
should
the
upon
the
a
industry, do
realize the fact that the rail¬
roads of
in other words, during high production years they have had to
depends
accorded
r
road
j real
conserved
answer
treatment
build and maintain the existing
spoke a few minutes ago about railroads plant. To provide needed j
problems—the need for a -mutual I improvements and
expansions, the
understanding
of
each; other's railroads have been forced to re-1
problems.
So I am going to take duce working capital
alarmingly—
the
is
is
rapidly approaching, .if it. is not
already here,: when ^e cost of
transportation must be stabilized
these
required
basic
so
nation's progress.
This plight
accentuated because the time
same
structure
industry is
plight must command the respect
understanding of everyone if
it is to continue in support of the
from
of
care
charges and at the
in rates,;
earnings of
and
and
terest and amortization payments,
and operating income should be
sufficient
costs
in its contribution to the
economy
of our country that its unusual
to in¬
as
in
which further saps the
the railroads.
partly by incurring debts
repayable out of future earnings;
from
available
working
capital, and partly from current
earnings.
must
the
increases.
disheartening lag between
a
advances
j partly
-
has
-
Unfortunately, there always has.
nanced
Debts
Commission alone
merce
modernization and improvements.
These expenditures have been fi¬
-.
in-,-
are
by the National Labor
Boards and Fact-Finding Commit¬
tees, while the Interstate Com¬
to
meet
| been
salary .adjustments
fluenced
I
men.
improvement
-
mission
and
support the
living for
trading
York
in¬
repairs, fuel and
equipment, along with wages
salaries
of
employes, have
risen so fast and so high that the 'i
increased rates belatedly granted
by the Interstate Commerce Com¬
producing
times their
years,
other countries.
not
the
even
new
time re¬
execute their plans,-'or work on
tain a satisfactory working capital,
their jobs, with a
minimum of with
something left oveit for the
government
interference.
Indi¬ owners of the
property. The fact
vidual enterprise built this coun¬
remains, however, that for a long
try to its present leadership-^
time, even during the peak wargovernment control has failed to time
earning periods, income has
provide such leadership or such not been sufficient to
in
manager
has
been
selected
a
man
pering
the
trading, depart-?
the
the
people that the railroads
corporate
of
in
which
earning
leadership which 3%%
doubt, sincere in its belief
no
not
many
its
and
the
and
a
year.
25
over
period
opinions
have
t
a
of
the
or
continue
for
that
_
is socialism.
For
They, are intensified to¬
day because of the fallacious im¬
pressions in the minds of so many
George Kranz, for¬
merly San Francisco
ager
WORTH
Francisco
announce that
WALL STREET
plants turn out
value within
nature.
Kaiser N. Y. G. Office
Co.,
industries
I
which
—
The
George Kranz Willi
&
one-third
over
ernmentagen-
is,
income),
nation
have hit the railroads hard. Costs
of maintenance,
In 1947 this great
(gross
cies
with the general market.
Kaiser
services
essential
their
Current
to¬
on
is
our
ress.
machine turned out only $9 billion
of
individual and
are
CANADIAN STOCKS
day's markets.1
of
crease
billion—it would cost
$35 billion to reproduce it
from the
economic
has
_
importance of Imperial Oil's
MUNICIPAL
sion at $22
possible
capital.to this
If the Canadian dollar
controls, this policy
Canadian
restrictions.
of-, the
trade.
to
on
natural urge for
a
Canada.
by
wartimev,system
„
.
withdrawal..
flierht of Canadian
Al¬
nevertheless is directly counter to
the
eventual
more
circumstances
.augment
strict financial
the
because of the restrictions
its
hanced and the capital flow would
compelled the Canadian authori¬
modify
present time U. S. .capital
^ Canadian dollar would be
ex¬
restrictions.
external
ties, to
Canada.
to
these restrictions the standing of
where
tendency to
try¬
every
strongest
accord.
situation
are
in
the goose that laid the golden egg.
country born of the loss of confi-, In 150
years-this nation became
dence in the Canadian dollar en¬
the
remiirement* of
nf
requirements
natural
a
though
the
Canadian
gendered by the current financial
would
with
with
pand
a
movement adverse
versely there is
strictions.
there is
on
country is not
sustained capi¬
ada
a
toward economic freedom and the
removal of trade and financial re¬
; This
to
in
is deterred from entry into Can¬
likely
fundamental change.
a
The influence
freedom
abolition of restraint
direction of still closer U. S.-Cana-
adian
i
the other hand the
on
dian economic collaboration.
would
: ;
,
investments
investment in this
This
The railroad plant is valued oy
the Interstate Commerce Commis¬
nation,
our
it
yet
in
way
structure
lure,
welfare
away
insulating restrictions.
Kingdom is committed to
policy of strict self-interest iri
a
Now that
far short of what is
are
railroads
ing
U.S.-Can-
economic
-
,
r
that country—it could
to
portation plant that exists today.
the
Canadian
brought socialization
needed to support the great trans¬
move
a
promptly.
forces at work
that
such
earnings
numerous
this side
official fears
of
The second world conflict
are
to take power
ind enterprise
as
the
United
accordance
Canadian
the: dangers
•
it
There
adian prices no longer exists there
is little risk of a sudden shock to
Moreover the
current discussions with
and
have been exaggerated.
the wide gap between
circumscribed
are
maze
border
sible that
outlets
fail to counteract it
we
happen here.
dealings
the
in
face similar situation if
•
first World Wan
and
be
are
,'
'
A grave
danger is facing our nation today—the danger of socialization, if not event¬
ually communism. The United States stands today about where England stood after-the.
the
trade
to
this
and
of
removal
barriers
of
and
3
~-
restric¬
tions
economic
issue.
existing
stage of potential dynamic ex¬
pansion
when almost universal
financial
—
vital
future.
is
Dominion's
versal of Canadian policy on this
a
Co.
are caught between rising costs on one side and
lagging rate rises on the other,
rail executive points out need of
stabilizing cost of transportation within price bracket public is willing
and able to pay. : Sees danger in propaganda for rail
nationalization, and concludes other industries will
increasingly recognized
now
in-<$>
give
Canada
variety of problems of
a
hand the
one
resources,
world
can
optimism
other
On the
undeveloped
vb
v-
Railroad
Asserting railroads
Canada's long-range prospects have never been brighter but con¬
peculiarly difficult nature.
Missouri-Kansas-Texas
a
workable formula that
as
a
basis for ef¬
consolidation of ali their
anticipated
Mr.
Day added "It is
that other meetings
be planned
lor
the
near
fu-*
ture."
;
The purpose of the merger pro-,
posal is to create a single ex--
change of sufficient size to furnisha
broader market for securities of,
mid-west
keep
pace
corporations
with
the
nancial and industrial
Vogel, A. H. Vogel & Co.; Cleve-' of this region.
and
thus,
growing
fi¬
importance-
Volume
168
I XIJET"
Number 4788
VlviiViJCiXi^xxixi-
xriiTnxi xj,xr\xj
ex.
quite possible to buy a pair of shoes in Mos¬
cow—if, that is, you're a member of the Soviet
royalty—a ruling Commissar. But if you happened
to be anybody else—one of the 99% of the people—
you would find that-wnen you
of
cost
(
Professor of Finance, Nfew York University
Dr. Nadler contends so long as inflationary spiral continues, interest rates will tend
upward. Looks for
further rise in short-term rates, but sees no likelihood of changes in long-term government
obligations
"aas this is bound to remain a protected market.
Predicts higher mortgage rates.
those
impossible to analyze the iponey market in a Vacuum; In order to ascertain with
degree of accuracy the, trend of money rates, one has to take into, account economic
conditions prevailing in the country, the policy of.the
monetary authorities and the posi-
would take
you 107 hours of work to ,get a
single pair. The average Amer¬
note this
—
any
tion and needs^-
the
—
-hours' pay.
seven
Here
some
are
to think about.
if he
—
For
other
d
things
>
of
'
half
days' work
—and it's
!
'
American worker
an
good suit.
a
"It takes
earn
Dr.
For
a
<
the
■
as
long
as an
a
a
18 times
lump of
Thomas E.
attitude
: V
.
as
V '
•
-
Dewey's figures
amounts
J !
may
or
\
>
•
that fact that
some
Americans do not appear to be
able to understand.
t
,
r
s
^
-
("
■'
;>
than
Banks
and
i 1
m
a r
1 y
Treasury
substantial
the commercial
and
tion to furnish the
According to word received from R. Victor
Mosley, Stroud & Co., Inc., Philadelphia, Presi¬
dent of the National Security Traders Association,
Edward E. Parsons,
Jr., of Wm. J. Mericka & Co.,
Chairman of the
Nominating Committee to be assisted by:
'
<
Cleveland,
has been appointed
„
Jack F.
Glenn, Courts & Co., Atlanta; Dayton
Haigney, Dayton Haigney & Co., Boston; Josef C.
Phillips, Pacific Northwest Co., Seattle; Richard
H. Walsh, Newhard, Cook & Co., St. Louis.
' *
The election of officers for the ensuing year
will take place
at the Annual Convention of the
Association which will be held this year in Dallas,
Nomination by the No¬
Texas, November 14-18.
minating Committee is not tantamount to elec¬
tion because opposing candidates can be presented
; after proper procedure by
/■
*'•/'
L
»
v'V
the members.
'yv-Vu
>•
SECURITY TRADERS ASSOCIATION
The NSTA Convention
.
Specials
\
-
to arrive in New Orleans on
are
the afternoon of Nov. 18 and will depart on the afternoon of Nov. 20.
•
The New Orleans Security
Traders' Association
are
"formative stage, details to be announced late?.
V* v
planning
en¬
This entertainment, of course, is in the
tertainment for the delegates.
•'
So
2
long
V?. %
corporate
the
as
cannot
one
obligations.
rate
remains
visualize
yield
increase in the bill, note and
discount rates.
If the inflationary
however, fairly certain that
an
process should
continue it is quite
likely that a further moderate
firming of short-term rates may
ture.
The
nessed
moderate increase and
a
on lortg-termrAAA corporate
securities much above 3%.
It is,
t
a
fur¬
ther firming in rates of long-term
corporate obligations is bound to
take place and the same applies
to yields on long-term state and
municipal obligations.
over-the-counter rate
i.e., the rate charged by banks to
their
customers, has also wit¬
at
the
The
rate
interest
of
also is
gages
bound
to
mort¬
on
firm
and
in all likelihood in the not distant
future
the
4%
rate
will
further firming is
practi¬
in the making cally disappear, with the common
partly because the risk involved rate
being 4M> to 5%.
The'real
in granting loans has increased as
estate
situation
in
the
United
prices of inventories advanced and
States
partly because
the
lent
small banks
many
to the limit and are
unable to increase the volume of
are
up
-loans.
While
,
further
a
is
highly inflated.
While
for housing is still
exceedingly great and the hous¬
ing shortage is bound to continue
demand
firming
fact of
the
matter
have
homes
of
point where
able
is.that prices
increased
to
a
people are un¬
buy them or to carry
is also evident that it is
to
them.
It
much
more
many
difficult
to
obtain
eral Reserve Banks aje
NSTA NOMINATING COMMITTEE
ORLEANS
high-grade
a
needed
the
all
in
a
posi¬
'
1
..
S'/:,
>
.V'
•
'■
V'r:
■ ,,v
■
y#?
reserves.
Federal Reserve
the-purchase of
government obligations sold by
insurance
companies
not
only
exercise
an
influence
on
the
Similarly, f; the
Banks through
a
serious
depression Accompanied by largescale unemployment.
^
>
Long-Term Rates =>■■ v- .v-"--
mortgage money have adopted
a
cautious
more
the
case
only
a
policy than was
few months ago*;
It is now-'possible to
reach the
following conclusions: (1) So Ion
as the present inflationary spira
continues
there is bound to be
a
It is not
cant
•
supply
of
capital
a
obligationsy previously
i;, 1
•
character.
is larger than tionary in
these agencies are in
position to sell long-term gov¬
the demand,
acquired by them. Vice versa, in
periods when the demand for cap¬
ital is great, the trust funds and
y On Monday, Oct. 4, 1948 at 4.30 p.m., at the
agencies are in a position to buy
Produce Exchange Luncheon Club, the Nominat¬ considerable amounts of govern¬
ment obligations sold by institu¬
ing Committee of the Security Traders Associational investors.
Obviously, the
tion of New York, Inc., will receive suggestions
activities of the trust funds and
;
convert t,he present
likely that any signifi¬ moderate firming of interest
change will take place in rates.
Emphasis, however, should
money market, but also provide prices of long-term government be
placed on the word "moderate'*
the
insurance
companies, with obligations, particularly those eli¬ since a
repetition of what hap¬
funds' which
can
be
invested gible for purchase by the commer¬
pened in the money market in
elsewhere.
If the Federal Re¬ cial v banks.
The
increase
in 1920 is
entirely out of the ques¬
serve
Banks had not been large short-term rates will merely mean
tion.
This
firming in interest
buyers of obligations sold by in¬ the narrowing of the spread be¬
rates will be brought about partly
surance
companies, the sales of tween short-term and long-term
by the raising of the reserve re¬
government securities by the lat¬ government obligations. ' If, how¬
quirements of the member banks
ter would have had a depressing ever, institutional investors out¬
and by the possibility that the
effect i on
prices
of high-grade side of the commercial banks
rate
of
interest on
short-term
bonds
continue
to
sell
large
and, conversely, brought should
government obligations may be
about a considerable increase in amounts of long-term government
increased.
The Treasury appears
money rates./ Since, however, the obligations not eligible for pur¬
to be willing to increase the in¬
Federal Reserve Banks so far have chase by the commercial banks
terest rate on the short-term Fed¬
been willing to buy- all the long- to the Reserve Banks, there is a
eral debt in order to fight infla¬
term government obligations of¬ possibility that the Reserve Banks
tion.
While an effort will be
fered by insurance companies and may lower the peg on these obli¬
made by the monetary authorities
others, they have prevented a ma¬ gations in order to impose a pen¬ to maintain the long-term 2Vz%
terial decline in prices of long- alty on those institutions which
rate, yet should insurance com¬
are
term high-grade obligations.
large
sellers of long-term
panies and other investors con¬
:
The ac¬ tinue to sell large amounts of
The operation of the trust funds government obligations.
quisition
of
large
amounts
of
and agencies of the government
long-term obligations there is a
also exercises a considerable in¬ noneligible long-term government
possibility that the peg may be
fluence on
the supply and de¬ obligations by the Federal Re¬ lowered
slightly below par.
mand.
In
periods
when; the serve Banks is definitely infla-»
ernment
SECURITY TRADERS ASSOCIATION OF NEW YORK
could readily
membe#, banks period of prosperity into»
,
NEW
government
ii'ti
jt n,
-
the
pay a higher rate on certifi¬
cates of indebtedness followed by
period of take place in the not-distant fu¬
.
'V-;
to
that
VU
i'.
NSTA Notes
Edw. E. Parsons, Jr.
short-term-rates brought about by
the willingness of the Treasury
>
with
-
money - market has
wit¬
a
moderate
firming of
nessed
fact
bond market is supported sets a
pattern for rates on all other
position to influence both the drastic credit restrictive measures mortgage credit than was the case
supply and the demand.
Through which would be accompanied by a, about a year ago and that lenders
open market operations the Fedr material increase in money rates of
in
:
the government obli¬
gations will be supported.
The
!
j/ ' task of refunding $50 billion of
Naturally, demand and supply maturing obligations during the
factors play an important role in next, 12 months and, consequently,
the money market.
However, the will endeavor to prevent a mate¬
fact ' should
not
be overlooked rial rise in money rates.
More¬
that the monetary authorities are over, it is generally conceded that
depicted—and it is
as
i
what price
Short-Term Rates
The
government obliga¬
primarily by the Re¬ their
funds.
precisely accurate. The matter is unimportant. The
situation, in its essentials, is
s-
.
the
in the
market.
for another several years, yet it is
of 'short-term rates can already evident that real estate is
banks, its policy could be different be expected, particularly should
not selling as freely as a year ago.
from that which had to be adopted the
reserve
requirements be Moreover, prices on older
prop7
when the Treasury, had a large raised, yet the increase in rates
erty and large houses already
deficit and had to depend on the can
be
only
moderate.
The have witnessed a decline and the
money
market for additional Treasury is confronted with the
end is not as yet in sight.
The
not be
may
period of
of
held
serve
long."—Governor
*■
of
redeem
to
tions
the American, and
as
28 times
sugar
Dewey.
Governor
long
as
American. For
soap—the Rus¬
any
a
t
to¬
ward the money market is bound
tQ be influenced to a large extent
by the need for refunding and by
the
budgetary, outlook
of the
Treasury.
So long as the Treas¬
ury had a large surplus and was
It's five
•
woman's cotton dress
piece of soap—when there is
for
be
'n
r .e
deflation
;
pound of white flour.
a
Russian works 13 times
'•
will
in a
Nadler
Marcus
able
sian works
ties
inflation
suit
earns a
■
minutes in America.
a
mone¬
authori¬
in
worker under communism 79 minutes
a
of labor to
the
tary
d i i f e
buy a suit of clothes the laborer in communism's promised land works 12 days. In three and
a
evident
is
t
"To
.
rates.
fhat the policy
earnings.
ri>nmaii f-' n-w-v
■
An
American
worker earns
enough to buy these eggs—not in five hours—but
in half an hour. And he gets the eggs.
Vf
.;
-
sible to analyze the trends
money
e
of
trend
It
get the eggs —the
factory worker must
in
e r m
interest
five hours of his
use
t
e
the
-
can
Russian
e
factors
combined
dozen eggs
a
Treas¬
Thes
ury.
three
:
.
the
of
American wage, earner
buy a pair of shoes with
average
can
-
It is
shoes into wages, it
ican worker
Money Rates
By MARCUS NADLER*
"It's
the
{T6Zar 'JOT
The Outlook lor
And, So It Is!
translated
v-nxvoxi xoxuxa *
The pro¬
The second conclusion that one
reach is that once the spiral
of inflation; has come to an end
and other
and a readjustment in the econ¬
institutional investors to fend and
invest these funds and. at the same omy of the country sets in, ac¬
time supply new reserve balances companied by a. moderate decline
in business activity and an in¬
ceeds
of
insurance
the
sale
-
enable
the
may
companies
to the member banks.
It; should
that
the
crease
be
decline
noted, however,
that may take
credit
in
unemployment,
the
policies of the monetary
authorities will undergo a change
place in the long-term noneligible
and
government
obligations can be
efforts
again will
be made
through credit policy to prevent
only very moderate in character. the
readjustment from degenerat¬
A repetition of what happened in
from the membership concerning nominees for
ing into a depression.
agencies can be effective only 1920 in the
money market is en-;
The final conclusion that can be
office for the coming year.
Michael J. Heaney, when the Treasury has a balanced tirely out of the question.
v
reached is that the money market
budget or a surplus. Bearing the
Furthermore,
one
may
state will remain
Joseph McManus & Co., is chairman of the coma controlled
market,
above factors in mind, it is pos- with a fair degree of accuracy
that
government securities will
m it tee.
that irrespective of the political
continue to be pegged for a long
*An address by Dr. Nadler at changes that may take place to¬
time and that the monetary au¬
the 35th * Annual Convention of ward the end of the year the gov¬
thorities have the power and
the
tion,
Michael J. Heaney
1948.
j
*
.
<:/■'
New
•
will
Bankers Associa¬ ernment bond market is bound to
use it to prevent a bre^k in bond
The
York City, Sept. 23, remain a protected-market.
only thing that is unknown is at prices as occurred in 1920.
Mortgage
•
<
16
THE
(1324)
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, September 30, 1948
Don't Kill the Fire Insurance
Securities Salesman's Corner
Industry!
By SHELBY CULLOM DAVIS
Shelby Cullom Davis & Co.
Formerly New York State Deputy Superintendent of Insurance
By JOHN DUTTON
Former insurance official
you
column of the "Chronicle," you too must have found them
These articles by men who are the general sales managers
of interest.
of some of
the leading Mutual Funds certainly have a right to speak with confi¬
dence on this subject of security salesmanship, and I for one have
found much of interest
considerable benefit in this series.
and
Last
week, in J. K. Brumell's contribution, I was particularly impressed
with his analysis of the approach to a sale.
He stated, "It is how you
say it that counts
no approach is the magic elixir," etc.
He also
gave an example of an approach that he suggested the salesman
should put into His Own Words (the italics mine).
...
On this subject of "the
approach,"
much has been-written on
so
this phase of salesmanship that, at times, I think the whole
I've tried about
overdone.
as
Because of its
implied threat to the future of the fire insurance industry, I have been
by a number of institutional investors to review from the investors' standpoint the
Second Report of the Sub-Committee of the Fire and Marine
Committee, National Asso¬
asked
ciation
between
I've followed this selling
long not to notice this very simple and obvious phenom¬
enon.
Poise, confidence and a relaxed attitude immediately is sensed
by another. Tension, worry, or lack of confidence can be felt before
a man opens his mouth.
Some people are more sensitive than others
to brain waves but I do believe that they exist. Some day the scien¬
tists may tell us all about this peculiarity of people but if you have
been a salesman you know of what I speak because you have seen
it too.
'■/ - ■'"-y
r
.
.
official
assume
the
i
m
i
s s
Comoners
is
Standard
Profit
This
natural
rience
is
of
so-called
this
supervisory
In
in
least
at
Deputy Superintendent
as
Insurance of the
State of New
York, is only infrequently brought
McCulIough
into
pany stockholders who
have tended to become
I
also
studied
carefully
expe¬
my
Report.
have
way
a
because
authority,
For-
mla.
authority.
contact with
insurance
com¬
therefore
"forgotten
men."
in front of
you are
haven't rubbed
work.
I don't
him
mean
the
thing.
If he has
wrong
prospect.
your
You
the
a
your personality goes to
charmer but just watch what
on*
-
Is
During the past
few
pleasant
a
interest TO THINK
utterance has become
generally
realized.
this not facetiously
the
you
BE OF PROFIT TO YOU IF YOU LOOKED INTO
to let him have an
interview, providing^ course,
available time for it.
}}
'.v.-,
:
often,
it has
interests
IT—you are going
that you have the
%<
years, no
of
but
that
he
tosses
back
to
you.
The beginning of
an
UbKU
10
BE
FIFTY
S^^tNG UPON SOME INVESTORS,
THREE OR FOUR.
or not here's
SALESMEN
A
a
MONTH
Under such conditions the
approach and the sale
itself presents much less of a
problem.
Savings Banks Deposits Up $12 Million
Reversing the experience
of July, net deposits during August in
the mutual savings banks of New
$12,990,614, bringing total deposits
York State showed
to
$10,112,266,619, it
an
increase of
was announced
Sept. 28 by John Adikes, President of the
Savings Banks Association
of the State of New York and head of
the Jamaica
maica, New York.
Savings Bank, Ja¬
Accounts during August increased
by 8,756 for
aggregate of 7,221,699.
•
an
•
accounts
during August
a
year ago.
However, the savings
banks have resumed their record of
consecutive
to
me,
free
a
the
capital under
socialism.
a
form of state
In America, the inves¬
tor's precious freedom of
to invest
choice—
not to invest his
or
that
no
the
final
be
answer can
This
war.
means
that the
ex¬
pected life by this method of cal¬
culation
has
stayed reasonably
pres¬
<
Chicago
•
■
the
business would buy an even dol¬
lar
liquidating and going con¬
in
cern
value.
■
53 of the McCulIough
Report it is stated that "a return
of 6% on the equity capital in¬
vested in the business should be
On
page
adequate return bafced on the
an
results
actual
low
few
of a 4%
payment
the
dend
last
the
of
This would ordinarily al¬
years.
divi¬
invested capital with 2%
on
(Continued on page 42)
Co., Pittsburgh
•
at
10
about
in
for
Already about all the
pools have been found
long.
shallow
(1,500 ft.) and the average depth
of
wells
new
increased from
has
3,000 to 4,000 ft. and an increas¬
1946.
It is picking up now, with
resumption of war-delayed drill¬
ing. We should be justified, then,
if such a figure were sound, in
assuming that petroleum would
last forever, but such an estimate
ing part of the discoveries is at
10,000 ft. and deeper.
The new
pools discovered each year clearly
tal
to¬
our
reserves
with
some
reasonable
cient
ac¬
suffi¬
curacy,
for
purpose.
our
-
is
>
A year or so
-
ago
pessimists
R.
they were only
h
o
r
t f
o
n
J.
S. Pigott
'
•
it takes
no
account of (a) unproved re¬
serves, that ? is,
all new, incom¬
pletely drilled fields; (b) new dis¬
coveries; and (c) improved re¬
covery in old fields.
years.
■
'•"•
;
•
What
Are :V Known
The known
which
those
less
reserves
Reserves
are
been
have
simply
more, or
drilled
and in
closely the extent
of the pools, sand thickness, por¬
completely
way to expose the
fallacy of the above figures is to
which
check how "proved reserves" have
osity, etc.' We have unproved re¬
serves,
that is, new pools that
have been only partly drilled, and
simplest
with
regard
to
annual
in¬
consumption rate each
year
until
by
Mr.
1
,
*A
report
prepared
Pigott for presentation at the Na¬
we
know
they
diminish
will
proved
up,
have
so
with
consumption,
lantic
that
this
state
pool,
far kept pace
but we know
cannot
continue
such
by
processes
as
flooding with water to push outthe oil, and repressuring with gasproduced with the oil and
recov¬
the
More¬
ered
from
separators.
since Kettleman Hills
and Oklahoma City flush pools,
we have recognized that
for best
over,
ever
without the use of sec¬
methods, the production
recovery,
ondary
must be at controlled
to
the
character
of
rates, suited
pool.
In
the
the
early days, recovery from a
pool has been as low as 10 or 20%
of the total oil in the sand; nowa¬
days it is probably 60 to 70%, and
with improved primary and sec¬
higher.
known
of
average
generation we have
improving methods of total
recovery
ondary
is
definition
and
zero
to
For the past
been
sand
bodyr etc. ,<■ These reserves have
been estimated at
equal to the
proved,
up
to
2xk
times the
proved.
Discoveries,
as
finally
too. much
toward
continue
-
deeper.
about
not
exact
tional Petroleum
Association-, At¬
City, N. J., Sept.1 18, 1948.
will
absurd than the first
method is oversimplified;
maybe
(or
s
of 12
years
years.yv-v.-'v
.;The>:fallacy
is f• that- isuchc-a
of
some
even more
one.
creasing at better than the annual
San Francisco-
for
that
1937, 14 in 1942 and 11.5 years in
that proved reserves have been
Established 1913
say
invested in
mate
The
Street, New York 4, N. Y.
is to
that
dollar
new
dollar
even
an
constant
consumption, for the last 10 or 12
years. The published figures show
40 Front
each
on
basis,
ent; we can,
however, esti¬
changed
,
dollar
<S>-
con¬
crete,
12Y2
NATIONAL QUOTATION
BUREAU, Inc.
business
sav¬
••
For 35 Years
a
through
which,
return
of
at
Question of Oil Reserves
gains, overshadowing judgment) put out a very decep¬
the decline recorded
during July, 1948, of $11,108,403 in savings de¬ tive figure for the life of our
posits and 658 in accounts.
supply of petroleum. It was ob¬
tained
by dividing proved re¬
serves
by
annual * consumption,
coming up with a life of about
Over-the-Counter Quotation Services
but rather
return
its
earning
stock
common
a
an
attracted
be
not
consideration of the fuels to be used in the future, we must consider what we
why these fuels have developed the way they have.
The first task is to get
reasonable idea of how much reserve we have in petroleum.:
We can say at once
some
the
These gains are
respeclively 54% and 75% of the increase in de¬
posits and
by
obviously
because
would
and
now
given at
N. Y.
advisedly
investor
In any
have
secret.
TODAY THERE ARE ONLY
new
be. attracted into the
business. I use the word minimum
can
and optimistic estimates of petroleum resources and recounts
new reserve developments in oil recovery as well as
improved engine construction. Places minimum
estimate of supply at from 20 to 25 years, and maximum of 40 to 50 years.
Stresses need for econ¬
omy in oil consumption through more efficient engine construction and through wiser use of present
resources.
Looks for use of higher cost synthetic fuel oil sources in future. > i
In the last analysis it is the number of
people you see who are quali¬
fied investors, or nos«ibJe
them all round and believe it
certain
a
which
Petroleum expert reviews both pessimistic
itself,, In conclusion, I don't think there is
any approach that is
letter perfect. -No one can sell them
all—no one can see them all—
no one should waste time
trying to sell those who are tied up with
some other salesman to the extent
that they just won't talk—no one
should think you have to be a
magician to sell securities or see people.
There
at
at
By R, J. S. PIGOTT*
sents
?,1r?,1pl<lnty,
in
Chief Engineer, Gulf Research and Development
interview should be developed without fumbles and misses.
It is all
in the way you relax and
develop the conversational theme that pre¬
nrospects, that brings the business.
because
stockholders—
timing enters into this approach business too—after you
"Hello, Mr. Investor, etc., etc.," it is important how you pick up
remark
criterion
only
com¬
-mention
seemed
And
say,
the next
more
I
The
"
.
capital
rate
Return?
Adequate
an
in any business is the return at
which new capital is attracted to
the
business.
That
can
be the
,
Dividends in the Public Interest
manner, if he gives you something of
ABOUT—SOMETHING THAT MAYBE MIGHT
on
business
that
,
1948.
too
salesman calls
is
to
fair
Shelby Cullom Davis
Com¬
mittee
to sell you some¬
some
time
reasonable
minimum
the
capital invested in the
on
insurance
.
Then
way.
has to be
anyone
happens the next time
my name
return
is
it
that
good
management
as
well
as
Under a system of free enter¬ changing
circumstances
within
prise, which is the only safeguard the industry, can be increased.
Laws of the National Board of for liberty and freedom in Amer¬ This
assumes, of course, that capi¬
Fire Underwriters dated June 3, ica, an
adequate return on capital tal is being attracted into the
of
■
"Good morning, Mr, Investor,
worship.
rate
What
be
Therefore,
maximum
the
Statement
to
preserved, along
with freedom of speech, assembly
and
Loss,
or
society.
Under a controlled society, such
is Dutton. I've called to make your acquaintance. I am in the invest¬
monplace than that "insurance is as in Nazi
ment business and I thought that possibly we might be able to do
Germany or in Soviet
invested with a public interest."
some business TOGETHER."
Russia, one can visualize a gov¬
(Slight emphasis on the together.) Sim¬
I would respectfully like to point ernment
bureau decreeing what
ple, plain, to the point.
The door is open for him to say, "Pleased to
out that the dividends to which rate of
return is to be permitted
meet you but I am not in the market, or don't buy securities, or I am
insurance
company
stockholders
on
capital invested in a business
busy, or, well sit down and tell me what you think of the market, or,
are entitled are also invested with
I have a good broker," or a hundred and one other excuses that
and then saying, in effect,, that if
every¬
a
public
interest—and
with
far
capital
is not attracted at that
body puts up when a salesman comes to see them.
But that is what
more
public
interest
than
is rate, the state itself will supply
you expect isn't it?
However,
Here is my pet approach:
ings—is
enterprise—have been passed over
by tnose occupying positions of
1921
people.
business too
—.
the
contributed
have
capital and bear the risks of the
chances out of ten
flow
who
on
the
that
—
those
Underwriting
Profit
he'll start to squirm inwardly even if he is too
polite to show it outwardly, The approach that I like the best doesn't
try to sell a thing. I make it casual and friendly. I don't believe a
good salesman ever has to press for attention. The minute you find
yourself doing this you tighten up. I honestly believe that there are
<*/
•
Com¬
missioners,
thing is
as one
waves
In-
of
surance
could think of during the past 20 years that I have
been engaged in the securities business, and quite frankly, I have
come to the conclusion that the more simple you make it the better
it is.
Try and get fancy, or go into a long round-about spiel about
what you and your firm would like to do for Mr. Investor and nine
mental
;
6% limitation on investment and underwriting earnings would be catastrophic for the industry.
Pleads for "forgotten men," the patient insurance
company stockholders consisting of endowments,
institutions, and individuals, who need higher rather than lower dividends.
and
openers
warns
or
different kinds of conversation
many
.
against allegedly ominous threats implied in McCulIough Report of
N. Y. Insurance Department. Maintains recommended
4% limitation on lire insurance company dividends
have been reading the articles each week entitled "If I
Were A Retail Salesman" that have appeared in the Mutual Funds
If
methods
applied,
go
can
;
Taking
into .account
the
com¬
plete facts would indicate a pes¬
simistic
minimum
25. years, a
and nobody
of
some
20
to
maximum of 40 to 50,
can
"7"(Continued
.pin it down
on page
43)
any
•
./
THE
Volume 168, Number 4738
COMMERCIAL
;V
:
•
By ROGER W. BABSON
Mr. Babson, in commenting on
says
sidies.
Holds government gets back through income taxes
"
During the past week I have been calling upon friends in New
line as to how they feel about things in general. Here
brief report. They are fairly unanimous that Mr., Dewey will
be elected President. They are sure he will "clean the rascals out"
and
replace^
them by men lions of farmers there is not much
a
We
are
ing
and
•
for each
business
how
dependent
farmers are upon weather, they
are entitled to a few good years
This
break.
especially
to
ap¬
take
care
when
of them
on
toes
such
small
an
crop
impor¬
bodies
the
Tax
as
Ap¬
peal Board,
Securities
the
and
Exchange
the
believe
I
go
taxes.
■":.Vv" mission and
believe
Mr.
raise
They
corn
Dewey will ap¬
best
Labor
various
the
also
Let
Com-
Trade
Babson
Boards.
unity
also
very
has
part. Therefore, Wall Street
it very possible that the
thinks
Republicans may try
prices,
wages
and
circulation
be
in
would
1936;
from him and we
but it got away
had
-
This
1949.
did
Roosevelt
;what
deflate
money-into
in
bad break.
a
all
course,
City
farm
be much
would
for
not
were
if it
support which
the
is too much prejudice,
These
selfishness.
ficulties.
are
.
LOS
ANGELES,
believe
that, with our faith restored, there
are no difficulties which a united
;7
.
difficulties—one
these
of
that every one of us is up
CALIF.
wife
—
:
of the New York Stock Exchange
exchanges. The Los An¬
out
against
day—is high prices.
every
.
Nov.
1, the New .^York
Exchange firm of Bogardus,
&
Banning,
618
South
and other
to :be
ill-will and
serious dif¬
firmly
I
But,
-
where there
world
a
High Prices
Shearson, Hammill
Frost
lower today
reached—in
One
New
my
opportunity
and
justice
York Spring Street, will merge with
friends are .yelling about Shearson, Hammill & Co., 14 Wall
prices. Without doubt they Street, New York City, members
Of
There is a
be won—in a world
where aggression is still rampant.
There are new goals of freedom,
to
peace ■
Bogardus Frost
Merging With
Stock
>
easy—this task
be
not
America cannot surmount.
About
Farmers Are Prosperous
will
It
that lies ahead of us.
mother
ani
who
Every
has
been
shopping for herJamily today
has
been
against1 that diffi¬
up
And
culty.
what
a
magnificent
job of management our wives and
mothers have been doing to get
the last stretch out of our dollars.
If
our
Let's
national Government man¬
aged its household affairs half as
unde;
,
look at it.
there
three
are
principal causes
'
■J:;.'"
friends
there is another side to this story.
It is true that farm net income is
times
four
now
as
1935-1939 average;
high
as
the
but this aver¬
meant foreclosures and intol¬
The total gross
farm income for the 1948 crop is
estimated at $17 billion compared
age
erable conditions.
with $11
average.
the
billion for the 1935-1939
There is no doubt but
farmers
more
are
than they have
prosperous
been for years.
"
Merrill Co, in Htfd.
CONN. — G. H.
Walker & Co., members of the
New York r Stock Exchange, an¬
nounce 7; the
acquisition of the
business and personnel of Merrill
& Co., effective Oct. 1. Arthur H.
Merrill,
Charles
W.
Redlund,
Francis R. Olmsted and John W.
HARTFORD,
Hamilton, general partners of the
Merrill firm, will become asso¬
ciated
Co.
Farmers Deserve Help
But, according to the 1945 cen¬
sus 60% of all farms grossed less
products, while the
of 75% was less than $3,000,
giving net incomes of only half or
two-thirds these
figures.
Com¬
parable gross income for 1948 may
be 25% more than the 1945 fig¬
like
but this will be offset by a
in the cost of ma¬
increase
Walker &
S.
Combs,
be
R.
Percy
Boardman,
Roger
B.
Axelson,
registered representatives of Mer¬
Ladd
and
Harry ; A.
rill & Co. "
' '
,
Hartford
The
gross
ures;
will
Cedric
■
than $2,000 in
with the Walker organiza¬
tion. Also joining G. H.
Walker
Pearl
&
Co.
Street.;
of
G.
H.
located
at
36
office
is
>
Harris President of Assn.
Of Customers Brokers
interest on debt,
Archie F. Harris, Merrill Lynch,
building
maintenance,
etc.
In
Pierce, Fenner & Beane, has been
other words, even with high prices
elected President of the Associa¬
75% of the farmers are not netting
as much when
working 14 hours tion of Customers Brokers for the
chinery,
labor,
painters, ensuing year.
carpenters and even common la¬ Hirsch & Co.,
borers get for working only eight
a
day as city bricklayers,
hours.
So
This is not fair.
that
when
you
divide
government bonuses among
♦
the
Maurice
was
Glinert,
chosen
Vice-
President; Milton Leeds, Pershing
&
Co., Treasurer, and Edmund Ta-
mil*"'bell, Shields & Co., Secretary.
....
these
maladjustments.;
begin
to
This problem of inflation fol¬
lowing a war is not a new one. It
happened
throughout
his¬
good,s.
We shot away $300,000,- tory.
Whether
a
nation
sur¬
000,000 worth of labor and mate¬ vived it depended upon whether
rials and now we have the long it had a
good government, a cour¬
tough job of paying the bill. But ageous government and one that
our freedom is priceless and every
understood the economic facts of
first
Is
cause
the
of
cost
in
war
terrific
the
and
money
has
.
good
American
share
in
the
is
of
proud
task.
And
no
American will try to make
his
life.
good
all
politi¬
will
High prices have followed
wars.
"
.
In
wartime, government spends
cal profit out of the sacrifices of a lot of
money to pay for muni-*
our people in the cause of human
tions and supplies.
The normal
freedom.
"j;J■■■';£V. production of all kinds of goods
is stopped in order to produce for
; The second cause of inflation is
war.
There are fewer things to
our peace-waging program which
we have adopted to help free na¬
buy and there is more money in
circulation
to buy with because
tions get back on their feet and
to strengthen our own national the government uses its credit to
defense.
In the two-and-a-half create vastly increased supplies of
years following the end
of the money.1'{As a result, what we buy
takes more of our dollars.
Or, to
war, we provided some $20,000,000,000 of foreign aid,: Much Of put it the dther way around, the
^ ■
that money was wasted behind value of a dollar is less.
(
■
Then, after the war, there is a
—much of it
by clear incompe¬ huge supply of money and no
During our own
tence. But it's done, and now, for goods to buy.
the first time, we have a real pro¬ Revolutionary War, the Continen¬
tal Congress issued so much paper
gram.
This new program of Eu¬
ropean aid was passed under the money—Continental dollars they
the
Iron
Curtain
squandered
something
sometimes say
describe
to
less
we
worth
a
want
we
worth¬
"It's not
as
Continental." *
-
costs of the Civil
War, the Union printed green¬
backs
so
many of them that
To
pay
the
—
prices soared.
That is similar to
what .happened
after the first
World War, and now we have it
all over again.
The
is what are
question
continued on page 23)
administration
bag of tricks
the difference be¬
knows
tween sound
-
policies and unsound
which can make its sound
policies work, which can got the
To
the
This is
"
1
Holders
not an
Offer
.'J. / 7 '
.';.■
of
;1
'
ones,
kind of brakes we need
on
infla¬
""777;
City of Bogota
'
(Republic of Colombia)
tion and knows how these brakes
should be
applied.
.
•
7
■.
8% External Sinking Fund Gold Bonds of 1924
/V
,
Obviously, the present inflation¬
high prices arose under the
leadership of the present admin¬
istration.
But I don't place the
Dated October 1, 1924, Due
<
October 1, 1945
ary
blame
whole
in
the
on
That might be
the easy thing to do.
But high
prices are not a political prob¬
lem. They are an economic prob¬
lem. I want no part in any effort
to play politics with human mis¬
fortune.
I want no part of any
campaign which aims to make
personal political profit out of the
distress of our people.
Washington.-
I
of the
our
American
in
the welfare
people.
I want
people to surmount this dif¬
that we can act to re¬
maladjustments v/hich
have caused inflation and do it
ficulty
move
so
the
without
bringing
on
Power and
•
.
,
Light Consolidation Loan of 1927
Twenty-Year External 6*/£% Secured
Sinking Fund Gold Bonds
Dated April 1st,
*An address
The time within which the Offer,
exchange
the
bv G<w. Dewev pt
Bonds
above
and
'
■
dated November 15, 1944, to
the
appurtenant
coupons
for
Republic of Colombia, 3% External Sinking Fund Dollar Bonds,
due October 1, 1970, may be accepted is hereby extended from
October L 1948 to October 1, 1949.
'
Copies of the Offer may be obtained upon application to the
Exchange Agent, The National City Bank of New York, Corporate
Trust
Department, 20 Exchange Place, New York 15, Nr-Yr'
"■
depression
Francisco, Cal., Sept. 25, 1948.
1927—Due April 1st, 1947
NOTICE OF EXTENSION
,.
September 27, 1918
San
(Republic of Colombia",
:
;
<
interested
am
Municipality of Bogota
government
77
;
■
we
going to do about it.
After our
wars in the past we have some-
been openly, avowedly, de-
years,
called—that when
were
remedy them when we
get
a
national
whi£h offers no
which
We
simple
economic
■
government
But I tell my Wall Street
the
our
of
of
Administration and it cannot pass
the blame to anyone else.
Causes of Inflation
G. K. Walker Absorbs
tr
reflected
the future of America. ; The
unhappy results of those policies
are' continuing even to this veryday and they are the sole respon¬
sibility of the present National
for today's high prices.
"
have
in
a
prices.
loss.
Understanding
and its tragic lack of faith
system
surrounded.
been
good, hard, honest
The simple fact is that-
standing
fundamentals
well, we would have fewer prob¬
is giving farm geles office will continue in op¬ lems
leadership of both parties and it
today.
is a sound investment in peace.
It does seem unreasonable eration with D. J. Bogardus as
High prices are a hard fact for
for the government to pay potato resident partner. ,
I firmly believe that every good
many
other people, for whiteAmerican is proud that he has
growers in' Maine $3.50 per barrel
All partners of Bogardus, Frost collar
workers,
civil. servants,
and then dump these potatoes in &
Banning will join the Los An¬ teachers, professional people, for this share in waging the peace
the ocean; while you and I must
geles office of Shearson, Hammill our aged who live on pensions, and reinforcing the world's free¬
dom. And no good American will
pay at the rate of over $5.00 per & Co., with the exception of Mr.
and a great many more whose in¬
barrel or much more if we buy by Francis D. Frost,
Jr., who it is comes don't go up when prices do. try to make political profit out of
the pound. There are 137"2 pounds understood will open a Los An¬
The hardship of high prices is the sacrifices by our people in
in a barrel. It now looks as if the
the cause of human freedom.
geles office for Shields & Co.
not an economic accident.
It is
government would also be obliged
The third cause of high prices
the result of definite causes. It is
to buy considerable corn, wheat
the result of maladjustments in and inflation is the fact that both
and
other
products and either
our
economy.
It is part of the before and since the war our Na¬
burn them or sell them at a big
has,
for
business of government to remedy tional -Administration
the-
of
policies
the Administration's basic lack of
these condi¬
this subject of the
demagoguery
with
has
take
The
capital.
part of his term and "get it over
with" than have it come in the
latter
in
nation's
the
Dewey
E.
Thomas
better
Vmuch
Truman
Mr.
practiced
nation
the
which
judges produces. 'Most successful ' em¬
appointed ployers will tell you that -their
Wall
Street, however, has its best executives were born upon
fingers crossed as to the outlook farms. They tell me here that not
for general business and the stock a single president of today's New
market in 1949 and 1950.
They York City banks was born in New
say
that Dewey believes there York City. Most bank presidents
must be a "bust" before 1952 when everywhere were born on farms
he would come up for re-election. or else were sons of preachers,
Hence, he would much rather have doctors or college professors. We
the depression come in the early need many more such men.
point
than
nation will be
say
children
it
the
for
want
that farmers
something more than wheat,
and potatoes. They raise the
me
and
which
all
we
strip
fraud
a
Lack
Those
■
The
team.
Something Not to Forget
Federal
the
and
Basic
have been—to find out
we
Let's
knows how to
as
order to know where
we need to look at
m
what brought about
tions.': '■
.;i•
7
that is
work
often iberately discouraging production
and trying to raise prices.
so
going,
are
where
have
team,
a
the government gets back at least
half of its guarantee through in¬
Now,
we
adminis¬
tration
government guarantees are justi¬
fied.
As to the few big farmers,
come
hair.
will
We
Commission,
Roger
each
other's
tant
getting
or
into
later
failures and other disasters
come.
Therefore, so far as these
V
„
stepping and unemployment as has
each other's happened in the past.
out
plies to ap¬
pointments to
farmers
with-^-
reling.
.
consider
you
fair
a
Furthermore, when
one.
:
Governor of New York
going to install in Washington an administration made up of the ablest Ameri¬
women who are really
big enough for the world's biggest job. We are go¬
to give them full responsibility to go ahead and do the job without bickering and quar-
•
cans—men
.
who will
by hon. thomas e. dewey*
.
<
Republican presidential candidate traces causes of inflation to combination of war financing along with
foreign aid and New Deal policies. Says there is no trick cure, and remedies available are (1) less
waste in government; (2) systematic payment of national debt; and (3) increased production. Attacks"
Administration as hampering free enterprise and discouraging productivity. Says there are signs current
inflation is losing momentum. "
V"",""
-
:
York to get a
give
legitimate
\
...
•"
farmers deserve help and upholds agricultural sub¬
half of
i."outlay ander price guarantee.
.V."v'IlVK"-
prices,
is
;.v;//.v..
:
Wall Street opposition to rising farm
-If
(1325)
I-.'.*
J
V
CHRONICLE
FINANCIAL
&
-
•'
Fernando Mazuera
.
Bogota
(Republic of Colombia) ; ^
Mayor of Municipality of
18
COMMERCIAL
THE
(1326)
LETTER TO EDITOR:
CHRONICLE
amounted
to
$3.00 per
capita. For the record, I should
repeat that 61% of the goods im¬
ported into this country were duty
Reports Back Orders Reduced
Business
final
A
word
Mr.. Dun¬
about
'•
it
would
'
be
better
eliminate
to
entirely if they
Editor, The Commercial and Financial Chronicle:
,
dependent on a protective
May I be favored with space to reply to the "exceptions" in your tariff by putting the same labor,
Sept. 2 issue which Mr. Forrest S. Dunbar, Jr., of Freeport, L. I;, equipment, etc. to work in "effi¬
has taken to the tariff views expressed In my article "Can America cient"
unprotected
industries
Prosper Without Foreign Trade?" published in the July 29 "Chronicle." where "we would all gain from
are
I
say
<*>——
■
that Mr. Dun-
costs
state¬
the
ment
to
effect
that
the
if
on
foreign
imports our
country would
platitudes
o
not claim, I merely
statement, in effect, that
equalizes the differ¬
wage levels already in
do
made the
f
the
tariff
in
Grover Cleve¬
ence
land's days.
In fact, Mr.
operation between the
and foreign producers.
Alexander Wilson
When
ing paragraph
is
all-inclusive
as
his
free
trade
statement
a
theories
as
of
any¬
ter
to
the
"Chronicle"
when
In
benefit of the few!"
the
"Can
America
an
in his
letter
views
protective
benefiting
proper
most
For
You
coats.
the
costs.
■'<
Dunbar
states
and real.
would
find
' of
portion
But, the
amount
total
for that is
your
reason
of
labor
"it is
permits the
protected enterpriser to charge
higher prices than he could other¬
not draw the line at any
wise
point and
particular
that labor does not
receive the larger portion of the
sales dollar just because labor is
a relatively small item of cost In
charge," he is not following
what I said at all, as well as mak¬
ing
an
statement.
erroneous
I
were
the final
removed, the domestic producer
dependent
upon
it
would
be
engage
by
years
stating
that
,
is
now
.
.
"an
Dunbar
ex-
to rid ourselves
A
free
must
charge to enable Mm to
make a profit.
If the tariff duties
not
ducer
there, the domestic
would
have
to
sell
send
many
labor
China
for
many
the free list.
on
weakness in the
a
argument by these ilthey show that trade
as
does not
only
result, per se, in raising
living. As a matter of
fact, England began going off the
free trade basis early this century
standards of
and
in
any
particular
product, he charges what the traf¬
fic will bear. If foreign
competo
revealing
lutrations
market
tends
with
free trade
pro¬
Moreover, the minute the for¬
eign producer gets a monopoly of
tion
England
free trade for
with Ghina where
since tea is
years,
•
our
how could
in
trade
He is
below
cost and, of course, this could
last for a brief time.
asks
statement, Mr.
are not comparable. He
might also have asked the same
question
regarding the
United
States, which has also engaged in
properly-
set tariff merely elevates the price
of the imported product closer to
that which the domestic producer
were
manufacturing process.
conditions
'
of these industries."
say
In answer to my
forced out of business. < Mr. Dun¬
bar later acknowledges this is
so,
ceilent time
the
that
represented
in the raising or trapping of the
animals, the transportation, the
processing and so forth. You can¬
tariff
pointed out that if the tariff
in¬
into
of
of your furs would bear the
cost
brought out.
the
expenditure
engaged in the manufacture of fur
con¬
largest
Mr.
that
example', suppose that you
There are, of course, additional
points that-imight be
that
the
of
wages, both money
tion.
When
true
dustrial income finds its way
sideration to the entire presenta¬
true
is
It
into the production of those goods
and
services
and so ultimately
is to point out to him
give
income.
machinery, power and overhead.
However, one step removed from
that direct-expenditure, labor goes
tariffs
preserving
American standards of living and
protecting American industry. It
appears, however, that Mr. Dun¬
bar hasn't paid much attention to
the points made that refute his
arguments and I think the best
that he did not
of
portion of the income goes to
the
purchase of raw materials,
labor,
procedure
pro¬
a
taking exception to
on
of
that, without the tariff,
destroyed, he is making
arbitrary limit to the distribu¬
tion
cipal points made by Mr. Dunbar
down
prices, the foreign producers
has not
now
only tariffs, but
preferences in her Empire group,
him
answered
stating that it is
article
of
As
I
by
pointed
of
sum
out,
there
this
where the wage costs are
sweat
and
not
afraid
to
Mr.
toil
and
has
recently
situation
of
a
rela¬
raising
in
the
prices
are
being
to
dozen
a
given
for
them.
In
fact,
and
prices
are
far
to
have
recognize
prices to
steadily
that
of
high
imports. Last
utives.
August
year,
423%
in square
Back
orders,
noticeably
are
products.
.
"Noted
Down:
Alcohol, brass
ingots, coal, cornstarch, corrugated
boxes, cotton twine, elastic web-
tiles.
i
\'
i
i
i
i'
■
i' i:
;
t >
.*,4 i
1
>■
'
j
I
'
'
>
■) «
J •.
)
|
|
/
k
merchandise.
Textiles
promi¬
are
steel),
coal,
nently mentioned in the slow bus¬
gypsum rock,
of
were up
exports in
170% in
iness group. The comment is not
pessimistic. Good business in many
•;vr;,'.;;:.
yards and 153% in dollars.
lines is assured for the immediate
;
future.
last
1948
the
while Belgian
period
same
square
The
combined
two
nations
months
of
exports
for
1948
the
these
of
first
five
the
total
exceed
exportations of carpets and rugs
from
all
countries
in
any
12
months period, except 1939 and
Floor
1940.
sold
in
American
products
despite the 30% duty now being
paid on all such goods,
v";
purchasing agents to make a com¬
parison of > purchased inventory
turnover rate' with that of
since
over
30%, incoming shipments' have
sharply. After paying
duty, domestic manufac¬
turers say that their foreign com¬
petitors enjoy a differential in
increased
the 30%
labor
costs
and
duce
at
much
a
ratio than
our
able
are
to
lower
pro¬
expense
American mills.
i
{
y
j
•
ji ,
,
;
-
■■
■'
/
.
'
few years hence when the
war-created pent up demand for
a
floor
coverings
What;
can
has
been
American
met.
manufac¬
turers do to meet this competition
when
business
really
becomes
hard
to
get
as,
Mr.
Runner
be¬
lieves, it eventually will.
This is what is
worrying many
an American company in
thaj; in¬
dustry today. Should we allow
rug in¬
to be wiped nut on the
of
inefficiency as has
been suggested by Mr. Dunbar, or
dustry
will our
fact-finding Tariff Com¬
domestic
production
tariff
and
foreign costs of
under
provisions
the
flexible
preliminary
to
adjustment and modification
by the President?
; v
this
country would
be today had its industries
ated without the
of the 16 Democratic and
lican
tariff
acts
oper¬
protecting aegis
of
the
Repub¬
past
100
during
pursued
<
J
-
1
Commodity Prices
:
"Prices
have
to
be
a
momen¬
now
period of
which
ap¬
Purchasing
spent.
look for
stabilization
should
near
trend
down, as competition to build up
lagging \ order backlogs becomes
more
of
a
factor.
Increasing
in¬
dustrial production.and high farm
yields, with lowering de¬
are steadily narrowing the
margin .between, supply and der¬
ma nd.
Opinion is expressed that
crop
mands,
Inventories
;/
month.
year
A
sharply
policy
of
ago,
made to reduce them to the lowest
necessary
production
this has
been
' to
schedules.
accomplished
compari¬
is evident in the current
and
to
back
steady,
well,
somewhat
level
.
employment unchanged;
buying
policy moving up to 90-day cate¬
gory."
Pasadena Bond Club
/
Again Sponsors Bourse
PASADENA, CALIF.—The Pasa¬
dena Bc>nd Club is again sponsor¬
began Sept.; 15, 1948.
The
course
ago. 84%
many
report greater turnovers,
25% to 50% faster. . Some
report having the highest rate of
turnover ever obtained.
There is
every
indication that this cautious
-
^
shorter
view«
is
reports.
:
on
shown
Investment
of
Nusbaum,
1
cover
all
dealers
Pasadena
etc.
Pasadena
Corporation, is instructor.
The
func¬
securities,'
of
forward
Sep¬
The trend to not
60 days is more pronounced.
65% are within these limits; 33%
limiting to 90' days.
price
,<i
uV.
Hi'.jr .«<!'"
**. iv'.'r y
•A-i;?-'-' 't »t
\
phases
Bond
'
Club
re¬
ports that the registration for this
year's course is three times as
large
as
last year.
.
i
/
.
•/'
confidence
in
structure,
the
some
L. Gilbert Stover With
E. A. Clark & Go.
L. Gilbert Stover, formerly pro¬
prietor of
joined E.
Stover & Perkins, has
A. Clark & Co., 39
Broadway, New York City.
by
over
are
will
of turnover rate with a year
son
'•!Vtv* t',,! ■
r
in the Stateg; prices
uptrend, with tendency
off; inventories static;
Keith
consistent effort has been
amount
Wm
than
then,
"A
'/
better
is
holding
ment,
tle
.
"Production
tions/types
of
•
V
available critical materials. Since
possible
:
v7/. "<■■■?Canada
had been reduced to the levels of
a
•
noted*
East
of the investment of capital funds;'
such as the Philosophy of Invest¬
the
Cleveland, Ohio, died of a
cerebral hemorrhage at the
age
54.
the
in
last
industrial
purchased inventories had become
well balanced. Noncritical supplies
is
trend
commitments
Kevin Keegan, of Field Richards
strike
down,
/"The
V'
scarce.
are
productivity /is
fered
■
Buying Policy
& Co.,
sev¬
without /charge on 17 con¬
secutive Wednesday evenings, and
continuing
M-
;
Skilled mechanics
office,; workers
Tfuckers'
and
in
an uneasy
ing a, special 17-week course iri
demand cannot continue long to
investments in cooperation with
support the extreme high of many the Pasadena City Schools.
The
prices.
'.
■/' v Hyi/ comprehensive course is
being of¬
Summit, N. J.
Keegan Dead
labor situation.
continue
pears
disappearing
industries, creating
in July and August.
ALEXANDER WILSON
Kevin
eral
orders
tum; of - that movement
N-
ad¬
to
attitude will continue.
years.,
overtime * is
vance," according to the survey,
"as upward adjustments are ap¬
plied to items that were not im¬
mediately affected by the upsurge
The
^ >W
paper.
Employment
wateffront strikes in the West are
the most disturbing of current la¬
bor conditions.
\v
'/v/'^
*
continued
lumber,
,
crushed
shorter time is scheduled
Better
generally
oil,
,
month, has not continued in
September. ;; Payroll registration;
remains about the same, though
and
the wisdom of the
buying ,and :. inventory
fuel.
"The trend to increase, reported
tial, .proving
That
Frankly, Mr. Editor, I hate to
think 'where
of them substan¬
many
the past year."
the American carpet and
ground
year
•
r;,
...-v.-'-'
cauticjus
agents
Harvey Runner asks what will
happen from such foreign compe¬
tition
rate,
policy
duty was 40%
duty was reduced
the
a
84% report increases in turn¬
ago.
Previously, the
but
to
'
■
.
thisf country at less than
competitive
'
"This month, we asked reporting
coverings from Bel¬
gium and Great Britain are being
than
t" t.i'/ i:
*
\
.
With lit¬
top-heavy
buyers are
Frederick J. Meyer
Dead
Frederick J. Meyer, retired New
York investment
banker who
for
had been a partner
in Boland & Priem, died Sept. 22
at the age of seventy-four.
many
years
'
■#.v.
'
■
.
down.
pf back
yards and 338%
Sept. 29, 1948.
the duties collected in the United
are
farm
bing, grains, eggs, sugar, corn,
rice, oleic acid, some paper prod¬
30% of the reports indicate a fall¬
ucts, imported pulp, wastepaper,
ing off of new orders. There is
shellac, Stearic acid, cotton rtexstill a substantial bolster
a
for example,
of those on
the result of
many
side
in
leisen, turpentine.
vacations.
however,,
tember
consumers
in¬
"Up Were: Aluminum products,
bichromate,
cadmium,
capital
equipment
chemicals,
cutting
tools, soybean oil, meat, glassware,
glue, lime, phenol, rubber, spiege-
Robert C. Swanton
during
the month, by
,r
catching up the slack of July and
that
there
tariffs which apply to a
minority
are
exec
down
in dollars in the first five months
important forces that
more
t s of
h a sing
the
industries, as 52%
"Still Hard to Get:
Aluminum,;
According to Harvey E. Runner," report maintaining heavy future
Editor of the New York "Herald- orders and 18%, slight increases. ammonia, cadmium, chain, : chromic acid, copper, steel furniture,
output
and
sales-, to
Tribune's" "Buyers and Sellers" Adjusting
pig iron, lead, nails, nickel, kraft
column, exports of wool carpets lower priced products is men¬
and rugs from the United King¬
tioned, with the drying up of de¬ paper, steel, tin, zinc.V \ "J,
y
"Easier Are: Containers (except;
dom to the United States were up mand for high priced and luxury
tariffs
steadily down¬
the
orders in most
and im¬
our
August, while
latest
p u rc
reflect
reports
weakness
supported
the
y
creased
field.,,
talk
to
tember
Production in¬
that
in
.
creased cost of basic materials in
marked
rep o r
hearts that
developed
Specific Commodity Changes
business
a
maintain
time
Dunbar
There
not
by
attempt big
things regardless of the risks and
odds against them.
were
rate
worst
reasons
student
country
so
the
of
risen. It does not take much of
dictate
in
than
high cost of domestic
ward
living by increasing
industries
for
tariffs
more
"
have been forced
their production.
many
world
one
that foreign countries raise their
standard
the
far
ported goods, but the tariff is not
imperative
more
is
current
I have really
my
'
'
about
the
is
trade
consumers.
particular level of
in
to
Now
productivity and
etc.
which
tariffs.
money wages and
real wages.
In other words, he
understands that our standard of
wages, prices,
of
barrier
between
any
the
minds
in
cheapness
synonymous with efficiency as do
all
free
trade
thinkers.
Yet,
in the same breath, he differenti¬
not upon
in
with
discriminatory practices, the
makes
on
men
•
"Many prices advanced in Sep¬
to
expansion is
opportunity which has been re¬
sponsible
for
American
enter¬
prise that is now the envy of the
world—American enterprises con¬
ceived
for
be¬
Sep¬
tendency
boundless
of
on price protection
short range.
this
even
activity would
show
be
are
tively low level of United States
living is based
land
"The
that
trial
con¬
to
mission investigate the differences
tion.
ates
this
the
spirit
well as blocked currency, state
trading, and other restrictive and
as
quite likely to work out a cartel
arrangement to handle the situaDunbar
is not
his
total
Mr.
in
found
and
American
would react to the
factors
would be
Prosper
Trader
Free
structive
} insisting
tember indus¬
opin¬
ion, is only one of the intellectual
vagaries to be expected from, a
income from the sale of products
"other
that
my
going
dustry
•
Without Foreign Trade" article, I
believe I have answered the prin¬
my
about
besides labor, and then
from this statement that
labor is not going to benefit from
the continued operation of an in¬
he
procedure, in
a
con¬
.
lief
savings invested in a carpet and
rug industry, I wonder how he
to
business
productiveness."
Such
of
dition states
If Mr. Dunbar had his lifetime
talks
argues
says, "The tariff is a perfect ex¬
ample of exploitation of the many
for the
Dunbar
Mr.
domestic
duction"
thing I might quote from his let¬
j
I
e
Dunbar's clos¬
y
tariff,
no
which
benefit, harks
bac k to th
If there
much lower.
so
China, as Japan
did before the war, could flood
U. S. with cheap textiles, such as
are
now
produced in the South¬
ern States. Mr. Dunbar appears to
think
this is an argument that
tariffs raise wages in this country,
to lift
tariff
are
were
all
"
their
4
bar's
outset
we were
•
4
*
they cannot .compete with
foreign producers whose wage
the
at
,
"
■
that
opinion
purchasing agents who comprise the
national Association of Purchasing Agents Business
Survey Coinunrtee, headed by Robert C. Swanton, Director of Purchases, Win¬
chester Repeating Arms Corporation, New
Haven, Conn., in reporting
<S>on general
industries
these
composite
a
"inefficient" and that
are
'
*
bar's statement that protected in¬
dustries
Answers Criticism of Forrest S. Dunbar
Survey ComatKtee of National Association of Purchasing
a failing off of new orders, with back orders notice¬
ably down. Sees momentum of price advances ended.
Agents indicates
free.
His Tariff Views
May
Thursday, September 30, 1948.
States
Mr. Wilson Defends
L
FINANCIAL
&
/
./"/i
y
j.
If
5WWWK
1
168
Volume
Goods Than Can Be
President of International Harvester
/
(Commercial
the
Number 4738
,
Supplied;
chronicle
Sound
i
i
President,
-
<
be
can
sup-
to
reach
be
a
tion.
between
plied
by
ex¬
t
growth, there must
your
tions
of
and
■
,": Mr .t
*>; M cC Ei f.frey '
has
.
usually
been
I
ters!
>
,
,
United States are expanding'
the prospereds community of nations
their
Industry
facilities.
mechanical
.
agriculture in
and
ft Industry
that it
;
is."
now
"Whether
vided
-
the
4
*
citizens
and
firms in Latin America
by
.
-
-
:
■
*
.
| tries and increase farm median-?
'
ization.
ftftkftY.ftvft!
',
-
.
"To obtain their needs, all
looH
existing industry of | jhe
.United.States. The resulting^e4
mands are enormous.
They-arc
,,
the
to
,
.
beyond the present capacity of the
States to produce in a
period of time.
."Under
those
circumstances,
.United
short
;
•
what
be
can
done?
I cannot speak
for any
United States concern ex-own, yet I am sure that
other business organizations
in this .country have done what
cept
my
ft many
.
That is: they have
have done.
we
J allocated
to
tion
a. share of their produce
export which has been
to
their
prewar
ft allocations for export.
.
; "Let me illustrate again with an
example from my own business;
In 11947 we provided for export
porportionate
.
■14.7%
of
total United States
our
That was roughly the
production.
—it
same
was
little
a
greater
—
than the average for our export
business in normal prewar times,
;
;
i
Y"Latin
actually
America <■ has
than other
of the world in the distri¬
bution of
For
.
goods since the wari
our
example,
in
1941; before the
'
war,
s
were
30% of our total export sales
made to .the nations of Latin
Last year 35.4% of our
America.
'total;'export sales went to your
countries.
While I am unable to
business
or by cit¬
it, I believe the facts would
similar for many other com¬
prove
be
.;
panies
of
the
United States.
I
Latin Amer-
believe the nations of
-
i|ica have had their fair share of
the
production
of
the
United
'^'States.
."What is the future
,..
through
1
e
11
e r s
and
ica
center
this •> greatft productive
the United States here
;
of
in the Midwest?;
»
i
and
sel,
individual
an
as
men
is
for
street in which
We know that he who sells
must also buy if he expects to be
ing.
ft'ft.-ft k.' k^k?/;:kfekk'Sk;-"
paid.
"Latin ft America
to
already sends
a large vol¬
the United States
v
tries
are
■
i
;
goods. ft That
trade can,
will, be increased as
increase 'your industrializa¬
tion,. develop
and utilize your
you
natural
.
and : have
resources
a
greater variety of goods to sell to
us.
I sincerely hope so.,
"But I have noticed one thing.
selling
that
found
came
to
me.
very
my life in
have
always
few customers
If I wished to make
have had
who I thought
sale,
a
goods," I
I
to select
might be
fluenced k:
ing
attention
tion
raises
him to buy.
living
standards
h
critical
no
many
reasons
direct
some
shortage
there
areas
are
uninspired and un¬
longer the long waiting lists Of
prospective
tenants
for
rental
for* what economic
units, ft There is marked evidence
activity specifically, as well as the
price level and corporate profits,
rose sharply in 1947 and 1948 and
exceeded any previous years o:':
our
country's economic history.'
To
interpret ft the many factors
which are daily influencing oui
national economy as a means tc
predict future economic trends, 3
know is most" dangerous, ft Onlj
that
in
the
comparatively
remaining
buyers are now shopping for price
and
quality and are no longer
willing to buy poorly designed
even
few underhoused
areas
and constructed homes at exorbi¬
tant
ftft;ft Vft.v,-.' ■ftftU,ft
prices.
all willing to admit, I
know, that there is much still to
be accomplished in housing. < Pri¬
ft-
We
vate
are
industry
it within
a
can and
will supply
reasonable time and
as
.
•
,
recommend
"I
to
you
and
your
ask
goods and then visit us
to buy."
us
and
,
td
the
of
most
restrictions
eliminated.
been
peace,? at y
least
Based
upon
a
broad
governmental housing.
have general economic observation, de¬
And yet since spite the fact 'that it is commonly
accepted that; our national econ¬
controls
and
to our
country, new and unexpected eco¬
omy
been
is less robust now than it has
in the past three years,, it
appears clear that the economic
and problems have
expansion forces, within at least
Again, it may accu¬
the foreseeable future^ will pre¬
rately be said that we are at the
dominate
over
the contraction
inception; of another new eco¬
forces.
nomic area.
But again, the vision
Let us narrow our sights and
of the operation
of the natural
forces
of
basic - economic prin¬ consider the effect of current eco¬
nomic trends upon the realty and
ciples appears upon the horizon.
nomic
trends
developed,
Again hope, at least, of the return
a
traditional free economy is
mortgage industries.
It is gener¬
ally granted now that the highly
revived, and again we have the publicized national shortage of
homes and housing units
is no
opportunity to unite our forces to
combat those who are even today longer evident in many communi¬
ties throughout the country.
In a
actively and openly seeking to
to
economic
advance
the
destinies
of
cause
a
and
governmental direction, of habits
of
■}
national
economy
living and working.
To
look
backward,
■
ftft
even
into
great many communities, it is less
acute
than the ever-active
and
voeal
and
persistent advocates of
public housing would have us be¬
lieve, and if current construction
levels are maintained, shortages
in
'
•
projects.
Some few
several commuhitii's
such
nance
and
States
immediate
past,
and
to
re-
these
communities will disap¬
have
to
tion
to
with the coopera¬
a
material extent
industry,
hous¬
with the funds of private
built sorely needed low-cost
ing to house those who previously
lived in slum areas and had
experienced
the
frustration
of
existence
in old-law tenements
had
sanitary fa¬
plagued
by
inadequate heating systems. Some
sharing
community
cilities
and
of
the
from
some
being
needed money has come
State-appropriated
funds,
was
represented by
tax
forgiveness and outright expendi¬
tures by the city.
But no matter
system, whether
State,
what
the
city
Federal housing, or a com¬
ultimate cost
be borne by taxpayers.
If
or
bination of these, the
pear
must
there is
some
date,
and
In
within the next year or two.
large cities, the housing
*From
the
Report of Mr. shortage is still serious, but again
if construction continues in these
Thompson, as .President pf the
areas
at
present
levels, these
Mortgage Bankers Association of
America, to the 35th Annual Con¬ shortages will end within the next
two or three years.
Strange as it
vention, New York City, Sept. 22,
may seem to some uninformed or
1948. 'ftft.; -.ftft ■ ft;
the
housing.
If there is to be more
public low-cost housing, the State
or
the local
community shoula
devise the means to soundly fi¬
v
of
managed
however, wants the Fed¬
such
person,
eral Government to subsidize
,
free : of
peace
a
active warfare, have come
and
'
is usually more
the
to
busi¬
^
however;
of the
economic factors which vi¬
a
buyer,
between' nations as
kand increases both the desires and
shall,
regulate ft our
thriv- all our business friends in" Latin
both be- America, that if you want to sell
come industrialized.
That is nat- more goods to the United
urally true/ since industrializa¬ you choose your customers, sel<
that trade
respective
our
I
a
finally, go to see the man and ask
And one of the
.things that experience indicates is
k industrialization.
'
of
ume
and I believe
taking steps to increase
relations between us.
,
and
significant events
directly or indirectly in¬
which
your
broad
Thompson
C,
kk;k;y
business-'
everything and buy noth4
sell
we
we
or
onerway
a
Your coun-
the long range prospect
constantly improved trade
John
of your Asso¬
ciation on the
important
To detail the many reasons
offered to substantiate those pre¬
dictions would be simply record-?
seeking buyers.
indisputable proof
of the so-termed
is
many
,
in the Midwest consider trade
be
to
-
choose the goods which I
thought he might buy, think of a
reason
why he should buy mine
rather than another's goods, and
I believe
the
many
special
lea s e s
re
market
in
history now clearly - proves were;
outstandingly bad guesses.;
The
fact is, as is now well known, that
production generally, and building
ington Vcoun-
the
that
sound
Wash¬
your.;
oh
there
ing the
to
ro^ny completed vacant dwellings
Too,
sary-
members from
business nation¬
..
„
man
k / "In spite of present difficulties,
,
that in 1947
and
ally would experience a recession;
is
npw unimportant and unneces¬
.
outlook for Having spent most of
mutually profitable trade be-r
tween the nations of Latin Amer¬
a
the highly publicized, pre¬ misinformed gentlemen, there is
dictions of government economists "visible evidence that in some sec¬
that history would repeat itself; tions of our country there are now
,
-
-
now
quickly as supplies of materials
affected business generally
and essential equipment are avail¬
more
particularly the mort¬ one
possessed ' of
the
gift
o' able and the productivity of labor
financing- industry in the prophecy can accurately foretell permits.
Building codes in most
past 12 months.
Too, I shall rek the iutureft But I know we now communities need both moderni¬
suitable climate for both local and
count some; of the activities of all agree at least one one point- zation and standardization.
To
foreign capital.
«jkj y'^.^3
your many committees and report that we are certain that/even the provide an unobstructed market
k'kAisr business^ men,?I believe we
on i-i the administration of
J the af¬ immediate economic futurejis un¬ for new vbuilding materials 'and
must recognize that we will 'have
fairs of your Association
since certain.
"
t
thus realize the savings implicit
to carry the burden of develops
last October. Tn addition, I shall
in mass production standardiza¬
ing our resources and our trade!
offer some personal observations
ft Heiising Shortage Reduced
tion of building codes is a vital
I do not believe either you or we
and outline some of the hopes and
necessity. The demand for build¬
should place all
our ' hopes - for
ftlt is undeniable that many
ambitions which I; have for: the
ing code reform is widespread ajid
the future of ; trade on possible
forces are;today working for the
future of your Association,
obvious.
Once those forces in our
actions by the United States Gov-r
k You recall most vividly, I know, higher;:development of our eco¬ communities move to free build¬
ernment or by a combination of
nomic prosperity.
There are al
the serious problems with which
ers from the shackles of old codes
governments. ,
'
•
;
i.--\ we had to contend'in conducting the same time forces actively
with
their
obsolete
and
costly
ftft "I say that for this reason: Just our :
working:
toward
ft
economic
con¬
businesses' under
wartime
specifications, additional new and
as I know the United States can-?
traction.'
When
production
and
conditions.
We were then operat¬
lower cost •'construction will re¬
not at present supply all the goods
the supply of basic commodities
ing' in an unprecedented era of
sult.
■'
•
;k, ft.
the world requires, I am equally
are
still far below demand and
necessary
restrictions .arid con¬
certain the United States cannot
Low-Cost Housing when
purchasing
power
is
still
a<
trols.
Too, I know you recall the
supply,all the capital the world
unprecedented heights, it is wrong ft- Perhaps private industry at
great distortions in our-economic
requires. ; A great part of the job
system during the period, of re¬ reasoning to predict an early gen¬ present costs cannot on a sound
must be done by the private en-i
eral recession;
At the same time
economic basis furnish all of the
conversion from a wartime to. a
terpriser in every nationV kkftkftj
it must be admitted that produc¬ so-called low-cost housing, ft Such
peacetime economy, ft Confusion,
"There
is
one k other ft thing ' I
tion
of
a
great- many types oi housing needs not only construc¬
concern
and
uncertainty • were
should like to say. I have talked
goods is now, according to na¬ tion cost subsidies, but annual
then
part of our daily business
at some length about the ability
tional indices; greater than ever operational subsidization.
No in¬
lives.
During, the ft past three
of this Midwestern section of the
before
and
shortages .of ; these formed person will deny that in
United States to supply goods and years; and especially during the
goods are being constantly re¬ some cities there is the need for
services which Latin America de¬ past year, many of the perplexing
duced.;; I submit that that is un¬ some low-cost-low-income 1 hous¬
sires.'That does not mean that I problems of the war and recon¬
No economically informed
version periods have been solved questionably true with respect tc ing.
fared somewhat better
areas
Points out mortgage financing is
k |
count
mat¬
Banker,"
the
"W as hington
News Letter,"
the y periodic
agriculture in Latin America
are
expanding, their, facilities.
tally
and to
And Europe is seeking to restore izens
and
J its damaged' or destroyed, indus-r States, governments must by their
gage
laws
and
regulations provide a
i and
;
productive.
t
the "Mortgage
nesses;
is' proft
capital
p
and
such
on
"
ftft
e
well informed
•
'
k
.
promptly
.
-
more
available because of increased interest rates.
vKvI shall not report to
been
na-j
Europe,;
accomplished
not alone by two-way trade be^
ftft cause
of
the
tween
us, but
by three-way. of
destruction of
ft
John L. McCaffrey
four-way trade inyolving several
ftkft;;>.v&ft large part
nations, each finding in that way
of the produc- - 1 ; •
'
*
-'
tive facilities of European indus: a market for the goods it had to
try, many buyers in your coun- sell and a supplier for: the; goods
T'
tries have found themselves; cut it needed 'to. • buy.ft" ft"'.. ■ ■,ft-ft';;' ft % ft. .k
"I believe - also
that a lasting,
-.!- off from the, sources which, ben
"
: fore the war- supplied all or an prosperous trade between us must
important part of their require- be built primarily by private cap¬
\
• ments of some products."
1' ; ital and by business institutions
k .ft Continuing,
M r.
McCaffrey operating within the framework
of a competitive economic system;
stated:
• >■'
■
k ' "Three things are going on simft That is the way that has made our
ultaneously at the present time; hemisphere the productive and
."Be-J
added.
is being
approves
Association
ours
Historically,; a
balance of payments between the
United States and Latin America
ru e
year 1947-48, asserts housing shortage
Opposes Federal housing subsidy, but
you in detail the many activities and accomplishments of your
during the past year.
Nor shall i outline each of the legislative and economic
nations and developments which have affected the
mortgage industry during that period.
You have
nations,
world,C particularly": the
the
should.' be
,*! v.'
reduced and when labor is made
are
more
but also between your
United States and the rest" of
this ;
that
able
■»
full
the
understand¬
.
costs
>
recognize that
restoration of trade not only,
,
;(K "It:^is quite
r
must
we
America
doing the job.
ftV:/
v
"I think
of
municipal low cost housing projects, when present high costs prevent private industry from
Holds private industry capable of constructing needed economically sound housing when
state and
•
in order for thisJncrease in trade
isting produc-
.
,r
pie.
Association
Bankers
reduced^ though much remains to be accomplished.
of the peo-<
power
Mortgage
Mr^-Thompson, in reporting to his organization for
k;-
notwithstand-
purchasing
Housing
President, New Jersey Realty Company
Speaking before the Fourth Plenary Meeting of the Inter-Ameri-?
can
Council of Commerce and Production at Chicago, on Sept. 22,
John L. McCaffrey, President of the International Harvester' Com¬
pany, says present demand of Latin America for American goods;
the
19
By JOHN C. THOMPSON*
Vi?.
ing the dollar
shortage, is
greater than
(1327)
j
Company advocates producers
allocate share of their output for export.
,
financial
&
r
a
great deal more
public
by
Federal.
citv funds, our;
overall economy will suffer.
And
there is, I assert, no such thing
as a
"little more" public housing*:
(Continued on page 27) ftft.ftf?!
housing
State,
or
financed
even
,
loans and discounts to total assets
Delano, Comptroller, of the Currency, reveals assets of
national banks on June 30, nearly $2 billion more than year ago.
Preston
Investments
'
of April 12,
as
1948, the date
of the previ¬
and
call,
ous
nearly $2,000,-
000,000 more
than reported
by the 5,018
-
.
Loans and discounts at the end
of
banks
active
than in June last year.
Cash of $1,120,000,000,
June, 1948 were $22,300,000,000
after d eductingreserves. of nearly
~
of June 30,
as
the
by
$20.0,000,000. for -possible
*"1947.
with
future
Federal
Reserve
>
-
42nd Street.
*
-
banks
*
a''-",
* V.
^Daniel T. ■ Howe,' President;
reserves!
of
,
1
of
$11,326,000000 and balances.with the Kings Highway Savings;Bank
other banks (including cash items of Brooklyn, N. Y., was reelected
than $480,000,000, or 2%, over the
Preston Delano
of the banks
in process of collection) of $8,019,- Chairman of Group V Savings
amount reported as of April 12,
on
June '30.
000,000, a total of $20,465,000,000, Banks ;Association at the Annual
1948 were $79,000,000,000, an in¬ and nearly $3,500,000 000, or 18%,
showed an increase of more than Meeting of the Group held on
over
the
amount
reported as of
crease of more than $500,000,000,
Sept. 28 at the Hotel Granada;
5% in the year. ^
June
30, 1947.
Commercial and
or 7/10ths per cent; since April,
The unimpaired capital stock of Brooklyn. This will be the second
industrial
loans
of
$10,900,000,000
and an increase of $1,600,000,000,
the banks at the end of June,f1948, year that, Mr. Rowe has - served
or 2%, since June, 1947.' Included were up 21% in the year, loans on
as Chairman of this Group of 36
was $1805,000,000, including $24,In the recent deposit figures are real estate of $5,200 000,000 were
000,000 of preferred stock. Surplus sayings banks of Brooklyn Queens;
demand deposits. of individuals, up 24%, and consumer loans to
Staten Island and Long Island,
was $2,452,000,000, undivided prof¬
partnerships, and corporations of individuals, of .$3,500,000,000, were its, $971,000,000, and ' reserves, Joseph G. Munz, Vice-President
of the Hamburg Savings Bank,
$45,200,000,000, which increased up 32%, while all other loans of $318,000,000 or a total of $3,741,was
reelected
Secretary ^Treas¬
$70,000,000 sii.ce April, and time $2,700,000,000, wh ich included 0.00,000. Total capital accounts of urer.
'
The
••-
"losses."
deposits
The net loans were; more
,
Reelected
of individuals,
deposits
loans
partner¬
to
farmers,
ships and corporations of $18,800,-
brokers
000,000, which increased $64 000,-
for the purpose
dealers
and
to
$5,546,000,000, which
7.02%
were
of purchasing
more
or
they
than in June last year,
were
when
decrease
on
were:
the
John
its dividend to 2% for the
crease
ending Sept; 30.
It is
pointed out, that the New York
Savings Bank is the first Savings
Bank in Manhattan to pay a , highel' rate -of; interest *. tq depositors.
It will continue to pay dividend*
quarter
from day, of deposit, compounded
quarterly. ! Two Brooklyn, N. / Y.
banks recently announced ;that ;a
2% dividend hadJ been declared
for the three months' period end¬
ing Sept. 30, increasing the Tate
from 1 y2%; They rare the; Kings
County Savings Bank and the, City
Savings Bank.
i
*
'
Reginald Roome, President of
.
.
the;
Excelsior
Manhattan,
Savings
has
Bank
announced
-
of
that
its board of trustees expects, with
earnings continuing satisfactorily^
to pay for the quarter ending Dec.31, a dividend at the rate of 2%
per annum. ;;.w
•
.
■
I '
"•
«
•
<!
ft
L
August Zinsser, formerly Presi¬
dent of the Central Savings Bank
of New York, died at his home in
Ridgefield, Conn., on Sept 26.
engaging in the practice of
law, Mr. Zinsser became President
of the Yorkville Bank, which was
After
since June
30,1947
merged with the; Manufacturers
of New York; Gilbert Trust
Company in 1925. He served
Barrett, s President
of
the as a Vice-President of the en¬
Brooklyn Savings Bank; Paul W. larged
Manufa^urers Trust for :a
Connelly, President of the Fulton year before he became President
Savings Bank Kings County and of the Central Savings Bank.
John J. Hickey, Vice-President of
\
Amount
Percent
the
6.86% of total deposits.
the
.
State
C.
(In thousands of dollars)
or
serve
Adikes, President of the Jamaica
Savings Bank and President of
the Savings Banks Association of
Statement Showing Comparison of Principal Items of Assets and Liabilities of Active National Bank*
as of June 30, 1948, April 12, 1948, and June 30,1947
Increase
to
Executive Committee
others of total deposits, were $237,000,000
carrying securities, and loans to
Deposits of u;e United States
000.
and
advances
Bankers
and
United States Government
,
national banks
:
NEW BRANCHES
banks in
NEW OFFICERS, ETC.
obliga¬
REVISED
tions (including $5,000,000 guaran¬
CAPITALIZATIONS
teed abligations) on June 30, 1948
—^
—
—
! Government of $1,365,000,000 were aggregated $36,231,000,000, which
was a
decrease of $3,200,000,000)
At the regular meeting of; the
$161,000,000 less than in April; de¬
Board of Directors * of The;" Na¬
or 8%, in the year.: These invest¬
posits of States and political sub¬
ments were 42.45% of total assets^ tional City Bank, of New York
divisions of $5,176,000,000 showed
compared to 4727% in June of the held on Sept. 26, Harold M, Mills
an increase of $268,000,000, or 5%,
year previous. Other bonds, stocks, was appointed Assistant Cashier:
and- deposits of banks of $7,306,and
securities of $5,310,000,000; Mr: Mills will be assigned tq the
000,000 were $271,000,000, or near¬
which
included: obligations. ol real estate department with vyhich
ly 4%, more than in April. Postal
States and political subdivisions he was formerly associated^ hav¬
savings deposits were nearly $3,of
$3200 0O0 JK)0r w amounted •./ to ing left the National City in194Q
000,000, and certified arnd cashiers'
about the same as in April, but to become Vice-President of The
checks were $1,116,000,000.
were- $357,000,000,
or; 7 %, ■ more American Savings Bank on West
16 by Comp¬
covered 5,004
the United States and possessions.
The assets
were
$400000,000 more
than reported
by the 5,014
CONSOLIDATIONS
1947.
than $85,000,000,000, it was announced on Sept.
troller of the Currency Preston Delano.
The returns
active national banks in
Thursday/ September 30, 1948
News About Banks
June 30,1948 was 26.13, in com¬
parison with, 22J55 on June 30,
on
1948 amounted to
The total assets of national banks on JTune 30,
more
v "
banks, etc.; showed a decrease of
nearly 5%;' The percentage of
Reports Rise in Nat'l Bank Deposits and Loans
-
FINANCIAL CHRONICLE
THE COMMERCIAL^ &
(1328),
20
t
Increase or decrease
"
June 30,
1948
Number
of
banks-__——*
—..
April 12,
June 30,
1947
1948
5,004
5,014
since April 12,1948
Amount
Percent
.
io
5,018
—
.29
14
&
—..
.23 >'
10,967,053
industrial loans——
Loans on real e-tace
loans
other
—.—»—,j——*
iniilvidua^^_-—,—
to
loans, iuciuumg overdrafts—,—
5,270,421
9,043,562
4,228,135
3.536,607
;2,669,114
2,726,779
3,869,195
21.27
1,923,491
■J;!'
-
——.±;—•
~
Direct obligations
of
18,810,006
(39,419,227)
;
486,701
—
2.23
.;!;■; 3,493,036
1.96
f—3,193,071
i
6,378/
—724,240"
—
1.96
savings banks within this State
study methods whereby they may
better meet the banking require¬
—17.67
>1,127
(—
39,425,605
Mr, Rowe also recommended that
8.10
—3,194,198
8.10
—
3,172,597
1,962,559
3,207,888
1,943,659
——-
2,900,981
>
f
.1,896,733
35,291
38,900
—
,
—
1.11
I
>
...
eral-Reserve banks—
158,271
'157,536
41,541,225
42,248,339
!
155,338
-•■f
Total 'securities
Total loans
—
securities—.,
and
63,844,267
46,926
2,933
1.89
—2,837,432
!r~ 6.39
-
Trust
Company, discussed the ef¬
fect of inflation
'
—707,114
,
—
1.67
*>hd
63,188,663
—220,413
—
.34
655,604
1.04
Federal
Currency and
1,120,314
11,325,863
8,019,321
coin..--———a_
Reserve with Federal Reserve banks———
Balances with other banks—
Total
J,
cash,
——
with
balances
other
•,
32,992
3.03
263,503
245,582
2.38
7,783,534
^
■
3.16
132,026
13.36
702.137
6.61
235,787
3.03
*..
'
20,465,498
19,923,421
1,031,347
,939,797
85,341,112
84,927,898
19,395,548
>
;
-
829,049
-
542,077:
2.72
1,069,950
91,550
9.74
202,298"
413,214
,49
.
83,413,260
1,927.852
1
:
LIABILITIES
Deposits
■
of. individuals;
;
partnerships
corporations:
'Demand
<"'
5.52
L«
-
Deposits of. U: s. Government.——!
Postal savings deposits—--——A-i.
Deposits
of
States
and
political- sub>' divisions
—-
——
—
18,830,881
5,175.811
"Total deports
;
Bills payable, red!"counts, and other liabili¬
78,999,988
money
Other liabilities
liabilities, exclud. capital accounts
,
45,134,137
18,767,225
44,751,010
18,656,606
1,526,220
2,803
1,365,053.
2,809
7,305,787
Total
•
•
11
;
1,115,980
'
i
.15
868.049
—161,167
—10.56
2,804
6
'21
.
4,562,716.
4,907,268,
7,034,821:
,
.
69,530
63,656
7 v: 2.31
.
7,433,963
.34
268,543
5.47
270,966
3.85
1,094,772
1,222,001
21,208
1.94
78,467,246
77,397,149
532,742
.68
\
613,095.
—
•
1.48
—
57.26
>
.18
5;:
•
13.44
128,176
—
106,021 '
—
8.68
National
42,871
152,315
752,485,
.769,669
79,795,344
79,389,230
,
27,860
—109,444.
679,571
...
17,184
—r*
78,104,580
—
406,114
2.07
15,011
53.88
2.23
72,914
% 10.73
.51
;! 1,690;764
■
2.16,
a—a--
25,235
1,780,905
1,774,713
28,359
1,742,512
1.804,803
1,799,948
1,770.871
2,451,488
2,419,482
971,091
961,790
2,329,951
874,798
357,448
333,060
23,898
.
r
1,337
'
—
5.30
'
—
.35
38,393
4.855
.27
•33,932
;
2.20
Total'
-
-
!——J-A..
Surplus
Undivided
profits
—
!
Reserves
*
«——-
318,386
3,740,965
.
Total capital accounts-
5,545,768
Ratios:
to t^tal
U.- S. Gov't
as«cts--
Loans and divovnfg to *nt«l assets
Z Capital accounts to total deports
,
and
85,341,112
5,538,668
84,927,898
5,308,680
.97
—10.93
2,245
7,100
83,413,260
Percent
Percent
43.51
47.27
26.13
25.69
22.55
7.02
7.06
6.86
Items
are
sh6wn
gross,
413,214
•
42.45
sign
denotes
decrease.
•
Minn.;
.
121.537
.06
—
203,156
.13
.49
4s
'.!
*
that
William D.
Ryan, Assistant Vice -President,
and Fred E. Hilgeman, Assistant
Secretary of the company.
Mr.
Ryan was formerly Assistant Sec¬
2.31
retary!
❖
*
#
Richard L; Maloney, Jr., Presi¬
.
-
1.
e.,
before
deduction
of
valuation
reserves,
has
than 80,an office
The absorption of the Bayonne
Trust Company, erf Bayonne, N.1,
the Commercial Trust Com¬
of Jersey City, at Jersey
by
pany
City, became effective on Sept,T$»
according to the bulletin issued by
the
of
Board
Governors
of
the
Federal Reserve System on Sept.
18. The main office and branches
as
Trust will be op¬
branches of the Com¬
mercial Trust Co.
ing
An item bear¬
on
Joseph C. Cotellessa, Vice-Pres¬
ident and
Cashier of the Second
National Bank of Paterson, N..
died on Sept. 21. Mr. Cotellessa,
who was 52 years of age, was also
President of the Passaic County
ehanics and Metals National Bank
of New York.
ft
Robert
'
dent
Bank
of
of
nounced
The
New
New
at
that
York
Savings
York
14th
the
-
;
fit
""
C.
Caskey, who for 45
served as Cashier of the
years
National Iron Bank of Morristown,
N. J., died on Sept. 23,
He re¬
tired in 1944, it was stated in Mor¬
ristown advices to the Newark
of Sept. 24, when the bank
merged to form the present First
National Iron Bank.
*
The
Corn
Trust
was
90th
it
ft
anniversary
of the
Exchange National Bank &
Company
celebrated
of
Philadelphia
Sept. 23. The
organized in 1858 with,
a.capital of $130,000; today its as¬
bank
on
was
sets exceed
...
;
serves more
President of "News"
Strong,
tution have appointed
4-47
1,927,852
$105,000,000,
000 depositors. It also
in Forest Hills.
the board of trustees of the insti¬
4,41
5.74
237,088
pSrts of Nassau County, will offer
a complete
savings bank service.
The
bank, with resources over
Record in g Bankers Association. Born in New
York City, he had at one > time
been in the employ of the Me-
of New York, has announced
11.01
14,674
.
The United States Trust Company
5.22
'96.2">3
—
an¬
Shawmut Bank of Bos¬
.
,
Avenue
available.
NOTE—Mlnus
.
Percent
^Beginning J"n* 30. J°^8. figures for various loan
are not ei*t<rely
comparable with' prior figures.
tNot
3,537,809
1.32
9,301
39,062
1.92
"
Total liabilities and capital accounts.—
:
3,738,720
32,006
,
—
■
was
on
Beniamin
'
■
Detroit;
Auditor, Upper Avenue National
Bank of Chicago, Chicago, 111.
4,461v —15.73
6,192
a
the
Treasurer, Miss Rebecca Lambert,
•
a-
Shelby, in
at
Mass.; Corresonding
Secretary,
Miss
Elizabeth
A.
Browne, Assistant Secretary," City
Savings Bank, Bridgeport, Conn.;
Capital stock:
Preferred
convention
ton, Boston,
■
—71.35
office, located in
new
shbpping center and convenient fo
Secretary, Miss Gertrud M. Sundlie,
Assistant to the. Manager;
ACCOUNTS
Common'
Fort
neapolis,
1.72
1,602,839
The
ton.
of the Bayonne
Sept. 24, were: VicePresident,
Miss Marion;...,E;
Mattson, Assistant Cashier, North-)
western
National ' Bank,
Mint
*
CAPITAL
annual
nounced
1.01
274,275
497,004'
,,f
L,
■
its
Hotel
452,657
L.
'
»:«>»;. r'-.
V
Ridgewood,
of
will open a new office in Laurel-
.
Other officers chosen it
Deposits' of bailkO
—a
;
a.
Other
deposits
(certified J and
casfoiers'
.checks, etc;). —_r—j——
ties for borrowed
/V
h
45,203,667-
a
vr"1
and
—
"
Time
..
Oct. 1, the Ridgewood Sav¬
Bank
the offer by the trust com¬
Corporation, The Provident Insti¬ pany for the acquisition of the
assets of the Bayonne Trust ap¬
tution for Savings in the Town
of Boston,- wasr elected President peared in our issue of Aug. 12,
c ■ '-Y
of the Association of Bank^Women page■ 617;- rf:;;
24.40
.
On
ings
erated
*
Mrs. Bernice D. Parks, Assistant
and;, member of
the
at
-V
Housing Administration,
Treasurer
1?
'Total assets-
savings banks
also addressed the meeting.
cash
i--_—
assets
988,288
10,623,726
banks,
including reserve : balances' and
items in process or collection—
Other
,
1,087,322
11,062,360
7,773,739
on
public debt. Thomas G, Grace,
New York State Director for the
'
64,064,680
,
AT-
'135
•
;
-i
44,378,657
not now served by
areas
savings banks. August Ihlefeld,
President, of the Savings Banks
10.58
306,907
,
.96
■" ,t '■
l).
'
'
r
18.57
—
ments of
r
Other bonds, note-s and debentures
—724,240
sub¬
-
—
I
36,955,647
36,231,407
political
and
States
21,816,341
36,955,647
5,251/
securities-,-,}—
Total U. S.
22,303,042 <
36.226,156)
its
urged that consideration be 'given
to the expansion of mutual sav¬
ings banking to states not now
being served by these institutions.
32.50
-
•
^
Obligations lully guaranteed,^—
^
as
4.96
24.65
1,042,286
867,493
142,416
T
Net loans
U, S. Government securities:
divisions
reelected
was
Rowe, commenting on the
growth of savings banks in this
State, and throughout the nation,
—...
Obligations
Savings
Mr.
Total gross loans——.-a *22,500,860
valuation rtsem197,818
Less
.
York
New
Chairman.
Commercial and
All
who
Bank,
ASSETS
Consumer
Greater
$280,000,000, while its
in excess of $257,000,The Philadelphia "Inquirer**
deposits
000.'
8th notes
are
that the bank's
City at
Street, has
an¬
out of the fact that it was organ¬
will
in¬
ized by members of Philadelphia's
bank
name
grew
■
Volume
168
Number 4738
THE
grain
exchange, then called the
Corn Exchange and known
today
the
as
Commercial
Philadelphia.
also
Exchange of
The
'
same
existence
1864
it
Na¬
a
and altered its name
Corn Exchange National
Bank.
On June
18, 1928, title of bank
to
changed
to
Corn
Exchange
National Bank & Trust Co. Ex¬
pansion
through
mergers
with
other banks started in
April, 1922,
Exchange
acquired
Corn
Rittenhouse Trust Co.
it
was
Four years
merged
with Third
In 1928 it
merged
Bank & Trust Co.
National Bank.
with
Oxford
and
in
April,
1929,
with
Union
Bank & Trust Co.
; "Its President is David E. Wil¬
liams, who has served in the post
since 1941 and is the ninth Presi¬
dent since the
inception of the
*
v
.
The
board
Girard
of
Trust
delphia
of
the
Phila¬
elected
Harley L.
investments offi¬
trust
a
of
managers
"Oliver D. Marcks, President of
for
four
years,
will
Equitable
Rankin's
Presidency of the new
firm.
John C. Cook, Assistant to
the
President of Bankers,
will
step up to the Executive VicePresidency of Bankers-Equitable.
Other principal officers will in¬
clude Ralph Nixon, Senior VicePresident; Nelson F. Adams, VicePresident and Trust Officer; Willbur J. Danaher,
Secretary, and
Olin H. Wyman, Treasurer."
'
In
election
*
to
his
new
the
and
stated
as
which
unite their interests
minster
office
and
to
are
the West¬
are
V"
The
institution
the
of
Westminster:
to
be
formed
by
consolidation, to become
ef¬
fective Sept. 30, will be
designated
the Carroll
County National Bank
of Westminster.
The Baltimore
"Sun" of Sept. 18 said:
'
"Norman
B.
Boyle, SecretaryWestminster
Savings
Treasurer,
Bank, and President
land
of the
Mary¬
Bankers
Association, is
scheduled to become President of
the merged bank.
Joseph H. Cun¬
<
ningham is slated to be Chairman
of the
board; Milton P. Myers and
Dr.
Lewis K.
Woodward, ViceChairmen, • and Theodore F.
Brown, Chairman of the Execu¬
,
tive Committee.
V.'i £•>.I
The
•
board
of
directors
Old National Bank
Ind.,
announced
election
of
Director,
Bischoff
on
Oscar
Oscar
Vice-President
in
Sept.
H.
'
Eberhart
and'
'
•>
15
Lamble
Walter
Assistant
as
ident.
of
..
the
Evansville,
E.
the
as
as
H.
Vice-Pres¬
V
■
of
the
of
the
Board
thereto
of
Mr,
*
*
*
'";
•
Rehfeld,
Vice-Pres¬
ident of the Mercantile-Commer¬
cial
Bank
&
Trust
Company of
Sept. 17 elected
St. Louis, was on
President,
of
Associates.
will
the
It
is
the
assume
Robert
stated
Morris
that
he
Presidency at the
conference
of
the
ciates at St. Louis Oct.
Asso¬
24-27.
The First National Bank in St.
Louis
tion
has announced
of
Frank
Vice
-
X.
the
Fuchs
promo¬
-
from
The common
capital of the Up¬
National Bank of
Chicago,
HL,
has
been
increased
from
$750,000 to $1,000,000 by the sale
of
$250,000 of new 'stock, the
Comptroller of the Currency re¬
ports.
came
.
The
enlarged capital
effective Sept. 17.
*
%
$
5jS
'
■
be¬
an
in
the
it
St.
to
a
made
was
Louis
"Globe
Democrat" of Sept. 22.
'
J.
Allan
Trust
lanta,
Ga„
of
rectors
of
the
Citizens
Bank
of
a
&
At¬
Sept.
on
17.
He had
Assistant Secre¬
been
also
elected
was
the
National
heretofore
tary
Wilson
Officer
Southern
The
company.
elected as
di¬
Assistant
Cashiers, said the Atlanta "Con¬
stitution," the following: Walter
H. Gibson, J. Harrison
Hopkins
and Herbert L. Megar.
.'
.•;•*,
*1
*
*
....■■
..
The opening of a new bank in
Dallas Texas, namely, the Empire
State Bank* occurred on Sept. 20.
The Dallas
"Times Herald" re¬
ported that the bank opened with
larger capitalization than any
a
other state bank in
Texas, accord¬
ing to State records; It has a cap¬
ital
structure
of
$1,200,000, con¬
sisting of $750,000 capital, $250,000
surplus and $200,000 reserves. On
the
opening day, Price Daniel.
Attorney General of Texas, and
Jesse James, State Treasurer, both
members
of
the
State
Banking
Commission, participated in brief
ceremonies formally opening the
bank.
Organized by Ellis C. Hugv
President;
Michaux Nash.
ExecutiveVice
President,
and
their associates, the new bank was
granted its charter on Jan 9 by
the
State
Banking Board,
the
"Times-Herald" reported.
^
■
are
going
Detroit, Mich., for
Bankers
Trust
Billings, Mont.*
in
of the
a merger
Company and the
"Free Press" of Sept. 26 that the
date
of
fixed at Nov. 30.
merger
is
on
the
be
Co.
and
through the merger
Bankers-Equitable Trust
its
capitalization,
it
is
stated, will be $1,518,000.
From
tlie "Free Press" we also
quote:
"Stock of the consolidated
will be issued
of*one' share
for
on
com¬
the
each
one share
for each five shares of
Equitable
also
will
old
Equitable
■-
Equitable sharehold¬
receive for
shares
Mortgage
■
each
share
one
Co.;
4 j»s4 qu ♦>
»*«"
> *
i"
«•»
in
which
\
■.
of
.
ner
in
comes
Oct.
Paul H. Davis
a
& Co.,
be¬
limited partner effective
1.
Interest of the late William M.
Fible in H. O. Peet & Co., ceased
Sept. 6. ;
;
■
.
With Hill, Richards & Co.
(Special
LONG
ens
to
The
Financial
Chionicle)
Our
Reporter
A group of financial and indus¬
trial leaaers, insurance and bank¬
Governments
on
By JOHN T. CHIPPENDALE, JR.
ing commissioners, and principal
ofricers of
The
a numoer of financial
associations attended tne
opening
session
Sept: 2v,
on
Third ' Annual
Boards
of
of:
to be
the
tant
The
Bankers
longer
covering
Chase
move
of
from
list,
support
with
the
traders
ever,
have
in
the
knows
it
has
spark
levels,
especially in the;;
performance along theseSept. 15, 1967/72.
Short
.
for
been
what
substantial
a
able
they
to
may
.
.
of
amount
of the bank issues.
some
past
but
that
best
doubt responsible
no
trends, and who
of
'
given by the 2%s due
was
future in support
near
bond market has shown
away
the
,
...
the recovery that took place in
How¬
,..
changes
sense
in
doing just that
be
again?...
America, Chicago, Illinois; Chris¬
topher J. Devine, President, C. J.
Devine & Co., New York; Robert
E.
Dinneen,\ Sup't of Insurance
Albany, New York; Frederic W/
Ecker, V. Pres., Metropolitan Life
Insurance Co., New York; Sumner
B. Emerson, Morgan
Stanley &
Co., New York; Walter Frank,
Schroder, Rockefeller & Co., Inc.,
New
York;
Thomas
Graham,
President,
Bankers
Bond
Co.,
Louisville, - Ky.; Sheldon Green,
Vice-President,
to
end
lines being
National
Ass'n
likely to be made in the
are
government
enough
president,
C.
F.
Childs
&
Co.,' Chicago,
Illinois; Julien A. Collins, Pres.,
Investment
readjustments
levels of government securities.
Childs,
.
.
.
.
.
York;
Barker, President,
Syracuse Savings Bank; Newton
mack, Sup't of Banking, Des
Moines, Iowa; George A. Bowles,
Commissioner of Insurance, Rich¬
mond, Virginia; Charles Cain, Jr.,
Chase
Suppoprt levels have held
...
was
necessary to test them.
In other
of eligible issues have remained above "pegged"
prices, and even rallied from the lows of the move.
Although
fear of lower prices for government securities has not been dissi¬
pated by a long shot, there seems to be less concern now that impor¬
W.
F.
seems
quotations
cases
H. Albert Ascher, Wm. E. Pol¬
&
Co., Inc., New
C.
V There
.
in those instances where it
lock
Bank;
.
lifting of some of the uncertainty that shrouded the financial
following the announcement that reserve requirements of
member banks would be increased.
International Monetary Fund.
Among those attending were:
Vice-President,
a
district
of the In¬
ternational Bank for Reconstruc¬
tion and
Development and the
Frederick
ability of the monetary authorities to keep
obligations within set limits is improving the
Treasury
technical position of the government bond market.
1948, of the
Meeting
demonstrated
of
prices
Governors
-
STABILITY FACTOR
One
•
of the
factors that should be making for more stable gov¬
prices, and probably is very important in maintaining
support levels, is the tangled international situation.
If there is
danger of armed conflict, will prices of Treasury obligations be
allowed to drop below present
"pegged" prices?
Would another
war be financed at
higher interest rates than the last one?
Hdw
could the Treasury sell securities with a
government market that:is
definitely on the defensive?
Until the uncertainties of the inter¬
national picture have been resolved in some measure is it
likely that
ernment bond
...
.
.
.
.
.
.
the
authorities
down
National
will
let
.
.
.
quotations
of
securities
government
move
much, if any, from current levels?
Financial preparedness
doubt being considered along with
military preparedness.
.
.
.
Bank, New York; Murray Hanson, is no
1
General
mV
Counsel, Investment
Bankers Ass'n, Washington, D. C.; BONDS ADDED TO "FED" PORTFOLIO
George L. Harrison, Chairman of
Although the Federal Reserve Banks have been large buyers of
Board, New York Life Insurance long Treasury obligations, the total
government security holdings of
Co., New York; W. P. Hodges, the Central Banks as of Sept. 22 were still below those of Nov.
12,
Commissioner
of
Insurance, 1947, when the movement to get rid of the more'distant maturities of
Raleigh, N. C.; Basil Hwoschinsky, governments got under way.
Nonetheless this shift in positions
Vice-President, Central Hanover has had a marked effect upon the government
security holdings of
Bank
& Trust Co., New York; the Federal Reserve
Banks.
Treasury bills, held by "Federal,"
Joseph
T.
Johnson,
The
Mil¬ which were 60% of the portfolio on Nov.
12, 1947, are now but 29%
waukee.^ Company,
Milwaukee, of the total.
Certificates which accounted for 32% of the position
Wisconsin; W. E. Knox, President, last November, are presently 22% of the
portfolio.
Notes have
Westinghouse International Com¬ not changed too much, with the current
total 8% as compared with
pany, Pittsburgh, Pa.; Arthur H. 5% on Nov.
12, 1947.
,!
"
'*
Kiendl, Vice-President, Guaranty
:
>
The most important adjustment has been in
holdings of
Trust
Company of New York,
government bonds, with the Sept. 22, 1948 report
showing that
New York;
Aubrey C. Lanston,
Treasury bonds were 41% of all government securities owned by
Vice-President,
First
Boston
"Federal," compared with 3% on Nov. 12, 1947.
Treasury
Corporation, ,New York; Samuel
.
•'
'
'
.
T. Lueker is with
.
.
'
•
.
.
.
.
.
,
.
.
.
...
...
bonds due in
"more than five
years" increased from
2% of the
Lunt, Hamlin & Lunt, Buffalo,
total as of last November contrasted with the current
position of
N.
Y;
Shepard
Morgan, Vice33% of all of the government securities owned.
Bonds due
President, Chase National Bank,
from "two to five years" moved
up from 1% to 8%. .
New
.
.
^
!
York;
Joseph
L.
Morris,
Robinson
Humphrey Company,
PROFIT PROSPECT
••
■,
Atlanta, Ga.; Edward D. McGrew,
■
*:
Although liquidity of the Central Banks has been decreased
Northern Trust
Company, New
through
acquisitions, and the shift from longs into shorts, this should
York; James A. McLain, Presi¬
dent, The Guardian Life Insur¬ not be of more than passing interest because of the Central Banks'
power
over
the government bond market.
ance
Company of America, New
Commercial banks, by
York; S. Page Nelson, President, taking to the shorter maturities, have increased their liquidity in so
The Savings Bank of Baltimore, far as government securities are concerned.
; However, there
will
Baltimore, Maryland; Herbert H. no doubt be a time in the future when the liquidity preference will
Pease,
President
New
Britain not be so great on the part of the member banks.
Income must
Machine Company, New-Britain, be maintained by the deposit institutions and this will most
likely
D.
.
.
.
-
V....
.
(
.
.
.
.
.
.
Conn.; D. K. Pfeffer, National City
Bank
,
of
Roland
New
York, ,New York;
Pierotti, Vice-President,
Bank
of
America, Washington,
C.; John Redwood, Jr., Baker,
and
Company, Baltimore,
Md.; Dominic W. Rich, President,
D. W. Rich Company, New York,
N.
Y.; M. H. Sandberg, A. E.
Weltner & Company, New York;
Francis X.
Scafuro, Asst. VicePresider.t, Bank of America, New
York; A. E. Scherr, Jr., Dime Sav¬
.
.
.
.
may not
be
so
long in developing.
,
^ ,•
The coming year will mean that the first of
the "three little sis¬
,
ters," the 2s due June 15, 1949/51, will be
callable, and this is creating
considerable interest among
money market followers.
N'ot only
are there
discussions about what could be done with these
bohdg;
but ideas are being put forth as to what
might be undertaken in
order to relieve the pressure of
.
.
.
selling by non-bank investors,
However, there
most
N.
any,
Schermerhorn,
C.; Leo N. Shaw, Vice-Presi¬
dent,
National
York;
Frank
President,
pany,
City
P.
of these
seems
money
to be
r/i
pretty general feeling among
market analysts that very little
change, if
a
will be made in the refunding pattern.
::U'-
Hill, Rich¬
Com¬
W.
Jason
York;
of
Director
Honors 25-Year Employes
Holders
of
City of Bogota 8%
external sinking fond
eold bonds
,
^
Eight, members of the home of¬
fice of the Home Insurance Com¬
of
Pub¬
.
Manufacturers;
Washington*
JX
Trust
C.;
flfork*- Jr.,
\. • i
Home Insurance Co.
Offer Has Been Extended
...
Philadelphia, Pa;::
>
or
Trust
Bogota Bond Exchange
1924, due Oct. 1, 1945, and of pany celebrated their twenty-fifth
Municipality of Bogota, Columbia, anniversary with
the
company
lic
Relations, - National - Ass'n power and light consolidation loan at a luncheon given in their honor
of 1927 20-year external 6*/2% se¬ Sept.
of Mutual
Savings Banks, New
23, at the company's head¬
cured
sinking fund gold bonds, quarters in New York.
-v-v'
York; W. R. Strelow, Jr., Vicedue April 1, 1947, are being noti¬
^ The honored guests were John
President, Guaranty Trust Co.,
fied that the offer of exchange of W.
Thuman, George Taylor, '
New York; William A. Sullivan,
these bonds and appurtenant cou¬ Charles Lauterbach, and Assistant
Insurance Commissioner, Olympia, pons for Republic of Colombia Vice-President
Moore,
of
the
Washington; Joseph M. Upchurch, 3% external sinking fund dollar Home's western department; Miss I
Stockbridge,
ards & C04 Farmers & Merchants
11
New
Vice-
Bankers
New
Bank,
Shepard,
.
ANTICIPATION
ings Bank of Brooklyn, Brooklyn,
A., Coster
.
a reversal of the
present trend.
Where will the commercial
banks get the longer Treasury securities
they will be looking for?
Federal should be in a position to
profit well from a change in con¬
fidence and psychology that
D.
Y.;
.
entail
Watts
Bank
Building.
.
.
'
.
*
BEACH, CALIF—Clem¬
\
"
Financiers at Meeting
Of International Bank
D.
of
Bankers Trust stock and
Trust stock.
their
Exchange
Weekly Firm Changes
basis
share
21
Chase National Bank, Washington,
New York Stock
changes:
"
Henry E. Greene, general part¬
will
ers
to
$100,000 through a
dividend, raising it from
$200,000 to $300,000.
v/:, :/v
for Oct. 20.
The
of the institution which will
act
created
pany
increased
was
of
plans
to
Meetings of the
scheduled
are
name
extent
stock
The New York Stock Exchange
has announced the following firm
stockholders
be
the
'
.
forward
Equitable Trust Co. of that city,
and it is learned from the Detroit
effective
•"'
Effective Sept. 13, the capital of
the
Midland ^National
Bank
of
the
Plans
(1329)
-
President
-
town
CHRONICLE
*
Vice
President,
known
gins,
.
FINANCIAL
4
Assistant
Farm-
Mechanics National Bank
Westminster
and
the
First
Bank
Chairman
the, election
Co.
-V
Savings Bank, the
National
of
Trust
Wismer.
efs and
of
Bankers
*
page 916,
the banks
therein
we
annual
*
Plans for the
consolidation of
three banks in
Westminster, Md.,
were
approved at special meet¬
ings of the stockholders on
Sept.
17.
Details of the
merger plans
were
given
in
these
columns
Sept. 2,
issue of Sept. 23, page
referred to the creation
our
Walter: L.
office.
,
the
assume
cer, effective Oct. 1.
Mr. Rankin has been
associated
with the First Boston
Corp.
The
President of the Girard Trust
Co.,
James E. Go wen,
announced Mr.
anticipatory
an
active charge of affairs and poli¬
cies.
in
'
Company
has
Rankin
*
recently
move, will take over the same po¬
sition with Bankers-Equitable, the
announcement said.
As such, he
will be chief executive officer in
1217,
bank."
Wismer,
Chairman of the Board of
Bankers Trust in
the
tional bank
later
"Otto' G.'
paper
as
Corn Exchange Bank.
In
changed from a State to
when
not
the consolidated company.
named
began its
was
all Equitable assets
contributed to the capital or
&
over
*
said:
"It
will take
COMMERCIAL
Drexei
t.
Company,
Edward
H.
& :Company,
:
bonds, due Oct.
1,<4970,"has been
Kathryn- Walton," cashiers depart¬
Miss
Katherine J. Beck,,
1:1949. The National City Bank telephone department; Fred Tletz,
of New York is acting as exchange strtnrrbarr department: and John A.
Milne of the supply department
agent.
" : " "
extended from Oct. X. 1940 to Octi ment:
.
1.
1-
h
-
l
K
<
22
(1330)
COMMERCIAL & FINANCIAL CHRONICLE
THE
Stone & Webster Securities-White Weld Group
approximately. $5,600. million. At
the end of 1946, by contrast, the
money
Offers 400,000 Shs. Tennessee Gas Common
.
supply ..of
appeared,
by
$4,000
As We See It
million
standards,
substantially out of line with the
Public offering of 400,000 shares of common stock of Tennessee then current gioss national prod¬
Gas Transmission Co. was made Sept. 28 by a nationwide investment uct Of about $12,000 million;
In
banking group headed jointly by stone & Webster Securities Corp. other words, it may be that the
and .White, Weld & Co.
The stock is priced at $30.25 per share.
The increased prices in the past year
and a half has by now absorbed
company owns and operates a pipe */~
line system extending 1,364 miles Consolidated Natural. Gas systems, much of the inflationary potential
from Texas to West Virginia for which systems sell about 60% of inherent in the expanded money
the transportation and sale of na¬ the gas' sold in- the Appalachian supply." *v
X"
;
tural gas.
area.
Operating revenues of the
from
Proceeds
ditional
added
the
the
to
sale of
stock
common
general
be
Tennessee Gas Transmission sys-»
tem for the twelve months ended
of
July 31, 1948, totaled $23,220,813
ad¬
will
funds
the company to be used from time
to time, together with other cash
income
and net
amounted to
$5,-
646,499.
of the company, for the
expansion of its pipe line system.
resources
Initially designed to deliver ap¬
proximately 200,000 mcf of natu¬
Capitalization giving effect to ral gas per day, Tennessee Gas
the sale of the additional shares Transmission's
daily
deliveries
consists of $112,961,000 of long- have progressively increased by
term debt; 100,000 shares of 4.10%
expansion of, its pipe line facili¬
Cumulative preferred stock, $100 ties to the present 'figure of ap¬
par - value;
100,000
shares
of proximately 455,000 mcf per day.
4.25% cumulative preferred stock, The company has been authorized
$100 par value,
and 2,500,000 by the Federal Power Commission
shares of common stock, par value to increase-its capacity to. 660,000
mcf daily and expects to reach' a
$5 per share.
capacity of .600,000 mcf, daily by
An
initial
cash
dividend
on
the
outstanding
stock
common
the end of 1948.
-
"
.
declared in the last quarter of
and has been continued in
Applications have been made to
the Federal Power Commission to
the
first
further
three- quarters of 1948
rate of $1.40 per
On Sept.. 7 last,-the board
the
at
annual
share.
of
directors
of
Tennessee
Gas
Transmission Co. provided for the
distribution on Nov. 12,' 1943, of
additional share of
one
stock
for
each
common
three shares held
increase its capacity to
1,060,000 mcf daily and authoriza¬
tion for the increase up to 1,000,-
mcf
000
is expected in the very
future.
The added - capacity
near
prewar
'
(Continued from first page)
and their ilk is
passing largely unrecognized and conse¬
quently uncombatted or at all events not effectively
resisted. It is being repeatedly said by New Deal apol¬
ogists that the conduct of government officials during
the war should be viewed* in the light of the fact that
Russia
will- involve
extending- the - com¬
pany's pipe line system to make
in eastern Ohio,
Pennsylvania and western -New
direct deliveries
was
our
ally at the time. They might well add
forces and
that the Commander-in-Chief of our armed
the head of the nation
H. P.
For
Goodbody Named
Presidency of
in the
Goodbody,
.■
of the
managing partners of Goodbody
&
Co.,
New
York, has been
the
Stock
of
Ex¬
an¬
was
Governors
developed in this country from 1933 to about the end of ; r
the
of
•
tioh at the
first session of
their
re¬
ceived the.
re-
;
Com-
P.
*
,
Good body
<
/ -■*;
^
;
information the
Russian agents
supply the Kremlin during the
])• vital importance
Harold
port of the
Board's
What vital
able to
war
;,r -vrX'x
or
during the years since, we have no way of knowing, x;
but we should be inclined to believe that little of very -x
?
Fall
meeting
war.
were
Associa-
the
now
one
But all this is but one side of the situation which
change Firms,
it
all of it, excused or could excuse such
in places of importance during the'
been accused of. It is the duty and responsi¬
than
as more
bility of "top level" officers to decide what information is
to be given to an ally even in war time-^-and to furnish it.
Any others who arrogated unto themselves the role of de¬
ciding what information to supply Russian or any other
agents and to supply it were patently in the wrong.
ASso-
iation
hope of appeasing him.
have
war
'
nominated for
of
-
wanted
None of this, nor
conduct
one
;the Presidency
:c
engrossed in his "grand de-
No Excuse, of Course!
S. E, Firms Ass'n
Harold Pi
was
sign" of giving Mr. Stalin any and everything he
nounced when
1947
was
Thursday, September 30, 1948.
'
mittee to nominate officers for the
as
of today fell into the hands of the
grasping Moscow government. The degree in which
these same agents have been able to make use of such
information to organize a "fifth' column" or a sabotage
v
•
*
'
system is likewise unknown. Quite possibly only the . Goodbody will
advent of war will disclose the truth about this matter,
connection directors ordered the York State, and the extension of succeed Homer A. Vilas, manag¬
;
transfer on the payment date of service to the government's atomic ing partner of Cyrus J. Lawrence
but^if ' any such activity should prove particularly x
$4,166,667 from paid-in surplus energy plant at Oak Ridge. The & Sons of New York, on Nov, 15
; troublesome in the event of war, we should not be in ax'v
(premium on common stock) to cost of these new: facilities is esti¬ next at the Annual Meeting of
common stock capital.
The 400,- mated at approximately $136,000,- the Board of Governors which im¬ i-£ position to find much fault with any one but ourselves
000 shares offered at this time 000.
—now that we have at least an intimation of what has
Subject to proper authoriza¬ mediately* follows
the 1 Annual
will be entitled to the stock dis¬ tion and to unforeseen contingen¬ Election of the Association.
•;
been going on in this country.
' y
• '?
tribution.
;;
cies, the additional facilities are
f Russell E. Gardner, Jr., senior
Principal customers of the com- expected to be substantially com¬
partner of Reinholdt & Gardner, x.
X?-.'x - Intellectual
x .
pany are the Columbia Gas and pleted by the end of 1951.
St. Louis, was nominated to serve
of
record
Oct.
20,
In this
1948.
year
x
Mr.
1949.
X'lxX''.'
.'
WW'i ■ r
.X \P:>.
■■
■
■■■::!i."!->••••
>
'X:-» y--
'
'
t
SlIfY
1
.
-
:.>■
Infiltration
-
"—-—^
■ •——
——r—*—
1 V1'"1."
.'.'-I
—
;
.t„. ......
,i
,'v; .n: ■;
-i-i
■"(
•
Vl
•.
...
'
t
Vice-President'; Gardner x?:'xIt is, however, difficult to avoid a feeling of deep per¬
'<ri;
D. Stout, partner of Dominick apd turbation about the infiltration of Communism, and com¬
SdMx"
iDominick, New York, as Second munistic
philosophy into the minds of the American people.
Vice-President; and Walter W.
The New Deal leaders and their* hangers-on, consciously or.
Stokes,, $ Jr.,1 senior partner
of
,
First
as
•
Warns Canadian Upward Price Trend
;
May
Stokes, Hoyt & Co., New York,
Bank of Montreal
justification in belief marked levelling
supply and bank credit will check price rise.
sees
of Canadian money
Treasurer.
no
x
In its latest monthly "Business Review," the Bank of
Montreal,
•'
#
-x
Mr. Goodbody,
ation in
•/ x;»
<
as
X xv x
since .his gradu¬
Williams Col¬
1927 from
though noting diminished upward trend in prices and levelling off of lege, has been associated with the
firm of. Goodbody & Co., as an
money supply and bank credit, warns that this does not necessarily
point to stabilized prices.
VXxx',^x;-V;.V :• employee and since January, 1934,
as a partner.
He was a member
"Such soft spots in the price#
structure
have
as
appeared
to
that
the
Canadian
active" money
date do not yet justify the conclu¬
sion that the long upward trend
supply has nearly tripled in the
intervening period, an expansion
of prices
far out of
the
has
Review
essential
goods
run
its full course,"
states.
materials
"Steel, other
and
capital
still short in relation to
demand sustained by buoyant in¬
are
and
comes
the
unfilled needs of
both domestic and export markets.
Moreover, with continued tension
in world political affairs, the mar
terial
requirements of
defence
will
probably be large for
time to
and other
in
But
come.
more
consumer
as
goods appear
plentiful supply,
cific
Scarcities
ated,
as
new
capital
more
normal
some
food stuffs
become
as
spe¬
abbrevi-t
the present high rate of
expansion
assumes
proportions, ^ and aS
consumer
buying becomes more
selective in terms of price and
proportion to the con¬
increase in physical vol¬
current
of
ume
probably
80%.
production, which has
been of the order of
X??;'<. 'V?';?Xv'<
•
'
of the New York Stock Exchange
from
1933 to 1938.
He was a
of. the
ors
Exchange
Association
Firms
commissioned
prior
to
being
in the American tradition
First Lt. in the
as a
following his release from active
noted, however, that
duty in the Army with the rank
since late 1946 when the active
of Major.
He has been Chairman
money supply reached $4,000 mil¬
of the important committee on
lion as against $1,370 million at
Business & Office Procedure the
the end of 1939, the trend has
past two' years. v.;:rr • -."xy,
been relatively stable, the
money
I
Mr. Gardner of St. Louis,
a
supply averaging $3,822 million in
1947 and $3,957 million in the graduate of Princeton University
in
first seven months of 1948.
1912, is a member of the Board
Dom¬
influences
Governors
of
producing this
stability have been, first, the sub¬ Stock - Exchange
stantial
surpluses of the Dominion
Government
more
which
purchasing
have
drawn
power out of the
than has been returned
through governmental out¬
econpmy
Association.
the
as
York
New
well
as
of the
He i served. in
Navy in World War -I and.
the
as
ci¬
vilian head of the St. Louis Ord*
District in the last
v
x.
!
1
?
|
!
j
price level, monetary influ¬
ences
underlying more obvious
surface elements cannot be over¬
looked. It should be said at once
that the
precise
with
course of prices has no
mathematical connection
It
follows
that - the sharp price
occurring
since
1946
must, from a monetary standpoint,
be regarded mainly as1 a
delayed
adjustment to a situation previa
ously established;
It cannot-yet
be suggested with any
certainty
increases
the
relationship
between that this adjustment is complete.
goods.
Changes in Nevertheless it is significant that
velocity of circulation, in the the present money supply of ap¬
public's saving habits, in the dis¬ proximately $4,000 million is be¬
tribution of production as between ginning to bear somewhat the
capital and consumer goods and same relationship to the current
in external
influences, all have a! gross national product valued at
hearing on the result. Neverthe- present prices around $15,000 milless, the trend of prices in Can- lion as did a money supply of
money
and
ada since 1939 cannot be
ated
from
the
dissoci-j
fundamental
$1,400
fact I year's
million
gross
in
1939
national
to
that
tion
of
Stock;
Exchange
ww-r
who should know better taken for granted as "longcan never be abandoned by
It
is
rather
more *
-
-
than startling to consider the
::
degree in which Americans, heretofore regarding themselves
disciples of individual self-reliance and
statism, have adopted, and
now regard as their very own, doctrines and ideas of V :
life, of society and of economic ideas which if they did
not come to this country directly from Russia certainly
x
have been given the breath of life both here and in a
s
as
true
.
haters of paternalism and
experiment.
One studies the utterances of the candidates for office in the current campaign, whether they
hope to be President or members of Congress, in vain to
find
j
.
: firms
any
that
An
are
product of graduate of the class of 1925.
y'.-X'
■/. T-'./V*
'''
•
.
■r
;
free from this taint.
Essentially Communistic Idea,
.
::
%
t:
Take the whole concept, of "$6cial security," the notion
commissioned
a. Lt. in the U. S. Naval
Reserve: ih that somehow government should assume the economic risks ?
I,942 from which ha was released pf life for every mother's son of us from cradle to the grave. ^
It was of just such concepts and such programs that the ?
in 1945- with the rank of Com¬
mander. : Upon his return to the Kremlin used to. do a great deal of boasting in the 1920's;
Street he was again elected a Gov¬ Where, today, can we find a man in public life or aspiring
ernor of the Association.
He is a to enter public life who even considers questioning the basic
Trustee of St. Paul's School. ' :
philosophy .of "social security"? Indeed, where do we find
Mr.* Stoked is the senior1 partner one who does not pay homage to the "objectives" cf such a of Stokes, Hoyt & Co., a member system? Yet, where would it be possible to find any concept
more inconsistent with the
of the New York Stock
system under which this country £
Exchange
of ours grew to be the greatest in the world, and, indeed,.
and a Governor of the Associa¬
in the history of the world?
tion since 1945.
He is a Yale
;
•
/
;
prior to his being
■
inconsistent and contradic¬
|; number' of other countries by the so-called Russian xj
.
sustained movements in the gen¬
as
"turning the clock back."
jf #£
quality, a-situation is created in to it
is active in St. Louis Philanthropic \.
which the pattern may well show
lays, and secondly, a marked, lev¬ and Civic Affairs.
j; ;, i
a greater
diversity than it has for elling of, since the beginning of : Mr. Stout is a graduate of Yale
many months past. *
1948, in the volume of bank credit University.
Like Mr. Goodbody,
"As a determinant of broad pod outstanding in the form of loans. he was a Governor of the Associa¬
eral
—
overdue" social reforms which
He
war.
■
tory to that tradition as they were—until now they are by
many
•
nance
7X:wV-.'Xi:
.
under the leadership of the popularly, persuasive President
Roosevelt, they were for the time being at least embodied,
Army Air Forces in 1942. He was
again elected to the Board in 1946
of
a massive appeasement
campaign- vis-a-vis Russia,, taut adopted,, assimilated and
preached with deceptive persuasiveness a very considerable;
body of ideas which are the hall marks of Communism. They embodied them in various "programs of action" — a
term which itself has a definitely communistic flavor. These
notions were given other names and defended on grounds
which made no reference to Russia or Communism. Indeed,
Stock
"It is to be
inant
unconsciously, not only undertook
of
member of the Board of Govern¬
■
*
Where is the
public official
or
the influential figure
]
i.
'
'■
V''
Volume
who
163
Number 4738
.
longer realizes,
no
THE
who is willing
COMMERCIAL
to remind
'
insecurity of life which keeps men
energetically and resourcefully at work? Or that it is
!
that it is the
us,
the
or
total of such work
sum
now
very
to
it.
answer
which
is
There is
Yet
none.
already gnawing at
here
is
inflation.
There are many more illustrations which could be cited.
The notion that the farmer must be
guided in his day-to-day
operations by officials at Washington and the risks of his
.
"incentive"
or
another.
misery.
by government
sort
any
is
the
time take from him the funds to finance
statisui
same
of
are,
tarred with the
course,
stick.
same
Who
deny
preached and planned such programs
.have found much of their inspiration in Moscow? And so
can
that those who have
indefinitely.
on,
Let
>
Kremlin, but let
f;r:;
in
and,
at
time,
step, I propose xo>
Washington men andi
of integrity, whose first
the
aim
is
self-interest, whose;
not
but
to
help them-'
help
America,1
to
their
in
progress
thing.
1
i
.
a
opportunity
-and
we
worked
sometimes
cannot
and if
ter
our
badly.
afford
we
to
out well
This time
do
it
badly,
going to do it bet¬
are
painless,
with the
and
courage
At the end of the war,
ernment
had
choices.
It
controls
for
-demand.
of
one
our
two
simple
continue price
could
reasonable
a
Gov¬
time,
Thee other
choice,
was
abolish
all controls,
relying
play of the free market
to bring supply and demand into
balance.. Each
course
had
its
,
.merits.
The
tragedy is that the
Administration fumbled and hesi-
apd chose neither of those
.courses.'
■$
No
headed for
lapse.
On
nounced
that
the
1945, -it an¬
the Spring of
people would
our
work.: That
cast-was-
x
would
Henry
a
fore¬
solemn
prediction fx that
$20 billion.
drop
known
was
dire
in
quoted
House
wages
1,
by
1946 8 OQQ.OOO of
White
economic col-
an
Oct.
be out of
That
at the
Wallace
remember—he
time
thesis.
then
was
of Commerce.
as
You
Secretary
-
this-way, the Administration
officially set the stage for a firstclass
depression
as
' the 1 leftwingers were licking their chops
forward
to
what
they
looking
do
to
the
country
once it
was
left to their mercy.
There
is only on way to get rid of these
defeatists
ernment
clean
a
in
National
our
and
that
is
Gov¬
have
to
a
with the election of
sweep
Republican Administration next
November.
.
I The
^V-/N..
wonderful
of doom.
it
thing
is that
the prophets
Our country is so great
America, crossed
that
can
even
up
survive
an
Ad¬
ministration which goes on inno¬
cently dropping monkey wrenches
into the machinery. The
depres¬
sion
that
some
nations—were
people—and
counting
on
some
just
did not materialize.
The country came through. And
,
then,
what
>
Trick
Cure
try
having been mistaken in
did, and wrong in what
people.
-
V
free
a.
by any trick device,
Russia
had
lowing
bad
a
the
Soviet
inflation
and
war,
coun¬
fol¬
suddenly,
night, they announced that
the government was taking away
one'
it
time
have been led to
flation
ever
since.
talking
ian devices?
Let's
go to
damentals, i We know
staggering
know
the
debt; to
must
we
if
peace
the fun¬
could
be
curbed
by
some
a
produce.
and
more
things
A
large
to inflation is
answer
still
more
people want and;
our
need.
:•
Kemper
J
>■■■'*..■,
The Government
-
by something
Plan
for
Latin
can
be
erful aid to that increased
a
here,
us
I
think
e
great majority of us, are
uneasy
in our minds about the
Marshall
Plan for Europe.
At the
well
intended for
we
produc-j
by tax policies which stimu¬
late new ventures, which aim to
encourage the investor
and the
producer, not punish them.
•
hemisphere. At the
leave Europe less
than before ,and more
it
will
off ;
dollars
to
unless
outlet
for
our capital,
and
Americans, would
pursue
your
own
ity?
Or would
to control
I
am
Marshall
rather be free
destiny?
do
not
misunderstand
not
suggesting that the
"Please
me.
we
own
our
Plan
believe
is
all
that
bad.
before
I
But
wishing
something similar for Latin Amer¬
ica, the European pattern should
be
thoroughly explored."
.
what
buy
we
go
she
needs
giving them to
on
Ass'n of S. E. Firms
our¬
this
on
worst,
We should not
prefer^ Latin America
it
if
selves
to
the status of agency. Do we want
to be planned by a world author¬
very
' dependent upon the surplus of
this hemisphere, with not
enough
pow-!
tion
an
do
fx
x
.
as
in
consider that for
us
1
of
the
trade
be overcome
may
moment.
"Many
that
works, it will enable
is a vast, pent-up' Europe to become self-supporting
on
a
plane of living lower than
almost
everything
can
produce
idea
manner
Let
that which
of the
S.
balancing
.Marshall
a
America.
America
that
h?r:V'•
"The objections to what
may be
called the Marshall Plan solution
Governors to Meet
The
Board of Governors of the
Association
Firms
at'
will
the
Boston
Stock
of
hold
Exchange
its Fall meeting"
Copley-Plaza
Hotel
in
Sept. 3Q~Oct. 1, it was
on
announced
by Homer A.
Vilas,
President.
to
are
we
wilLb^GVerrle<^
hp an
an
pnonnmir asset, not a liabe
economic
asset, not a lia
bility, to the living standard and
the creative genius of our people,
a
•x
and
continue
we
have
we
pay
>
we
to wage
live in
a
ceives
a
already
signs
inflation
?is.,losing
are
current
[some of its momentum.
that
The fab¬
sound
or
an
principles
that
m need
windfall
a
grant
other
There
the
by
Aoy government
in
the
loan from
easy
re-
form
government will find
of
an¬
itself
under pressure to spend the money
for social purposes and for public
works. ' Even
though
desirable,
of
goods from our
these projects usually are not selfmaking
itself
felt
in
have
to
continue following the
liquidating, with the final result
many markets.
;x;x
.V:
unsound and- defeatist'policies of
that you have created a nonpro¬
In the face of the world's great
an
administration
that
got - us I
ductive debt that will have to be
into the mess we are in.
need, God has touched our fields.
peaceful
world.'
But
do
we
not
flow
ulous
factories
is
-
•
i
We
and
We
start
can
dealing frankly
with this problem.
honestly
can
Start going to its funda¬
-
With
sound
leadership
and courage, we can lick it.
,
As
we
first
step, I propose that
bring-to Washington an ad¬
a
ministration
men
and
of
able
the
and
inflation
effectively.
As
and
the
courage
tackle this problem of
and
honest
have
who
women
intelligence
and
to
high prices
to
tackle
it
xv'':xx.''-:'::
■>
second
step, in order to
put the brakes on inflation, I
propose that we put a brake on
a
unnecessary < government
spend-"
ing. Heavy government spending
in/peacetime sends up prices in
precisely the same way as heavy
government
spending ' in
war.
After next Jan. 20, your tax dol¬
lar is going to get the most care-r
ful attention it has had in a long,
long time. Where it is being un¬
necessarily spent, we will simply
stop spending.
By every dollar
of waste we eliminate, we do that
much to stop inflation.
:
'
Systematic
Payment
of
Debt
national
means' an
increase
circulation.
This
equivalent
of
is
of
debt
money
the
printing
The
farms
much
bursting with
has
never
is
It
in
modern
press
America
of
a
been
harvest such as
gathered before.
thing, of
a
both to
of
and
infinite
mercy,
and to hungry people
us
everywhere.'
\ this
From
year's
bountiful " harvest
should / flow
hope
to
and
courage
and' all the world.
ourselves
„*■
v -
"In 1946 the United States Gov¬
ernment
loaned
ernment
British
see
of
$4
the
British
billion,
said
would
Gov¬
which
the
be
enough to
thern through four or five years
hard
going
their feet again.
and put them on
In 18 months the
money was gone; and Great Brit¬
ain financially was worse off than
before.
.;
With faith in the rightness of
freedom, we have ahead of us,'
man,
tyrj^ging to fulfillment the promise
have
of
our
the
go
forward,
us
our
how much better that
and
our
magnificent land. As
we
doubts,
our
waverings.
confusion and
;
We will go forward
in
our
solve/
new-found
: our
we
will leave behind
i
end.
together and
unity,
we
will
to¬
day's hope into the achievement
this
moves
world.
A
govern¬
toward
a
planned
world is not
fortunate hemisphere
us
planned
for this most
we
would
be
(Special
censored
The
Financial
Chronicle)
> WAUSAU, WIS/ — Wilfred F.
Rowe-has rejoined the staff of
Raymond
J.
Plunkett
& -Co.,
American -State
Bank * Building.
He has recently been with" Bell
& Farrell and prior thereto was
ment.
by
■
Rowe Rejoins Plunkett
U.
place, Marshall
contemplate eco¬
arrangements
of
the
'
-
ments, touching trade, production,
distribution, consumption and the
employment of capital; and all of
vision
with
;
in
second
solutions
■--not if
to
S
Treasury Depart¬
Association
wish to be true to
its
future.
That
superseded,
our
vision
submerged
ternational
hamstrung. An in¬
authority would say
whether
or
not
how
could
we
listed
securities
and
changes.
New
York
-the
on
Stock Ex¬
,
Subjects to be discussed by the
board at its business sessions will
include, among others,
try-wide
an
indus¬
plan,
special
and secondary methods of distri¬
bution,
public
relations
plans,
pension
clearance arrangements, employee
relations and other technical busi¬
and
ness
office
procedure
mat¬
ters.
Suiro & Go. Observes
;
Ninetieth
Anniversary!
SAN
FRANCISCO, CALIF/, -rCo., 407 Montgomery
Street, members of the New York
Sutro
&
San
and
Francisco
Stock
Ex¬
other leading ex¬
changes, is observing the ninetieth
anniversary of its founding in
1858. Its long history spans such
outstanding milestones of Pacific
Coast progress as the Gold Rush
period, the Pony Express, and the
changes- and
five
wars
from the
Civil War? to
World War II.
and
it
was
valid
and
proceed to realize
it, not in our own way, but
authority might decree.
"The
Boston
the
and
Exchange.
Robert P. BoyIan, Chairman of the Board of the
New York Stock Exchange; Harry
Besse, President of the Boston
Stock Exchange, and Mr.
Vilas
will be the speakers. Dinner will
be
attended
by
members
of
the
securities industry 'in
Bos¬
ton
and
officials
of
companies
would
Britain
Great
■
-
"In the
Han
for
,
problems, turning
of tomorow.
been
nomic
-
Sept. 30, sponsored jointly by
the
Stock
with
recriminations having
Boston
feeling all around.
V
ill
Any banker, any business¬
knows how different it might
have been if $4 billion could have
riot defeat, but a great adventure* been, loaned-to British industry
It is the mighty adventure of direct, on a strictly business basis,
r
on
repudiated,'
and
this year are
of the world
r
"
And
believe that in¬
like
the
of
best,
ernment of the United States
stopped
we
America in terms of totalitar¬
in
the
all, the American people
release
initiative, the enterprise and
propose
As the third
tried to < unscramble their
step, I propose
badly scrambled eggs.
With im¬ that we start systematically pay-*
provising. indecision and contra-, ing off our national debt. Every
diction, they have been trying to increase
in
worst of
shall
James
hears
wholesale
a
free
development as you wished. Fiee
enterprise would be reduced to
.
transactions
be
Lyon Carter, partner of Estabrook & Co. in Boston, and Massa¬
are
mainly three:
In
the
first
bring
to;
chusetts Regional Governor oi the
That is one totalitarian method..
Washington
an
administration place, the history of loans by gov¬
Other police state methods have
Association, is in charge of the
which believes in our American ernment to governments is bad.
been
proposed in thiscountry.
It is bad both politically and eco¬ arrangements.
[system, which understands what
The highlight of the two-day
They sound easy. But they are no
It is not business. It
makes it click and which is. re- nomically.
less painful and would be, equally
is a transaction
that
seldom is business conference of the. Gov¬
jsolved that henceforth the Gov
ernors
will be a dinner meeting
damagingto our free - society.
nine-tenths of the people's /poney.
cooks
unscramble them
Mr.
Movements of capital
be free; they
would
you, as Latin
not be free to
stated:
the creative powers of our people
in a great upsurge of production.
to
it
it predicted, the Administration's
We
succeed.
part of the
•'
This inflation
be cured .in
cannot
mentals.
In
could
American
Isn't
Instead, it took' cobnsel of its
fears and shortly after V-J
Day
publicly predicted that America
■■
/was
and
panacea,
I propose to be honest with the
upon the
.tated
t
revealed.
be
would
the
-gradually lifting them as the sup¬
ply of goods'caught up with the
: to
patented
the
j
•
to
that—if only it were not for the:
Today - there
Congress—the secret of that cure demand for
understanding to do the job.1
?
1.
;
,
it
need sober and wise lead¬
we
ership
way
from page 17)
by
a
government
has faith in it and wants
which
| What To Do About Inflation
times
nection,
longer
would be directed.
Kemper
"One
sixth,' and perhaps most
important step, - I propose that
we,/ start
vigorously supporting
our
American
system
of free
the most obvious.fx■
xU//,\x'... v.-■-:*X"Vi (Continued
con¬
difficulties
Enterprise
As
no
nations.
this
fair division of labor
among
a
the nations.
Amer¬
-
ican
Release Initiative of Free
;
protect ourselves from the
be alert on all fronts—not merely
be
Eu¬
any extension
of the Plan to
Latin
Markets would be
administered by the
and
authority. National tasks would
be assigned
according to the au¬
thority's judgment of what would
the
the
of
same
In
good
every
\
.
of
disapproved of
whose loyalty is a single-minded
loyalty to our united people, and
means
us
filth
to
selves
'/
.
by all
us
view
rope
first
<
plan.
allotted
imistic
results
world
a
somewhat
p e s s
Marshall
a
says
•—
a
Plan
As
Production,
politically and economically and
by sound principles.
—
pressed
first
clinging to the public payroll.,
bring
bad
are
seldom governed
Kemper, Chairman of Lumbermen's Mutual
Casualty
President of the Inter-American
Council of Commerce
still
interest is not
restrict, if not to crush, the successful businessman and at
of the
of Fourth Annual Session
S.
is
able pleasure in doing it—is to
get rid, once and for all, of those
speculating profiteers who
are,
women
All the dozens of statutes which aim to limit and
One
*3
*C+i0nLln £*5 keynote address at the opening session at
Chicago of the Fourth Plenary
Meeting of thi« international organiorganizauon, ext
things your next administration)
will do—and I will take consider¬
an¬
type., The notion of ''incentive" taxation
operations of
James
Co., who
or
man
same
inter-governmental loans
low, for anyone who will
speculate in grain—or any other
commodity—at the price of hu¬
Watch All Fronts!
Kemper, in keynote address
of the Inter-American Council of
Commerce and
most
fourth step, I promise you
a
high
tude to Communism and communistic ideas.
other of the
the
are
As
vitals, and which if
long continued and further developed may well be our
undoing — and for this blessing we owe a debt of grati¬
obviously
of
that in your next National Admin¬
istration there will be no place,
our
business largely assumed
by the taxpayer is
One
(1331)
Decries Marshall Plan for Latin America
James S.
effective ways to stop inflation is
to reduce the national debt.
situation
a
dollar, as tne amount of
inci eases, the things our
buys will decrease.
That
is
brings economic progress, and, for that matter,
other sort of progress? To ask such a question is
any
As in the days of the Con¬
tinental
money
which
CHRONICLE
money.
money
by millions of individuals
FINANCIAL
&
resources
of
this
as
the
Two With Stix & Co.
(Soecial
ST.
to
The
LOUIS,
Financial
Chronicle)
MO.—Leonard
;
■
h
Smith and Charles A. White have
hemi-
sphere, its surplus and its capital,
would be distributed according to
been
added
to
the
staff
of
Stix
& Co., 509 Olive Street, members
of the St. Louis Stock Exchange.
24
(1332)
THE
COMMERCIAL &. FINANCIAL
G. L. Cross Mun.
Scherck, Richfer Co.
& Co., 50 Broadway,
New York City, members of the
Dreyfus
SECURITIES
New
ST.
LOUIS, MO. — Scherck,
Company,
Landreth
Building, announces that W. T.
Richter
York
Stock Exchange, an¬
the opening of a municipal
nounce
890,000* shares of common stock
outstanding, of which 750,000 are owned by Standard Gas & Electric
and 140,000 by the public, the latter representing a new money offer¬
ing at $39.50 a share in March, 1947. In connection with its dissolu¬
tion
program Standard
Gas
—
Electric currently proposes to sell operations should be more stable.
agement of George L. Cross.
Established 1891
18 Clinton St., Newark 2, N. J.
Mr. Cross, who has been in the
investment
business
for
many
years in the'past was manager of
the municipal bond department
for W. E. Hutton & Co.
MArket 3-3430
■
400,000 shares
(through a syndi¬ While the state ranks fourth in
by First Boston and actual production of oil, it is sec¬
Merrill Lynch) and it is under¬ ond in the discovery of hew re¬
stood that the balance will be serves.
;
cate headed
N. Y. Phone—REctor 2-4383
John R. Dillon Dead
John
Specialists in
Richard
Dillon,
retained
former
illness.
likely that it will be listed until
residential
1,044
kwh.
(These figures are less favor¬
able than the U. S. averages for
final
the
Kitchen
has
associated
become
with them in the St. Louis office.
Mr.
♦
Kitchen
in the
Chicago firm of Kitchen & Mur¬
phy.
was
partner
.
F. R. COLE & CO.
Scherck, Richter Company also
anounces
24 COMMERCE STREET
\'
MEMBER
MArket 3-8445
Federal Reserve
installation
of
STATE and MUNICIPAL
\'
4/,4'4.c
\i+
★
2, N. J.
Open End Phone to New York City
DIgby 9-Q767
★
POUNDED 1812
St., Newark 1, N. J.
Tele. NK 348
REctor 2-8140
•
the years
in
areas
and
Oklahoma
adjacen4
and
Hickey
MM
western
6.6%,
estimated
cooperatives.
company
8%
and
About 92%
obtained
are
in
in
of
rev¬
tions with the
and
economic
It
is
both
New
York
land
Sinclair
with
each
of
has had
years.
Commission
State
rate cases in the
no
.
v.-
earnings
estimated at $3.50
are
a
share after allowance for the pro¬
a
major
is
with
them
in
equally divided between
livestock.
The
state
is
crops
a
trend
and
of
earnings is
continue in
leader
the
expected
1949.
to
-
'
Regarding dividend policy, due
.
to
construction
cash demands for
proposes
the
about
only
current payout
60%
($2.20 out
is
of
With completion of a fi¬
nancing program next year, how¬
ever, it is possible that the com¬
pany might be more liberal.
v
$3.66).
Proposed
-
financingfor
new
construction will include issuance
of
stock
common
on
a
l-for-10
basis, sale of $14
company uses natural gas subscription
fuel for about three-quarters of million mortgage bonds next year,
The
its
state & municipal
BONDS
has
bonds
is
also
some
but
to refund the
state
the end of 1949.
55 billion tons available
The
buy some "dump"r hydro
a result of cheap fuel, ratio is
operating ratio last
year was well below the U. S.
average. :'-K
:y-'y
power.
Fidelity Union Trust Company
& COMPANY
Newark Telephone: Mitchell 2-2800
Of
NEWARK, NEW JERSEY
Nfew York Telephone: REctor 2-9289
As
about
$21
million
.
Teletype NK 170
:
New Jersey
*
Securities
if44:5 4
TRIPP & CO.
■
■;
"
v.
-
INC.
'j
current price
yield; of about
and
the
price -vearnings
9.3. >;;4v4::^4.4'4:,:
nearly 10% was from the oil in¬
dustry,
divided between
well-
William
Doherty,
formerly
of
pumping, pipeline operations and C. E. de Willers & Co., has be¬
refinery operations. With well- come associated with Rutberg and
pumping less than 3% of gross,
Co., Inc., 31 Nassau Street, New
the company does not seem vul¬
nerable to any drop in oil pro¬ York City, to open an unlisted
duction;
pipeline securities trading department.
refinery ; and
;
-7
40 WALL STREET
Public Service Issues
its
Doherty to Open Dept. §
For Rulberg & Co.
revenues
for the 12 months ended June 30,
Tel. MArket 2-5800
at
the company's
Municipal Bond Department
7M Broad St., Newark 2, N. J.
stock
around 34 returns a
able to
COMPANY!
million notes
present issue due at
and issuance of $4.5
low-cost
available—the
if natural gas reserves should be
exhausted. The. company is also
TRUST
Mae BRIDE, MILLEIl
requirements,
coal
FIDELITY UNION
i
in
Stock
AAA
Bank & Insurance
made
ended June 30, and calendar year
well-balanced
structure.
natural
use
$3.66 per share on the common
stock was earned
in the year
and
a
for
6.1% after allowance for
working capital.
The
has enjoyed good rela¬
Oklahoma
the
as
-
or
City accounts for about one-third past 25
has
cheap
e
Voluntary rates re¬
Oklahoma
Arkansas.
b 1
a
1943-47.
with 15 communities and 16 rural
enues
i 1
were
Arkansas, plus wholesale business
Jersey
MUNICIPAL
Municipal
a v a
The return on
the estimated rate base is about
materials.
New
is
appliances.)
production of oil, natural
gas, lead and zinc; and it also
Drew Celebrates 25 Years
produces coal, gypsum, cement,
Charles II. Drew & Co., 40 Wall
limestone, glass sand and other
Street, New York City, dealers minerals. Principal industries are
and brokers in bonds and bank oil refining, meat packing, flour
and
insurance
stocks, are this milling, food processing, metal
milling,
week celebrating their 25th anni¬ smelting, cottonseed oil
and production of glass, oilfield
versary.
machinery, furniture and building
Open-end phone to New York City
>+>■.;
225
communities
that
reason,
ductions
in
NATIONAL STATE BANK
Tel. MArket 2-7988
.
by-
about
wheat and major cotton- posed sale of 89,000 shares of com¬
producing state. An average grow¬ mon stock for "new money." These
Exchange, an¬ ing season of 213 days and a, wide earnings are stated before amor¬
nounce that William H.
Jones is variety of soils promote crop di¬ tization of electric plant acquisi¬
now
tion adjustments and preferred
associated
with
them
as
versification.
Several
areas
are
manager of the Customers' Rela¬ particularly adapted to livestock stock premiums, which is charged
tions Department, and H. How- grazing, nand farm income is about to earned surplus.
The upward
Phone MArket 3-0190
810 Broad
un¬
made
average
is
gas
Oklahoma
charge of industrial research.
[31 Clinton St., Newark
appears
is
company's business; Fort
Muskogee are other
important cities served.
Vilas & Hickey, 49 Wall Street,
New York City, members of the
BONDS
Securities
it
and
and
usage
The company is engaged solely
in the electric business, serving
Smith
Jones, Sinclair With
Corporation
34,
distribution
3.73c
Standard.
of
Vilas &
Koellner &Cunther
a
■
System
Federal Deposit Insurance
:
the
direct private wire to Berwyn T.
Moore & Company of Louisville.
NEWARK 2, N. J.
*
Residential rates average about
around
Kitchen
Jersey-
of
died at the age of 58 after a long
Municipals
New
distribution
a
assets is made by Standard. The
stock
now
sells
over - counter
W. T.
Telephone
until
partner in Hayden, Stone & Co.,
NEW JERSEY
.
Oklahoma Gas & Electric
Oklahoma Gas & Electric has
bond department under the man¬
J. S. Rippel & Co.
Thursday, September' .30, 1948
W. T. Kitchen Joins
Mgr.
For Dreyfus & Co.
NEW JERSEY
CHRONICLE
,-
'
!
NEW YORK 5
r.;
f*
Dealers in
?
*"■ *•.
'
STATE,
MUELLER & CURRIER
24 Commerce Street
Newark 2, New Jersey
Phone
Mitchell
MUNICIPAL
and
■
■■
■
7.'
TELEPHONE:
;N
WHitehall
TELETYPES NY
;
♦
'
,,
y
PUBLIC REVENUE BONDS
.«
a.
,
3-6742
1-2030
\
1
:
Wm. E. pollock Sc Co., Inc.
:
2-7660
20 PINE STREET, NEW
as
We have prepared
AND
CORPORATE
a
Statistical Analysis of Lead*;
YORK 5, N. Y.
;
UNITED STATES GOVERNMENT
ing Banks and Trust Companies in Northern
New
Jersey which will be of interest to
STATE, MUNICIPAL
you.
HOUSING
Copy sent
on
AUTHORITY
Request
CORPORATE
SECURITIES
PARKER AND WEISSENBORN
«
,
■
24 Commerce Si, Newark 2, N. J.
WArket 2t27?2
61
Broadway, New York 6, N. YBOwTwg Green 9-7472
Brokers and
INCORPORATED
24 COMMERCE STREET
:T
v
.•
;
*
.!,
Dealers.specialising In New Jersey Securities
t
:
*
;
r -
.
:
';
4
*1 ELEPHONEi HANOVER 2-8244
.
f. :-i "• .'•»
•"
"•
New York^~REctor 2-8870
Telephones:;
Newark—MArket 2-3606
{
NEWARK 2, N. j.
Teletype: N. Y. 1-2846
a, •: -
.THE
Number 4738
Volume' 168
(1333)?
CHRONICLE
COMMERCIAL & FINANCIAL
M,jjjwft''
Units covered
Capital Oitlays in 1948 Nearly $19 Billion
SEC and Commerce Department
by FHA Section 203
the
fttsv- six
60,384, weU
applications
for
months of 1948 totaled
hold, however,
twice the
over
z03
peak of 1947 will not be exceeded.
numoer
applications
lor
of units in
the
last
six
months of 1947.
"1948
looks like
tnen
the
ban¬
business, exclusive of agriculture, expects to spend a
ner year which will see a million
billion in the second half of 1948 for the construction
of new plant and the purchase of new equipment, according to the housing units started.
"Over 90 bills concerning hous¬
quarterly survey made public jointly today by the Securities and
ing and norne Unance received
Exchange Commission
and the^—
——
some sort of attention during this
Department of Commerce. Planned riod of 1947, and probably indi¬
about
the
same
physical last session of Congress. At vari¬
expenditures for the fourth quar¬ cate
ous
times it seemed either
(a)
ter of 1948 are estimated at about amount of plant and equipment
that ail mortgage lenders would
$4.7 billion, $250 million lower to be purchased by business.
Actual
expenditures
of
$4.8 shortly be completely out of busi¬
than the actual expenditures for
ness or, conversely,
(b) that new
the last quarter of 1947 but much billion for the second quarter of
liberalized
forms
of
credit; and
higher
than
the
corresponding 1948 were about $100 million
estimate of planned expenditures larger than previously anticipated government subsidies were prac¬
business.
Similarly, the tically free for the asking.
for that quarter made at this time by all
"None of this was calculated to
a year ago.
Ever since the fourth revised estimate of $4.9 billion of
put a lender in a particularly
quarter of last year, when plant expenditures planned for the third
restful frame of mind. But it cer¬
and equipment outlays reached an quarter exceeds the original esti¬
all-time high, they have remained mate by almost $400 million, with tainly indicates the usefulness of
a
reporting and legal office for
relatively
stable
at their new the manufacturing group account¬
American
total of $9.6
peak
seasonal: influ¬
for
except
ences.
/
• ■
,.
Including' outlays of $9.0 billion
actually realized in the first half
of the year,
estimated
the $18.6 billion now
total
plant and
for
equipment
expenditures during
1948 is approximately the same as
the preliminary estimate based on
reports
submitted
by
business
early this year and $2.4 billion
more than the 1947 total.
Manu¬
expect to
substantially more during
1948 than they had planned at the
beginning of the year, as do elec¬
tric and gas utilities and mining
companies.
On the other hand,
railroads,
other
transportation
companies, and commercial and
miscellaneous .» companies
expect
facturing?; companies
spend
the
for
expenditures for industry
compiled by the Commis¬
sion.
The basic data for this re¬
lease were derived from reports
ment
submitted
>
by
this
fear, funda-^disregarded. ing* year and a ten year average
fluctuations are wide and of $3.81.
Gross revenues for tne
of
atmosphere
Price
been
have
mentals
first
sharp declines occur even with a
complete absence of any real sell¬
ing
pressure.
One
stock
acts
worse
than
another,
even
of
plant and equipment in
1947 and consid¬
quality, for no
poorer
Edgerlon, Wykoff
had been
LOS ANGELES, CALIF.—Rich¬
ard R. O'Neil has
that
joined the trad¬
quarter and anticipated expendi¬
tures
for the third
and fourth
in
$9.6 billion planned for the sec¬
1948 reflect some in¬
the
this
release
whole
based
in costs over the same pe¬
figures
All
quarters.
ond half of
America,
P
veteran
on
of
are
hoped in many quarters
management might this
the
ing department of Edgerton, Wy¬
koff
at
&
Co.,
618
South
Spring
least
share.
When this
was not done the feeling grew that
there was little hope that the one
annual
$2
a
payment would be liberal¬
ized this year.
in the
Northern Pacific picture has been
the set-up of its debt structure,
with its lack of maturity problems.
is
There
small
one
divisional of
$1,000,000 due in 1968 and a Col¬
The
estimates for
industry
latter,
of
amount
due
in
1975.
outstanding in the
$50,480,000 as of the
last
of
of
reports, because of higher interest rates, applications for
insurance under FHA have increased, despite decline in
Lauds Federal housing legislation of 80th
Congress.;
:
V
Richard
R. O'Neil
'
'
The balance of the
aggregating roundly $192
Samuel E.
Neel, Washington, Counsel of Mortgage Bankers
to the National Convention of the
Asso¬
debt,
with working capital
L"... 1:
Company.,,
&
'
Association, expressed an optimistic
lending under the terms of
view of trends in housing and mortgage
Pierce, Others Directors of
legislation oi-f
Better Business Bureau
the Special Session of the 80th under the Servicemen's Readjust¬
Edward Allen Pierce, a senior
Congress. In this report, Mr. Neel ment Act and the increased vol¬
ume
of business; done by FHA. partner of Merrill Lynch, Pierce
stated:
Fenner & Beane was elected as
But in all construction, and in the
"From a period prior to 1945
a Director of the Better Business
particularly, the
when the mechanics and peculiar¬ mortgage field
Bureau of New York City, Inc. at
results of 1948 to date are re¬
ities of housing were subjects of
markable.
Mortgage
recordings its twenty-sixth annual meeting.
interest only to technicians and
Re-elected to the Board were:
for the first five months of the
members of • the profession, we
James C. Auchincloss,
Robert
have come a long way to 1948 year were higher than any other
first five months on record.
The E. Blum, Louis Broide, Sheldon
when the subject of housing ap¬
R. Coons, David M. Freudenthal,
total volume of nearly $4.7 billion
pears with regularity on the front
Edwin
S.
Friendly,
Sylvan
L.
was
7% higher than the simFar
pages of newspapers and even be¬
Freelich, Henry R. Hayes, Wil¬
period
in
1947
and
only
slightly
comes a main reason for a Spe¬
liam
M.
Holmes,
Ralph
E.
Ladue,
less than the volume of mortgages
cial Session of Congress. In fact,
recorded in the entire year 1941. Elliott H. Lee, Mead A. Lewis,
in view of all-the charges and
Edmund R. Livingston, William
"Throughout the year VA loan
counter-charges over housing,-it
E. Robinson, William D. Scholle,
is a matter of some%stonishment operations continued to fall off
H.f Boardman
Spalding, Arthur
that the last 12 months have gone sharply. By June 1948, home ap¬
plications were down to 30,199 Stelzer, Bert L: Thompson,' John
by with so few real upsets and
from a high of 53,695 in June 1947, C. Wood and John A. Zellers. V
almost no radical changes in the
The report of the General Man¬
Loans closed also showed a sim¬
Mortgage Banking Industry. - • V
ilar
decline
with
29,780
loans ager, which was submitted at the
"We are still a private business
closed
for
$150,606,000 in June meeting, reveals that during the
—-and a vigorous one—in spite of
1943 vs. 47,638 for $293,733,000 in past year, the volume of Bureau
predictions to the contrary; and June 1947. Obviously this decline service to the community has in¬
we are helping to produce hous¬
One hundred
indicates not alone a lessening of creased over 45%.
ing at a rate more rapid than at
demand, but also reluctance on additional business concerns have
any other period in our history.'
the part of veteran purchasers to been elected to membership. The
"It was predicted by many that
pay current purchase prices and report also reveals the Bureau to
this year, 1948, was going to be further the unattractiveness of a be in sound financial condition.
: Sheldon R. Coons, President of
the
forerunner
of a depression 4% interest rate in a period of
the Bureau, expressed gratifica¬
era eventually to sweep over the
rising rates.
■V' v: ^ f ?•<• - ';v :
tion that the Bureau will, from
country, and that the construction
"That the interest rate
is of
now on, have the benefit of the
industry was, in .1948, going to
great significance in this picture
services of Mr. Pierce.
"He has
lead the way into this morass,
can
be shown by the steady in¬
for years," says Mr. Coons, "been
i, v "The reverse has been true. It
the revised housing
?
>
crease
in
the
number
of
units
building covered by applications for mort¬
empha¬
gage insurance under FHA Sec¬
sis from one program to another,
tion 203 in .the same period when
Most nolicable is- the,, decline in
the loans guaranteed or insured VA applications were declining.
is
true
that
in
home
there has been a shift in
an
earnest
education.
invaluable
,
investor
His services will be
to the Bureau , in its
advocate
of
various investor protective
ties."/-'".'::
direction,
to expand
of
Group
Southern
the
of
chairman
Asso¬
Investment Bankers
the
America; chairman of
Southern Group's Municipal
of
ciation
the
Committee, and a member of the
Bankers Association's
National
Securities
Municipal
With many years ex¬
perience in institutional invest¬
ment, he is one of the outstand¬
ing men in the municipal bond
field. He had been associated with
Trust
the
Georgia
of
Company
since 1922.
Nunnally has
Mr.
associ¬
been
ated with Courts & Co. since 1941.
Disappointment over the failure
to pay a mid-year dividend hardly
seems an adequate reason for the
deoartment, fol¬
lowing service in World War II
with the Civil Air Patrol and the
market action of the stock.
poor
that
issues
rail
Other
have
riod.
Basically, there appears to
be
reason
no
for the poorer-than-
action and on this basis
many railroad analysts are again
recommending that advantage be
taken of the present opportunity
average
to
accumulate
an
stock.
Even
$1 dividend the shares
with only a
afford
the
attractive income return
dividend, at least, seems
protected.
and that
well
The
road
was
not
among
leaders in debt retirement at
the
the
high earnings pe¬
riod.
The
management elected
first to build up its financial posi¬
outset" of
the
spend money on property
equipment additions and bet¬
terments.
Nevertheless, consider¬
tion and
and
able
progress
has been made in
this respect in recent years.
one
lower
coupon
Also
refunding op¬
completed., As a re¬
sult. fixed charges are down to
an annual rate of less than $10.3
million compared with over $15
million in 1940.
The saving is
eration
was
equivalent to $1.95 a share on the
common stock, before Federal in¬
come taxes. J The trend will na¬
turally continue downward by
virtue of the operation of the
sinking fund on the Collateral
4%'s.
.
-»■
returned
He
194®
in
the firm
to
in the brokerage
U. S. Navy.
not
making any payments
have fared better during this pe¬
been
even
; - Last year earnings on the stock
activi¬ amounted to $5.40 a share, com¬
pared with $3.58 in the preced¬
.
the company plans
facilities for serving in¬
stitutional accounts.
Mr. Means is
his
of the end of
$43,million.
as
June stood close to
developments during the last year
de¬
Under
municipal
the
manage
partment of Courts & Co.
Committee.
million, has from 48 to 99 years
to run to maturity. Obviously, this
Mr. O'Neil schedule is no deterrent to larger
was formerly manager of the trad¬
dividend disbursements.
Nor is
ing department for Oscar F. Kraft the read's financial condition. Net
Co. and prior thereto was
Means joins Courts & Co.
vice-presidency of the Trust
Company of Georgia in charge of
the
investment department.
He
Mr.
from
ficient to retire the entire amount
Street, members of the Los An¬
&
Exchange, effective Sept. 23.
Investment
year,
geles Stock Exchange.
Fairman & Co. and M. H. Lewis
ciation of America, in reporting on
V
members
has a sinking
fund, contingent on earnings, suf¬
end
the sample data.
issue
Trust
lateral
general partners in Courts &
Co., 11 Marietta Street, N. W.,
of the New York Stock
as
will
element of strength
One
American
Neel,' Counsel for Mortgage Bankers Association
loans.
were
clined
by maturity.
mortgage
1948
share
other ap¬
get around to a semi-annual
basis, bringing the yearly rate to
presented
Foresees Million House Unifs Started This Year
E.
of
but expenses increased more rap¬
idly with the result that common
year
the second
ment expenditures for
Samuel
months
seven
somewhat higher than a year ago
parent reason than that potential
buyers are content to sit on the
sidelines.
Under such conditions
during the third quarter of 1948,
included actual plant and equip¬
erably higher than the $7.1 billion
of expenditures in the first half
of 1947.
The record expenditures
creases
Willi
groups
the last half of
of
having these past few months.
The market as a whole has*
almost entirely dominated by the developments abroad.
In.
been
been
Richard R. O'Neil Is
amount spent by business
new
Day by day or even week by week price fluctuations of indi¬
mean little, or nothing, in markets of the type we have
earnings for the period de¬
about $1.
Comparisons in
the seasonally better months from
now to the end of the year should
be at least moderately more fa¬
it is difficult for the analyst to
keep
from
being
disappointed vorable. For the year as a whole,
then,
earnings should at least
constantly.
the Association.
'
ing for $300 million of the change.
One of the stocks that has been equal the 1947 showing.
It is pos¬
"Our industry remains in pri¬ giving a sorry account of itself sible, depending on management
During the fourth quarter of
1948 manufacturing companies ex¬ vate hands and free to do busi¬ is
Northern
Pacific
policies
with
respect
to
non-op¬
common,
pect to spend somewhat less than ness on a sound basis because our which earlier this year was being erating income, that they may
in the third quarter, as do mining Association has, on frequent oc¬ fairly widely recommended. There
even be higher than those of last
companies, transportation compa¬ casions, asserted itself vigorously was presumably some disappoint¬ year.
nies
other
than
railroads, and and forthrightly on behalf of it, ment over the fact that a more
commercial and miscellaneous members.
Vigilance is still the liberal dividend policy has not
companies. Railroads and electric price of liberty in domestic af¬ been adopted. In recent years the
and
gas
utilities, on the other fairs as well as abroad."
company
has been making one
distribution of $1 a share each
hand, anticipate a larger amount
of
expenditures
inv the fourth
year.
These dividends have been
declared at the November meet¬
quarter. •: >•!:"' -i,■ ?':
ATLANTA, GA. — James W.
The above analysis is based on
McKee
Nunnally ' and
ings, payable the beginning of Means,
estimates of new plant and equip¬
Frank
B. Sites have been admitted
February of the following year. It
most corporations
registered with the Commission and
to spend less than anticipated in from a large sample of unregis¬
tered
manufacturing companies,
their earlier reports.
The actual expenditures of $9 unincorporated as well as corpo¬
billion during the first half of this rate, reporting to the Department
of Commerce.
The data, collected
year are approximately the same
as
v
vidual stocks
?
,
Sites has been with Courts
Mr.
& Co. since
1928 in varying capa¬
including
cities,
office.
Atlanta
of the
manager
He
has
wide
a
securi¬
ties, as well as the petroleum,
creamery, and refrigeration indus¬
background in investment
tries.
'
admission of
The
marks another step
,
V
•
new
partners
in
program
a
expansion recently inaugurated
by Courts & Co. to augment facil^
ities of its offices through the
of
South,
to
supplement
clearing
operations and to service Eastern
connections.
,
":
recently moved its
New York office to 52 Broadway,
firm
The
available
iwhere larger space was
for
more
comprehensive facilities.
Courts & Co. has also
system of
new
ments
some
on
installed a
clearing arrange¬
of the exchanges.
orders are
Under the new system,
carried directly from the
company's offices to the floor of
the New York Cotton Exchange,
being
the
New
Orleans
Ex¬
Cotton
directly
change, and, for odd lots,
to the floor of the New
York Stock
Exchange. This makes direct con¬
nections with the exchanges
able
to
time.
The
branch
South
the
-
•
v
first
;
-
"
.
firm.. maintains
Atlanta
offices
avail¬
the
for
in
principal cities
throughout the South.;
,
:
-
26
(1334)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(Continued from first page)
stopped because the people
not
who
counted
want to
politically
did
except silver certificates,
deemable. All our bank
not
are
stop them."
He then went
on
tion
ployed.
This
reserves
of
the
only be¬
politicians nor the
important
interests
neither
politically
it seriously.
In itself it is
relatively easy to solve
(but)
all
really
effective
"Any
banks
notes
will
cure
is
inevitably
more
the
be
If
None of
fillment
Re¬
our
they
laws,
do.. not
re¬
deem.
pro¬
unpopular
Aside
from
people
with
Board
other
endowments,
and
savers
bank
from
this
class
of
sets
(j
...
would
not
be
such
reserves;
a
program
would
simply carry
into still more extreme form our
and
savers
credit
member bank whenever it
"special reserve" appear to have
little justification. The frozen as¬
the
to
Reserve
a
extend
The proposals to freeze govern¬
securities
in
banks
as
a
on
done
to
ment
present typical 2Vz to
long-term debt would not
begin to repair the great damage
integrity, such
refuse
fit.
sees
who
seek security in the use of their
savings. Even this small increase
3%
to
to any
and
investors
credit
conventional
permit it to im¬
despite the authority of
savers
a new
of "" hospitals,
its
the
Reserve
consumer
to
will
and
of.
of ihe
pose
some
apparently desirable
restrictions not otherwise
possible
the proper administra¬
public debt. It would
better return to
a
revival
impose
adds
powers
the government's spend¬
inject
to
controls
another
and badly needed
element of health into the incomes
reform would end the discrimina¬
silver
on
provide
much
proper standard of
brake
and
of
this
the
ing beyond
tion of the
to
ever
needed reform.
The most favorable time was in
1940 when the ratio
of gold to
money and deposits was 25%.
In addition to
restoration of a
redeem,
cannot
is
promises, now is a
favorable time in which to
most
effect
banks is¬
intend to
not
under
inclusive.
States
pay, and thus return to standards
of integrity in
respect to the ful¬
of the
Federal
United
vide
the
specific authority
higher interest rate would
have great virtues: It would pro¬
This compares with an
less than 8% for the
the
Similarly,
banks.
A
restore redemption of
promises to
the
of
deposits in commercial
of
1915-1932,
years
paid out do¬
Reserve
which
redeem, do
are
and,
what
of
Our Federal
sue
unpopular.
duce
true
banks
1948.
average
mestically.
.
measures
also
can
reserves
serve
take
.
is
member
Federal Reserve System.
problem is serious
.
30,
able paper
money except in so far
as silver and minor
coin are em¬
to say:
"It is common
knowledge that
something of this kind is now
going on in America. Our infla¬
cause
is irre¬
deposits
redeemable only in irredeem¬
and creation of money and
suance
The Surrender to Inflation
Thursday, September 30, 1948
present
system
of
so-called
re-
certificates, tion against our people in favor of investing institutions caused by serves
which
are
not
in
any
temporary depression, be¬
paper money
issued by our
foreigners in the exercise of claims the recent and current artificially proper sense reserves because
cause, so soon as inflation ceases,
they
Treasury is irredeemable.
low interest rates and
against
our gold.
currency cannot be paid out.
there will be
readjustments in
There is apparently
no
valid
It should be an important factor depreciation arising chiefly from
It would seem that the best
prices and production that will ground on which one
plan
our government's
may justify
in
fiscal
and
mone¬
is for the Reserve
providing confidence in the
still,
all
a
losses
mean
and
unemployment,
as
though neither need be serious.
Everyone feels that and is afraid
of
it, especially in an election
So
year.
inflation
runs
by
on
The
important
drift
whether
or
It
question
will
we
continue
we
will arrest it.
reserve
been
Treasury
cur¬
consis¬
portion
of
the
enforced
have been possible. "
One
result
has
been
of
nounced
the
and
surrender of the people
the United States to
high, and
perhaps to higher, prices is to be
brought to
cation of
far
end
an
the
best
known, two facts
must be es¬
(1) Who could stop the
present drift into possible severe
reaction, and (2)
the proper steps
insofar as present
are
to be
of
What
to
With
the
Dr.
Schumpeter has correctly
placed the chief
responsibility for
our high prices on
the people who
count
politically. It is also the
nothing significant that
enterprisers can do to
high
or
forces
direct
which
production
for
of
not
or
to
respond to, and to protect
themselves against, those forces
best
as
they
can.
The Proper Course to
Follow
(1) One of the most fundamen¬
tal steps that should be
taken is
the adoption of an honest
mone¬
tary system.
an
One
does
honest money in
an
not
find
irredeem¬
able paper
currency and in a type
of reserve structure
in our central
banking
serves
system
in which
cannot be
the
re¬
paid out domes¬
tically.
are
pay
are
good and
honorable only when
redeemable,
and redeemed, in
things having
intrinsic or objective
value, such
as
gold
or
silver.
These
represent
stored
labor,
relatively
scarce
and
metals
they
are
have
many
uses, the demand for them is
per¬
sistent and
worldwide.
manship
or the printing
press, and
their value
tends, in the end, to
be determined
by -their redeemability in metallic moneys which
do not involve
promises to
but
pay
are
themselves
the
embodi-
ments of value.
Today,
all
our
States with
money,
an
to pursue
used
foreign
of
As
the
should
be
reducing
enterprise and
taxes
on
seems reason-
believe
something
is
peo¬
wrong
credit
is
properly
are,
rather,
quality.
managed,
If
the
safety
and a steady increase,
possible,
of
margins > of
against all extensions of
credit.
'<
rates find their natural levels,
v
in principle, the Re¬
authorities are supposed to
serve
Federal
(b) As
;
tion
of
Reserve
Powers
operate
the
fiscal
affairs
of
objectively and
as
in¬
an
dependent agency in the interests
part of the reconstruc¬
a
i
Finally,
improperly
of the right to
require
Treasury and banks to redeem
these, particularly,
".V
1
Both the Treasury and Reserve
authorities
should
let
interest
reducing
in tax reduction,
mini¬
.a
endeavor,
where
perpetual debt.
between
fifi'' lies
at
v
In times like
against
as
ijbly. clear that the greater social
vimraf
loans
there should be an
unusually cau¬
tious use of credit in all lines of
corresponding
people, ,£he national debt it
th^,.cpntrQlsf
the public purse
when they were
the
of
warnings, consul¬
nonproductive
surpluses occur
of the under¬
a
to
member
on
mum.
receipts
surplus
the
retire
private
'•
would restore to
the United States
to
amount
similar
a
j"-
:
of
our
the
whole
it
economy;
is
not
in high de¬ Federal government, the Federal appropriate for them to act as an
inescapable needs Reserve authorities and Reserve arm of the Administration to he^r
relieve,
gree, the almost
of
Congressmen
demands
of
groups, with
the helpless
to yield to the banks should be enabled to
sepa¬
important pressure rate themselves more completely
promote
such
to, the Reserve authorities should
great
taxpayer.
cost
Were
from the policies and activities of
the United States
Treasury and to
return to their principal and basic
to
There ard
their
and.
grip,
both
taxpayers
be
within
trol
over the
public purse which
gold coin monetary system pro¬
a
vides.
\
Reconstruction
''v\v
(2)
of
of
Affairs *•:!*;
<
Along with the restoration
redeemability
should
the
serve
Fiscal
fiscal
government.
(a)
>,
of
-t ■■■-
the
■
such
•j
■.
rates
low,
Federal
the form
y
market
still
are
much
-
■
.
the
in¬
of
miscel¬
debt—exempting
short-term
debt
in
with
serve
segments and
our
economy
instruments
can
activi¬
insofar
ascertain
of
more
be
of
Treasury certificates,
possibly notes—should
how
when
and
one
or
these instruments should
employed.
Apropos
"
the
Reserve
ciples
known,
could
we
have
dilution,
a
ovenour
even
be ■* all
never
should be until
unified banking struc¬
banks.- should be made
a
All
members
can
and
of
Federal
the
System
and
surance
Corporation.
Federal
Reservp
Deposit
In¬
■'
'
"V
Reduced Government
*
*
Expenditures
(3)
Government
expenses
should be cut radically. This can
be
done.
Instead
of
Adminis¬
an
tration defending the extravagant
level
should
Board's
in
economy,
application by the Re¬
authorities of the best prin¬
as
accomplish
such purposes and insofar as the
Reserve authorities are able
to
our
in
re¬
the
that it
ture.
be
of
in
much
harmonious
banking and credit structure,
provided the Federal Re¬
authorities should
in
the
various
ties
accomplish
more
expansion, and depreciation of
ample if used and used
properly. These instruments are
supposed to be used to promote
harmonious relationships among
the
a
While
laneous
our
money
reconstruction of
affairs of our Federal
come
terest
of
to
;
adhered
currency."' .10
'77;.;y
V But the administration of
oi%r
•r\ It
main
Federal
able
fortunes.
standards
and in preventing
vided in the Federal Reserve Act.
control
1
political
fostering real advances in conn>merce, agriculture, and industry,
approxi¬
mately one dozen qualitative and
quantitative instruments of credit
con¬
its
these
promoting
lationships
would seem, considering the
the needed nature and functions
of the Federal
effected by Reserve System, that the
that
and
Con-*
changes can only be
returning to the people that
honest
with the promises of the
banks or
Such
demands do
not
reveal
a
defect in
a
gold
at
which
they
to
work
in
all
that
are
go
eliminate
stand,
it
earnest
to
defi¬
not
bills, and
recent requests for new
But be
powers, nitely
in
the
general
interest.
funded in the form of a per¬ it would
seem
that, under its Those expenditures
compels petual consolidated
resulting from
men
debt, similar power to refuse to extend credit
to keep their
promises to to the British
efforts to placate and to obtain
Consols, to bear an to any member bank that is not
pay within the limits of redeemasupport of pressure groups should
interest rate
sufficiently high to proceeding in harmony with the
bility. even under highly adverse
be ended as promptly as
induce nonbank savers and in¬
possible
best judgment of the Reserve au¬
conditions.
except where the general welfare
vesting institutions to absorb most
thorities,
these
We should take careful
banks,
individually
is clearly involved.
note of of it. They should have
In principle,
first op¬ and
the fact that our
collectively, could be held in every
government has portunity to place their
subsidy should be abolished
bids for check.
For example, a Reserve
granted to the Treasury and Re¬ it, after which
except where matters of national
the commercial and
bank could
refuse to make ad¬
serve
banks authority to issue Federal- Reserve
defense are involved.
All prieer
banks might be vances
to, or rediscount for, any
promises to pay and at the same allowed to
parity
and
price - maintenance
gold standard functions well.
it is a taskmaster that
absorb it in
sums equal
capital
ac¬
time has freed them
from respon¬
to
sibility for redeeming their
counts plus, perhaps, for the
This
is
a
case
of
prom¬
granting
special privilege without
exacting
a
corresponding and appropriate
responsibility.
Privilege without
a
corresponding responsibility
parently has
no
justification
ap¬
and
does not conform to the best tra¬
ditions of the people of the
United
States.
In
as
the
a
light of our' experience
nation, our gold stocks are
more than adequate to
permit re¬
sumption of gold redemption. The
ratio between our
gold and our
paper money
(omitting silver cer¬
tificates) and deposits in Federal
Reserve banks and all commercial
and
paper
the
government.
Promises
to pay are
merely matters of pen¬
what
merely evidence that the
ple
ises.
Promises to
to
bank reserve system.
demands for redemption
Heavy
combat
consequence
pressures
caution, loan
only for productive purposes, and
keep mortgage, consumer, and alt
stimillus
-
-
unexpected
a
estimation
effective invita¬
their promises to
pay.
It should
providing the people of
immediate control. What standard
system; they
they do, and must attempt to do,! proof of its
superior
is
and
money and
private
no
irrespective
the United
and
they have
confi¬
currency should serve
demands for redemption
might be,
there canhot be valid
arguments
rising prices generated by I
over
our
encourage
But
they alone, who can end our le¬
thargic drift. There is practically
an
to
deprived
a
Current?
politically important people,
7
expenses,
them
gressmen;
keep demands for redemption to
relatively low level.
Stop Our Drift
■
I
pro¬
as
contracted,
be given
and productive
initiative
direct
tations, directions, and refusal to
advance any Reserve credit unless
these banks exercise
as a consequence,
activity.
important
aid
an
held
currency.
factor of increased
dence in
pro¬
vides guidance?
Who Could
our
The
taken
knowledge
a
as
con¬
are
desired
•
thus
tablished:
economic
much
a
Federal
should,
private
"
be
It
of
further
a
As
an
as
expenditures
and
depreciation in the value
thoughtful Congressmen who be¬
of our
currency in terms of goods, lieve
it hopeless to attempt to re¬ peacetime functions of admirnsand services despite our
great pro¬ duce Federal
expenses in any im¬ tering our central banking system
ductive activity.
portant degree until Congressmen as a commercial
A return' to an honest
banking enter-r
money can be freed from the
drives of prise, accommodating agriculture,
system should have beneficial ef¬
the pressure
groups which in re¬ commerce, and industry as pro¬
fects in
arresting the depreciation; cent
years have
by the appli¬
remedies
to
the
by the creation of deposits
against it than otherwise would
surren¬
tion
course.-
been
has been able to monetize
act
countries and
lost
possible had they been re¬
deemable.
The
banking system
ment
further issuance of
prom¬
on
should
greater volume of
promises to pay than would have
debt
by the government
It
Reserve
much
a
can
ises to pay.
lation
greater
voluntary
Federal
should
brake
over
lead to still greater
problems.
If the present
It
a
.: ,-y,
people of the United
and
good monetary system
use
banks—that is,
by real savers, taxes could
then be reduced, provided
govern¬
tribute to these things.
able to issue and to
ficulties, and, if not ended, should
der
a
cannot be
banks, both institutions have been
keep in circu¬
to our present dif¬
us
insofar
and practices.
the consolidated debt ab¬
sorbed
the
making of
commitments, a great
long-term
paid
as
invite
policies
With
and sustained
production, and gen¬
eral economic health
States have been unable to
redeem
their paper
money and to draw
down the reserves of
gold in the
tently correct in foreseeing these
events and in issuing
warnings
that
the
course
being pursued
would lead
be
describe
something that
Since the
rency, what the various manifes¬
tations of this economic disease
have
reserves cannot
used.
present]
who
reserve
banking system in
It is paradoxical to
tal policies and
people have done
most to bring about our
and
a
It should
be held.
less could be made
interesting, to
describe what forces, governmen¬
are,
country because of
reliability of our me¬
dium of exchange.
domestically or be used to re¬
deem the promises against which
these reserves are said to
this
depreciated
for
tary
our
the greater
be
to
out
is
unprofitable at this
stage of events, though it doubt¬
and
a
future of
which
pay
appears
defense
in
which the
appears
high prices
valid
no
structure
Will We Continue This Drift?
whether
to
Similarly, there
consent."
common
of
promises
irredeemable.
are
authorities
honest procedure the issu¬
an
ance
savings banks
panies
was
over
and trust
13%
as
of
their
respective
com¬
mercial
banks, half their time de¬
Allotments could be made
by the Treasury and Federal Re¬
serve
authorities in
accordance
posits.
with
sofne
such
principle
as
the
member bank that is lending too
laws should be repealed.
There
freely, for example, in the fields is no valid economic
defense for
consumption or mortgage credit, those. '
\
1"
'
or is
investing too heavily in gov¬
It probably is a good
guess that
of
ernment
in
one
suggested
here
with
such
modifications as greater wisdom
and the characteristics
of
rious
financial
indicate
able.
are
our
va¬
institutions might
necessary
or
desir¬
' ■'
.
It
seems
reasonable
to
suppose
that at an interest rate of
3% such
funding could be accomplished,
and that most of the
debt
long-term
would
bank
savers
be
absorbed by non-
and
investors,
com¬
reducing sharply the
June
would
serve
as
a
thus
amount that
basis for the is¬
securities.
It,seems
rea¬
sonably clear that this power is
not being employed, at least not
important
any
The
recent
to
increase
of
member
Reserve
way.
grant
of
reserve
banks
•
.
;
authority
requirements
of
the
Federal
System
probably points
direction although
the value of this
authority is lim¬
in
the
ited
proper
by
banks
the
fact
that
member
all
departments
excepting
tional
cut
at
defense
staffs
the
and
at
government,
those
expenses
same
usefulness.
should
are
be
na¬
could
50%
and
disposed,
total efficiency
Of
so
notorious
eliminated
the
course,
wastes in defense and
ditures
of
present,
time, if
same
maintain the
and
of
perhaps
war
expen¬
and
they
insofar
as
possible. Then the prevalent tend¬
enlarge their reserves ency to dissipate our national
quickly by selling government se¬ patrimony, to give away our real
curities to the Reserve banks and
wealth, should be ended. Our na¬
by the further faet that general tional patrimony calls for
can
increases
do
not
recognize the
problems of individual banks and
do not
apply to nonmember banks.
preser¬
vation and enlargement, not dissi¬
pation.
(4) Taxes
on
both business and
Volume
Number
163
individuals should be cut sharply,
The dollar retained by the person
who earned it and who was com¬
pelled
to
meet
the
forces of costs and
markets
is
THE
4738
squeezing
prices in
efficient
open
in
his
should bring greater
course
in the government's
omy
the
econ¬
of
use
people's wealth, greater pro¬
and
ductivity
in
COMMERCIAL
harmony
greater
economic and social system,
our
than
in
those
of
govern¬
be
example, when government spend¬
ing was a relatively small portion
as
the
spending in this nation, a
dollars, chiefly in private
abandoned.
Such
1
price fixing and
times
of
peace
improper and
are
Prices
whereas
1933,
after
when
correct
Since
a
a
goods
be
can
re¬
The
how demand
see
decreased
and
supply in¬
government
has
The
creased.
services.
and
step is to
those
in
government
notoriously inefficient
and
non-productive
cuts
for
the
dollar, tax
of leaving
purpose
dollar possible in the hands
every
of private enterprise are
wise ex¬
cept, of course, Where matters of
national
safety - and of general
welfare demand that the govern¬
ment use
some
of these dollars
despite the general inefficiency of
government activities.
principle,
; In
tax
r
;
■
' reduction
should be directed toward the
en¬
couragement of saving and invest¬
capital goods. It is a mis¬
ment in
for
take
government; to remove
people in the lower income tax
brackets from direct pressure of
the income tax payments.
Every
adult income
the
earner
should have
experience of making out an
income tax form and of contribut¬
ing at least something in this man¬
ner
toward
government,
since
both experience and contribution
should
desires
his
reduce
ask
to
the government
to increase its ex¬
The fact is important
penditures.
"Liberalism" in
that
little
means
than
being
Jhis country
practically,
with other
.♦ more,
liberal
people's nicney., *■
1V
" /
-
.
■,
Encouraging Private Enterprise
.
(5) A. much healthier economic
social system should prevail
zuid
and thus contribute much toward
greater economic harmonies if the
government were to do all things
possible to encourage private en¬
terprise and the operation of the
forces of free and fair competition,
i 1 it were
to regulate monopolies
with the objective
standards provided by free and
fair competition, and if, in its ef¬
forts to advance the general wel¬
fare in those areas in which pri¬
accordance
in
function, it
certain that it is
operating in the interests of the
people as whole, with their con¬
vate enterprise cannot
\yere
to. make
ance
ing
vate
with the
same
cost account¬
principles employed by pri¬
enterprise.
The attempts to
a
governmentally man¬
establish
aged economy and a governmentally managed, irredeemable paper
money
have contributed- much to
high prices and to a depreciated
currency, and should be ehded.
"Hie simple fact should be faced
that
governmentally managed
economy is destructive in nature
and leads rapidly to economic and
social retrogression.
At no time
should the government, because of
a
would
while
be
it
recommended
people
managing
our
Congress should be strong
enough and wise enough to over¬
corrective
so-called
those
become clear that
one
Presidential
will
avoid
and
have been offered
by the present
in
respect to the
demand, rela¬
and serv¬
inordinate
vate
enterprise.
The next question is what a Re¬
,C:,;Y YY-vYY'Yj'Y
: y Y
resulting symptoms natu¬ publican Administration and Con¬
rally revealed in the form of high gress would do should both be
prices should not be attacked as elected. It would seem to follow,
causal factors.
Price symptoms as a matter of course, if the pro¬
are guides to people;
and one of posed program outlined here is
best cures for high prices is
high prices. To attempt to remove
this -V fine
indicator
and
helpful
of the
underlying causal fac¬
tors is merely to remove the re¬
liable guide, to create confusion,
cure
to make matters worse.
and
this is
correct, that to the extent the Re¬
publicans should deviate from it,
they too would be inflicting in¬
jury upon the people of this coun¬
1
try
What
All
old, familiar story, and
government officials should * not
for a moment suppose that they
can
with impunity ignore its va¬
If
an
it be
May
We
assumed
>.
Expect
best that
it
assumed
be
further
that
the
lidity.
•:;<Y\YYYYv'4.Y f-'Y'-YYYY Republicans follow it, the question
(7) It is useless to expect pri¬ arises as to what we may expect
vate enterprisers to do much, in the consequences to be.
that; corrective
sense,
regarding I i, Will such a program cause pr
great demand, relative scarcities, invite a business recession, or will
and
it prevent
high prices.
Most of the factors
prices and responsible for our de¬
preciated currency lie outside the
They
government
enterprise
private
system.
lie
^chiefly with the
an<J the central banking authori¬
ties, and it is from them that the
major correctives must come.
all
About
aside
can
from
concerned busi¬
that
do
constructively,
their busi¬
nesses as oest they can in the face
of the forces with which they are
running
confronted, is to determine to the
best
of
their ability
what the
proper
course
is for the Federal
Government and Reserve authori¬
ties
to pursue
and then to urge
that they follow it.
No individual
business,
probably
nesses,
The
causing high
matter how large, and
no large group of busi¬
no
could accomplish anything
this:
The
would
act
diseases in our
seem
to be
arresting the
midst must of ne¬
of
cessity, it would seem, bring some
changes and readjustments. Ex¬
perience suggests that these
changes should be less severe than
if the present unsound forces were
permitted to run their natural
course, and that economic health
should be restored more promptly
and with less distress than other¬
wise should be expected.
The effects upon
a
change from
a
the patient of
doctor with an
outwardly
sympathetic
bedside
manner, who has given pacifying
and somewhat intoxicating pills
and has endeavored to say what
the patient wished
competent physician
will tell the patient precise¬
he has supposed
to
hear, to
who
signals, to interpret them, and
ones
are
Y
to be.
Claims by large
associations of
they can combat
high prices or overcome a depre¬
ciating
currency
or
prevent a
business recession and heavy un¬
employment
are
without
any
foundation in fact so long as the
businessmen that
a
major causes of the great demand
and
relative scarcities of goods
and
services originate in govern¬
mental
The
and
policies and actions.
individual
businessman
representatives of groups of
producers can, of course, cease
running to Washington for sub¬
sidies and other favors—and they
end
this
practice if
they
really believe in the virtues of
the
private enterprise competi¬
tive system, and if they wish to
contribute something directly to
the reduction in governmental ex¬
The
,
voluntary
credit
■
control
spects,
qualities have been seriously im¬
paired by the doctor who has pre¬
ceded, then the reaction might be
surprisingly sharp.
<*■"jBut whatever the patient's re¬
action
be, the need for an
experienced, honest,
and stern,
but
understanding, physician is
may
for
housers
far as
so
to
deception
it
straight,
Govern¬
ever
a
tidal
a
our
tiny ripple
com¬
,>
wave.
the
to
greater
better
which leads
course
economic
social
and
health and prosperity.
19)
page
to
is
industry
provide
sound
all
objective
has
been
membership
and
there
indication that within a
comparatively reasonable time in¬
creased
production
of building
all" kinds
and
development
credit
the
of
mortgage
industry.
the
availability of such materials" in
the traditionally free and com¬
COMING
petitive market will substantially
EVENTS
contribute
lower
to
to
the
of
is committed Association in a way which would
economically contribute to the continued sound
the
housing needed
of
sole
regarded
I
the
serve
every
materials
to my
its
myself
simply as its temporary chief ad¬
ministrative officer, directed and
guided in my activities by a most
serious and capable board of gov¬
spokesman.
primary
Sound Housing
Private
as
not
was
ernor^, ^comprised of 58 conscien¬
tious
mortgage
bankers whose
Private Industry Can Provide
construction
In
•
Investment
Field
costs and stimulate
building. The
promised and hoped-for increased
productivity of labor will in turn
tribute
construction
and
con¬
(Boston,
1948
1,
30-Oct.
Sept.
Mass.)
in
reducing costs.
As J
have before suggested, the realis¬
tic
modernization
of
building
codes, too, is of critical impor¬
Board of Governors of Associa¬
tion of Stock Exchange
Firms Fall
Meeting at Copley-Plaza.
tance.
Oct. 1-2, 1948 (Chicago, 111.)
Midwest regional exchanges
accomplishments
of
the
construction industry in 1947 and preliminary
meeting to discuss
to date in 1948 fare now a matter consolidation, t- ;
The
of
record—an
amazing rdtord, I
the part of private in¬
dustry to supply on a sound eco¬
nomic
basis
critically
needed
housing.
The pace of the almost
on
unbelievable
high record
of
new
construction
will, from all present
indications, continue and will pro¬
vide positive and conclusive evi¬
dence of the capacity of private
industry under the private enter¬
prise system to meet the demands
for housing.
'
You are fully informed, I know,
of
the
current
availability
of
.
mortgage credit and of prevailing
interest
rates.
You
know, too.
that
after
an
unwarranted
ex¬
tended period when interest rates
artificially
were
fixed,
interest
rates during the past 10 months
have, by virtue of the law of sup¬
ply and demand exercising its
influence, risen so
sound
respond as best he can to them
while estimating what the next
of
widespread
gets under
way the magnitude of Federally
financed
housing
projects
will
compare with the public housing
public
rates
to
role
I
depend, apparently, upon
the quality of the patient.
If he
has pluck, initiative, self-reliance,
self-respect,
and
ambition,
he
should
respond well.
If these
the
to inflation and to start ourselves
on
I was not its sole policy¬
and that it will hurt in many re¬
to
bring to
maker.
watch
is
to
position.
important by cutting prices, or by
doing anything else of that gen¬
eral nature.
The job of the indi¬
businessman
who
candidate
present Federal
our
ly what ails him, what the proper
treatment is and is going to be,
vidual
reasonably clear that
in this way can we expect
an end our surrender
seems
have at least
we
ment and some of
assert,
it?
answer
It
only
by
accelerate
that the pro¬
recommended here is the
can be produced, and if
gram
temporarily uncomfortable.
I have had no delusions
,
The
the
campaign the
as President
an honest, tough surgeon who will
proceed to do the things that need
to be done though they make us
(Continued from
appropriate central banking prac¬
tice, good management of our na¬
tion's fiscal affairs, and the prop¬
er relation of government to pri¬
,
elect
If the program still contemplated
The distortion
money.;
the
should
Economically Sound Housing
pares
production.
affairs,
and if out of such a
Private Industry Can Provide
built
better
the
substitute
ices, high prices, a good currency,
greater
fiscal
of
government to private enter¬
prise, and the others treated so
inadequately here.
It will be a fortunate day for
the people of the United States if
in this political campaign it should
and
with
methods
of
that
interfere
correct
attainment of the proper relation
tive scarcities of goods
penses.
the
of
current
with it.
of
institution
condemns high prices. It has done,
and still is doing,
many
things
should
Pursuit
honest, and informed explanation,
un¬
Administration
otherwise
general inefficiency, attempt to
do
what private enterprise can
and will do.
The government op¬
erates best as a regulator of pri¬
vate enterprise; it should not at¬
tempt to manage it or to compete
its
followed
and
it
■
sent and approval, and in accord¬
principal features. It
less
ride
27
and peace, as those involving pro¬
vision for a sound currency, the
present
recommendations of the type that
nessmen
t
the
done, and still is doing, mueh to
enlarge this demand beyond what
a
dollar
its
reasonable to suppose that
recommended
of
and
.
hands is
of
seems
ties
demand
was
such
most
if
and
present Fed¬
is wrong in
(1335)
pursued
course
sponsible for the relative scarci¬
inordinate
the dollar in 1940 between demand and supply has
large proportion of been aggravatedgreatly by the
the dollars spent was government government's dilution, expansion
dollars. Y'YY
-7YY; Y>:Y.;JY and depreciation .of this nation's
than
the
Administration
Administration
should be returned to power the
same
general course would be
next
when
it
then
curate
analysis is ac¬
naturally follows
eral
and far. until in 1940, for
tive
If the preceding
recommended by our
accurately the factors causing this
example,
a
billion dollars was doing only
$13 billion worth of business per
year. This was at a time when the
government was spending huge
sums
of money and after seven
years of such spending. In other
words, the dollar in the hands of
private
enterprise
in the
late
1920's was 3V2 times more effec¬
Proper Coiurse?
usually high because
procedure lies in analyzing
it must
Government
Federal
Our
Take the
is relatively
spending became a
much
larger proportion of our
total spending, the velocity of de¬
posit currency dropped rapidly
government
Will
that
are
demand
in
compel obedience.
rationing in
was
great as
doing approximately
$45 billion worth of business per against the available supplies. The
year,
weakness
the
of
supplemented by other pro¬
grams of the type suggested here
in
which outside authority can
procedures
injurious.
the
hands,
will be lim¬
success
because
be
•
billion
still remains, appar¬
fact
ently, that its
ited
virtues,
positive
to
by the fact that in 1928-1929, for
of
has
self admonition. Therefore,
which
ment
but the
CHRONICLE
of the American Bankers
Association
and it should reduce its
tendency
contribute
so
much
to high
prices.
H
escapes the require¬
ments for efficiency and the pres¬
(6) Attacks on symptoms, rather
sures of costs,
prices, and possible than a study of causal factors and
the employment of programs that
losses.
1
This can be illustrated in part deal properly with causes, should
hands
more
program
FINANCIAL
&
moneys
available
of
continue
for
that,mortgage
to
all
be
readily
economically
realty projects. If interest
mortgage credit are free
on
artificial
controls
and
a
gage
money
credit.
I consider
myself singularly for¬
President
tunate to have been the
of
Club
Bond
Cleveland
Fall
Party at the Kirtland Club.
(St. Louis, Mo.)
Oct. 11, 1948
for annual elec¬
Tentative date
tion
Security
of
party
Traders
Club of St. Louis.
Nov. 13, 1948
(Chicago, III.) '
Club of Chicago
Traders
Bond
Luncheon for members
of NSTA
passing through Chicago on way
to the Convention.
Nov. 14-18, 1948
National
(Dallas, Tex.)
Security Traders Asso¬
ciation Convention.
Nov. 18, 1948
New
(New Orleans, La.)
Orleans
Security Traders
Association entertainment for del¬
egates
coming from NSTA Con¬
to be announced
vention—details
later.
Dec. 5-10,
1948 (Hollywood, Fla.)
Investment Bankers Association
1948 convention at the
Hollywood
Beach Hotel.
com¬
market prevails.
I know you will agree that we as
mortgage bankers,
whether we
directly or indirectly invest in
mortgages, can and will supply all
the needed and justifiable mort¬
petitive'
(Cleveland, Ohio).
Oct. I, 1948
Dempsey-TegeJer Co. Adds
(Special
to
The
Financial
Chronicle)
LOUIS, MO. — Joseph L.
Rehme, Jr. has become affiliated
with Dempsey-Tegeler & Co., 407
North Eighth Street, members of
the New York and St.. Louis Stock
ST.
Exchanges.
He was previously
with the Mississippi Valley Trust
Association—an Associa¬ Company.
"
tion which commands the respect
and enjoys the confidence of other
necessary. The need is for a com¬
With Charles E. Bailey Co.
petent surgeon who knows the trade associations engaged in pro¬
(Special to The Financial Chronicle)
sources
of our ills and will cut ducing and marketing real estate.
DETROIT, MICH. — Roland T.
through to them and drain away Your Association, too,
is; most
Chickering has become associated
the accumulated poisons.
highly regarded and its advice is
with
Charles E.
Bailey & Co.,
The people of the United States
frequently
sought
by
govern¬
Penobscot Building, members of
mental agencies charged with the
need badly to be told the harsh
the Detroit Stock Exchange.
In
truth and nothing but the truth.
responsibility of supplying insur¬
the past he was with J. E. White
They need statesmanship in lieu of ance to mortgage lenders who are &
Co., and Martin, Smith & Co.
the evasions and deceptions of the constantly and actively engaged
politician who is willing to en¬ in sincere and effective efforts in
Joins Lincoln McRae
supplying the credit which plays
gage in personal profteering at the
(Special to The Financial Chronicle)
such a vital role in our national
expense of the general welfare.
ROCKLAND, MAINE —Carl D.
There are few if any questions housing program.
As President of the Mortgage Griffith has joined the staff of
as important to the welfare of this
Lincoln E. McRae, 449 Maine St.
nation, aside from those of war Bankers Association of America,
of
your
OMzfkdl'njnwerffi.® flbAV
23
■
(1336)
THE
COMMERCIAL; & FINANCIAL
CHRONICLE
Gradually
A "New Look" in Oil
"
(Continued from first page)
and better gasoline to meet
tion's
more
growing needs of a nation on
Touay it becomes increas¬
ingly clear that people expect us
In
gest job
have
we
had.
ever
We
the
During
the ' past
the
years
in
troleum
creased
that
not
of
source.
consume
the
total
a
pe¬
in
production, they have in¬
markedly not only in
of
volume but in their economic im¬
portance
products.
B.
t,
u.
all
needed
are
the
from
do
cent
per
use
of
kinds
each
A
the
to
year
Coal
has
world's main
gas
plier.
the major energy
sup¬
as
Coal
»
world's
supplied
76%
of
the
than
than
ergy
fact.
of this
more
coal
nation's
a
—
a
of
require,
as
that
people
many
the
multitudes
tomobiles, trucks
of
the
concern
during
goodwill. Obvi¬
Our
border, Utilizes
in
-....v.,
,,
for
some
16%
of
use
of
the
na¬
energy.
The third
major group, and one
of
growing interest to all of us
here, is that which uses
energy
primarily to heat enclosed space.
For the most
part, this group
comprises
the
American
home
dweller. In
and apartment
heating their dwelling and
work¬
ing rlaces these people account
for 24% of the nation's
total en¬
consumption.
Our
the
concern
of
use
ergy.
these
oil
is
a
three
has
source
of
oil
major
expanded
Of
be
course
of
our
make
all
of
us
is
proud,
seemed
nary.
obstacles
.
We
have
been
t
witnessing
an
outstanding example of what a
free, competitive, responsible in¬
dustry can do in the face of a
public
need.
In
this
striving to
expand supplies, though, we can¬
not be forgetful of the fact
that
apprehensive and in
critical
The
eyes
possibility of
•
public
To
many
focused
are
our
of needs has become
great
cases
on
us.
falling short
matter of
a
concern.
•
the
public, a shortage is a
shortage.
They do not think in
terms of "tight
suoplie*" and "lo¬
cal situations."
us
Last Winter gave
excellent
an
example of how
apprehensions on the part of con¬
sumers
can
rapidly mount into a
The
opinion
polls show
crisis.
clearly
that
claimed
far
they
more
had
people
suffered
real
hardship* than could possibly have
been seriously short of fuel. This
experience,, taught us how im¬
portant
it
is
to
to
of
at least the mini¬
margin of supply over de¬
necessary to keep distribu¬
tion facilities
working smoothly.
mand
en¬
Trend from Coal to Oil
a
As
major
to
the
basic energy supply of the coun¬
try, we cannot fail to consider the
none
can
chanmng
by-products.
For
principal energy sources.
Plainly,
the trend of the last two
decades
from coal toward oil and
gas can¬
most
®s a
as
is
well
known
to
refiners, it is burning oils
group that have been relent¬
lessly crowding gasoline's
position
as
the prinmoal end ^Wuet
of
petroleum. The
use
heating alone has
one-half in
to reach
an
•Umption
stents
now
nearly
just the past two years
relationships
continue
indefinitely,
cially since
our
of
much
coal
oil.
are
The
between
ultimate
mqre
greater .than of
increasing
penetration
of oil into .the. broad
energy
is certain to
some
con-
than
16%
or4 cue
iiet-
i eifect
espe¬
resources
bring about new
relationships reflecting the
<320,000,-1 netH'en bptwf*rv er,**rgw
Space heating repre- and the
available
estimated annual
of
^00 .barrels.
of oil for space
gone up
not
and
demand.
be¬
The
trie
Clearly,
we
together with public criticism, loss
of confidence, and
regulation of
sort
one
factors
price
another,
or
of
supply,
The
exercising management
nected and
and
inter-con¬
in dynamic move¬
ment relative to one another. Let
are
hope, though, that the equilib¬
us
rium
will
sibilities in
be
a
try
margin
demand
in
coun¬
ability to find, de¬
velop, produce, and refine petro¬
our
with
maximum
efficiency
and / without
excessive
Plainly,
the
then,
waste.
for
pressure
efficient producing
more
and
re¬
fining equipment of all kinds, and
for ways in which our
products
be
reached by sound, can be used more
efficiently, wi/l
orderly
progress,
rather
than "be greatly intensified.
Very large
through wild swings and stifling sums of money will be spent in
controls.
coming years for
Must Push Ahead; With Research
be
all
of
Another
kinds.
equipment
new
Here, perhaps, will
greatest test we
involved
the
danger in this new
situation would be to relax in the
activities which have
pushed our
competitive positions, and the
industry ahead. Our industry
tion's
risk
not
the
loss
of
can¬
confidence
Which would result if
we failed to
push forward soundly in the field
of product
quality, development
of
new
products, and
appli¬
new
cations of old products.
We can¬
not relax in our
expenditures and
efforts in scientific research of all
kinds, v'f-i.'
The growth of the
industry has
been
based
on
aggressive
ress, and active
lines
of
prog¬
competition in all
work.
our
Increasingly
we are
competing, not only among
ourselves, but with other indus¬
tries.
Obviously that competition
is not manifested
by price alone.
The quality of our products and
the
service
vide
with
them
portant
will
in
which
be
this
we
pro¬
less
no
growing
im¬
inter¬
industry
competition tuan mey
have been as we worked to hold
Irj tHjs nil
field itself.
This
industry cannot
relax
in its tradition
service aild economy.
There
in
our
seem
of
industry.
,
basically im-
uiis
or
quality,
*
Importing
is another
part
pnprcn-
' new
This
iook
year
'
we
to be
making the change, on
balance, from an oil exporting to
an oil
importing nation. ? To date,
this country has
supplied 60% of
all the oil used in the world. Our
country is still overwhelmingly
the greatest consumer and
pro¬
ducer
of
oil.
But
recently
the
country's needs have been rising
faster at times than it has
seemed
possible to increase our
to
com-
without
capacity
produce oil economically and
mands
been
undue
for
oil
waste.
And
world-wide
swelling at
greater than here.;,
-
a
:
de¬
have
rate
even
r
~
\
operators have ever faced.
individual abilities to hold
ability
as
whole
a
and
more
efficiently, will be
oil
our
products
ever
depen¬
dent upon the degree of technical
skill which Can be achieved in the
design, installation and operation
of that new equipment.
f :;
The widening
technological
field extends even beyond these
avenues
sion
natural
of
toward
expan¬
petroleum
sup¬
plies.
More and more frequently
today we hear of synthetic oil
plants to supplement, from natural
coal and oil shale, our do¬
mestic natural petroleum supplies.
gas,
Few
people
however,
we
quantity
of
ucts from
from
or
synthetic
oil
prod¬
natural gas, from coal,
shale would be, by
a mammoth indus¬
undertaking.
dollars
been spent
The
millions
which
have
already
by this industry in re¬
our
country—
in
investment only to that
agriculture itself. But that is
of
enormously
when
we
ing at
a
important
especially
realize that
ours is
grow¬
rate far greater than
any
other major
With this
industry in the
size
and
world.
importance
come
responsibilities extending
beyond simple business or econo¬
considerations; The eyes of
mic
the
world
the
oil
meets
focused
are
industry.
its
today
How
on
well
it
responsibilities
toward
everywhere
will
deter¬
mine, in large measure, the de¬
gree of freedom which the
indus¬
people
try will continue to
enjoy in the
conduct of its affairs. So
far, the
American oil business has
been an
outstanding example of the bene¬
of free,
aggressive, competi¬
fits
tive
enterprise.
plished,
It
its
on
has
own
accom¬
initiative,
things which certainly would have
been far beyond the
comprehen¬
sion
of
in the
ordinary
doing
the
mands
or
government
These things it has done
of its busi¬
it has not only
course
In
ness.
met
state
a
planner.
so
phqpomenally rising
for
oil,
but
has
de¬
supplied
continually
better
products ' at
continually lower costs in relation
to other basic
commodities.
All of us want the
continue
as
i
;
^
industry to
outstanding exam¬
an
ple of what free men, with incen¬
tive
and
encouragement,
do.
can
But
its continuance on
such a
basis depends
very largely on how
well we succeed, not alone in our-
material
achievements,
but
in*
holding the confi¬
gaining
dence
and
of
people everywhere.
We
continually demonstrate
that
kind
good for
the
of
business
more
vised
does
people than
substitutes
private
oil
standards,
any
trial
of
realize,
supplying
any
as
in.
are
largest industry in
our
to
seem
that
growing con¬
responsibility .by
We accept as a matter
of course the fact that
ours is the
must
Synthetic Oil Products
I
the
of
,
familiar
as
others.
enough
na¬
to pro¬
duce
use
Our
the
gain a perspective on the really
broad significance of this
business
us
between
this
it
fea¬
It is just
industry toward the public
second
Let
all
as
another
look.
to
,
respon¬
business.
our
widening
and
leum
three
demand
obviously
are
of
well into
are
still
Most of us have
grown
in the oil business. Not
many
us
have stopped long
up
our
of great technological ac¬
tivity—activity which may be of
high significance to every one ot
efforts
whole.
a
age
us
industry,
our
is
new
sciousness
another aspect of
importance in this "new
great
our
important
might call
There is still
look."
there
ture of
try.:
They will have an increas¬
ingly important effect on the re¬
an
these
Public
But
coun¬
gard for and understanding of
country abroad.
•
that
Responsibility of Industry to
representatives,
becoming the in¬
our
great
so
must continue and
expand.
increasingly engaged
men are
The possibilities in
improved
use
of oil products
are
oil
consumer
field
price
supplies. -The
of-rising piioes m mowing
will be
American
serious dislocations
in
like.
has
accept the premise that there wili
nortant
contributors
point that today
practically
example,
relationship
upon
supply
business,
dustrial ambassadors of
for;
situation de¬
any
world
mind,
efficiency in
truly
U. S. oil
and
on
more
to
us
be avail¬
danger, however, is that of prices
getting into a series of spurts and
collapses. This would bring about
Cannot
Continue
classifi¬
of the components of
crude oil
be regarded as
pending
tween
in
Oil
by all
such
factors
->r>r|
how, to maintain
pay
the face of what
insurmountable
has been little short of extraordi-
mum
principally with
as
Consumption
last
cations
v
■
Source of Energy
as
us—one
conduct will
our
j ready made in
gas.
In total this
group accounts for some 37% of
the nation's total
energy consump¬
tion.
tion's total
which
thought for
tongs, and continue to do
the very best we can to lick it
and
keep it licked.
The progress al-
the
Another major
group comprises
mostly those who use energy in
the manufacture of a
wide range
of industrial
products.
This ac¬
of
area
ling
definite
to go at the supply situation ham-
utility compa¬
electricity and
of
manufactured
the peace¬
until the last
mer and
really big energy consumers in the
United, States.
One of these con¬
sists of our public
nies, producers
into
see
insist
to
on
other commercial
en¬
products which they find hard to
get.
Basic
economic
laws
are
bound to be the ultimate control¬
situation
in
record
should
,
are
extended far
this
...
no more
groups
But
offer
be
will
in
played an important part in im¬
proving the efficiency of con¬
suming equipment — automobile
engines, jet propulsion engines,
oil burners, prime
movers and the
significance—
is, the less
of it
more
Bear
that our technical activities
extend into fields which the
pub¬
lic does not
ordinarily associate
with ours.
In the past we
have
there
will
achievement.
too,
any
way
consumers
readily
tiai
even as they are dependent
With the oil business
us.
men
of evading
pressure of prices
no
impelling
when
"shortages"
during the
understandable
consumer
for
of greater
activity and en¬
deavor—or one of greater
potent
in activities in many
foreign coun¬
tries.
Perhaps more than
displayed by most of the
industry. In this they
ously, there is
the
prod¬
major job, and one which the industry is tackling in a manner that
—
other
of
great importance.
—
Three
talk
periods.
new
commercial, private, and
military together
consume less
than 1%.
The
after
great
11%
Oil
practically
our
on
units in the
ourselves
production and
supply, and with little prospect
y for any let-down.
to
Here, then, to begin with, is a
of the nation's
energy,
Our merchant
ships take just 2%.
All of the
planes which dot our
skies
ergy
find
we
evidence of working our way
out,
and this only by
breaking record
continent from coast to coast
and
border to
owner
Now
•
time period.
Not
few months could we
and busses which
me
have shown their
has
au¬
to
seems
new
it
industry
To their credit, it
that great restraint
has been
war
railroads, spanning the
counts
economical
more
field
far,
Despite
so
bridge of possible iso¬
Today we are becom¬
ing dependent on the rest of the
infla¬
an
amount,
crossed the
and
ways of disposing of products for
which demand seemed far short of
was
city streets and high¬
ways are not the largest consumers of
energy in our country.
They
use
only 10% of the nation's total
than
out
products get into
our
net
lationism.
a
of
new
industry.
technological problems are
inspiring. It is hard to imagine a
Such
Last year
year,
whole
a
able here to
help meet our own
nation's mounting needs for oil.
The
U.
S.
oil
prices of
tionary spiral.
a
of
there
the
and
conditions.
materials
in
This
giant plants which wili constitute"
de¬
im¬
amounts
supply the needs of other nations,
world,
raw
has
more
tendency, for
example, to take advantage of a
short supply "situation and let the
our
trickle,
pressure
than
supply.
ucts.
our
energy
consumption.
network of
can
everything we have to sell has a
ready
market.
We
are
being
pressed on every hand to meet
crease, shows the size of the job
ahead for the oil
industry; Let us
look at the present
distribution of
energy uses in our own
country.
And by energy I mean that
from
nil
sources—coal, water power,
natural
gas,
petroleum and all
others..
;
'
crowd
work
faced with the fact that
energy the world will
standards of living in--
surprises
to
consume.
For years all of
have tried to'find new outlets
us
en¬
on
pletely new economic
There could be a
readily
and
phenomenal
passing reflection
amount
learn
existing customers
growing needs for all of
Even
It
our
the
readily available supply, we are
subjected in many cases to com¬
is
there is little likelihood of
again having a lot more to sell
our
vend of World War II the propor¬
tion supplied by coal had
dropped
to 57%.
In this country, which
enjoys
incomparably
higher
standards of living than the world
at large, oil
consumption is much
higher. Today oil and natural gas
provide
being
are
come,
energy
requirements at
of World War I.
At the
the end
business
our
Possibly the first of these
that, at least for some time
matically challenging the position
■of coal
of
a
abroad.
abroad
current demand to one where
po¬
tential demand is greater than the
formed.
dra¬
are
of
petroleum shows
pretty basic new con¬
some
greater
was
only
went
ex¬
have
trickle seems likely to
persist and
enlarge., The U. S., like all other
major industrial nations, is now a
net importer of oil.
Oil developed
coal and shale.
They are
technically possible today, but are
still beyond our economic reach.
t
In the change from a situation
supply
the
S.
activity and
expansion in our domestic indus¬
try ever visualized, that inward
the ultimate economic
picture,
course,
lies the part to be
where
and
U.
that trickle has reversed.
the greatest projected
coal,
from
useful
realization of the impli¬
this rapid expansion of
of
cepts
of energy. But
source
oil and natural
now
and
amounts
the
ported have increased.
played by liquid fuels synthesized
outlets
that
traditionally been the
valuable
as
ruli
cation
keep the world running.
relationships be¬
the economic
tween
oil, natural gas and
other energy sources—not to for¬
has
machines
The development
of
get nuclear fission—lies ahead. It
will surely have new and im¬
portant effects on our business,
pushed the world's total consump¬
tion of energy
up almost
70%.
Today, more than 79,000 trillion
of
ready been felt.
ticularly chemicals oeing derived
large
thirty-five
steady rise
of
uses
the
from
creased
course,
not forget the lubricants and
par¬
increasingly
While these
called upon supply
energy for
growing needs of civilization
a whole.
are
as
reviewing important
we
snouid, of
ported
the trend from coal to oil has al¬
consump¬
petroleum
bigger share in the big¬
a
petroleum
tion.
the
wheels.
to take
total
Thursday, September 30, 1948
enterprise which are de¬
proposed.
petroleum industry is one
of
the
for
good in the world. I
dent
any
or
The
just
more
of
competitive,
for
greatest
that
it
that.
industrial
will
But
forces
confi¬
am
continue
it
must
be
to
be
done
search, and in pilot plant opera-?
tions in the synthetic field, are
probably small in comparison to
the aggressive, competitive meth¬
ods which have characterized it
expenditures
from its
made
can
realities.
sibilities
proven
mic
will
still
be
beginning.
*
of
aoproach
The
these
commer¬
technical
processes
beyond doubt. The
pos¬
are
econo¬
possibilities, unless cost and
material requirements
can
be sub¬
What
Standard
In the
case
most of you
Oil
Is
know the policies
we
adopted and of our activi¬
ties in meeting the present,
prob¬
lems and those we see ahead. Just
to
yond
maximum efforts within
reach for other than possi¬
f
of my own company,
stantially reduced, or unless sub¬
are provided, seem still be¬
bly a few local areas. But once
the cost limitations are
overcome,
either through process
Doing
have
sidies
summarize;
First,
to
we
»
are
our
.
customers.
We
;
■
our
the U. S.
find, produce and refine
for
N
expending
more
have
oil
the
improve¬ greatest possible
confidence
in
through general econo¬ the long term, healthy, progres¬
a whole range sive,. expanding
future for the:
technical problems lies beyond
U. S.: domestic oil industry and all
ments
mic
of
'
,
by the industry before these
processes
cial
which
through the continuing exercise of
or
developments,
We will face questions ot
location,
construction, .V and
operation,
of
of its branches.
Second,
we
are
^
making heavy
investments and
substantially
port it to those areas
where rising
sures
firm and
duced this year—an increase of 85%
produced in the peak year of 1944.
production, this trade authority points out, will
approach 88,000,000 tons this year, or about 1,500,000 tons less than
cause
problem of oil is worldwide. We
convinced that people all over
the world need and are insistent
are
having
upon
No
oil.
period
the
one
time
of
and
use
increasing
area
can
advance
benefits
°il.
we
spending
are
of money
sums
large
in extensive ,;.and
research. We believe
promise of technology in its
continuing
.
the
^benefits for people
everywhere is
greater today than it ever has
been. We are determined to keep
ourselves ahead of needs and defar
,
velopments in these fields.
Of
V
course
"
t
We know we are compet¬
efforts.
ing tooth and nail
of
*:
these are competitive
your
in some
activity.
with everyone
or all of our
We know, too,
":
-
were
somewhat irregular
:
-
last week
withy
Spot quotations averaged higher during most of the period bwtr
downward in late dealings and closed with slight net losses
turned
for
of the ingot going
week.: Although the movement of cotton into the 1948 lorn
to expand, farmers in some areas were reported to
the
stock continued
selling more freely, v, ;Yy
y
Y. Y.'Y
'/■ Y, .
Total "sales in the 10 spot markets increased sharply to 155,800
be
.
it not been for large
since it has shown how available
lower.
markets
price movements continuing in a narrow range.
is finding its way into finished steel products.
That's why
will be a banner one and next year much more so.
steel would have been available.-
on
Cotton
the converter, the magazine adds, since
and small companies which bought ingots
and took them elsewhere for conversion into finished steel items, less
of other
.
Third,
prices,
into finished steel belongs to
had
domestic demand for flour. Lard prices
with weakness in cottonseed oil.
Hog
the other hand, displayed a firmer tone, while steers and
sympathy
in
lambs trended
all-time record.
But ingot output is no longer the real
Finished steel output tells more. A greater part of the steel
Part of the credit for the increased percentage
if it
only answer to in¬
sistent pressures for greater con¬
sumption of oil is a greater supply
*
ingot
this year
itself in
prices rose moderately, aided by a continuing brisk demand
by the CCC.
MilLng demand for cash wheat was
wheat
easier
were
an
ingot
The
people.
.
1944,
story.
for any
of oil
is done to the detriment
;
supplies
Steel
cash
only fair, reflecting slow
1939 and more than was
over
We are doing this be¬
of our conviction that the
products.
of
for
.
bringing heavy pres¬
for greater supplies of oil
are
and prices
limited
(Continued from page 5)
29
sharply for the week.
Demand for cash corn wag
also fell sharply from a week ago.
Wheat wan
declined
which
v
(1337)
CHRONICLE
FINANCIAL
ex¬
panding our efforts to find and
develop crude oil production
abroad, and to refine it and trans¬
needs
&
COMMERCIAL
THE
Number 4738
168
Volume
.
107,500 bales in the preceding week. Volume,,
considerably under "the 198,400 bales reported sold-in
bales last week, from
Conversion,^ now a big business
equipment in one area can process
however, was
.- Domestic
consumption of the
of the Census, rose from 628,000 bales
Furnaces now on order, being modernized or in the planning stage, in July. to. 729,000 bales in August, which compared with 713,0004a
will add at least 750,000 tons to electric furnace annual steel capacity August, 1947. ; On a daily basis, .however, consumption.in August
averaged 33,100 bales, y Although up from the July rate of 29,900,
before the end of 1949. Y.v;
x;;:
,; 1
There is no slackening in steel demand anywhere. ' Some large this; was. slightly less .than the August, 1947, average of 34,000. bales,
due to the fact that there was one more working day thisj
steer buyers are so wrought up over the possible breakdown of vol¬
y Volume of trading in the Boston raw wool market remained
untary allocations, "The Iron Age" concludes, that they are increasing
very small and quotations continued nominally firm.
Small weights
their conversion deals—where possible.
^
of apparel wools for piecing out, purposes were reported sold, I? In.
;;
The American Iron and Steel Institute announced on Monday
foreign wool auctions, prices.were; easier for good -fleece wools,*with.
of this week the operating rate of steel companies having 94% of
United States buyers continuing tj> show^ little interest.
Imports of
:
the steel-making capacity of the industry will be 96.4% of capac¬
apparel wools received at Boston, New?York and Philadelphia In the.
ity for the week beginning Sept. 27, 1948, the highest since the *
week ended Sept. 10 declined to 1,727,100 clean pounds, from 5,693,-'
week of May 24 when the rate was 96.8%. A month ago the indi¬
800 the week previous.
Yyyy:0
,YYYv. s
cated rate was
products from other districts.
,
,
'
corresponding, week a year ago.
the
\ '
,
,
staple, according to the Bureau
.
j
95.2%.
Yy(Y;'':>
YH/Y; This week's operating rate is equivalent to 1,737,600 tons of
RETAIL AND WHOLESALE TRADE MAINTAINED AT HIGH RATE
steel ingots and castings compared to 1,732,200 tons one week
—QUALITY AND MODERATE-PRICED GOODS SOUGHT4
that some of you are going to do
ago, 1,716,000 tons a month ago, 1,651,900 tons, or 94.4% of the old
a
better job
in some of these
y -I The volume of retail trade in. the past week was slightly above
capacity one year ago and 1,281,210 tons for the average week in .»
•the level of the preceding week and moderately above that of the
things than we.' We hope you
1940, highest prewar year.
'
*
"
1
'»
corresponding week a year ago, Dun & Bradstreet, Inc., reports in
will; because that is how we all
its current summary of trade. Resistance to high-priced merchandise
gain from aggressive competition. ELECTRIC OUTPUT MAKES FURTHER GAINS
and insistence on quality continued to characterize consumer pur¬
Everyone benefits—our industry,
y V
The
amount
of
electrical
energy distributed by the electric light
our
consumers, our stockholders,
chasing. y:
YYyY.;yy.y;.Yy-vy y; ,y ; vY:;yY-vy'■= •' •:. Y.y ■
and power industry for the week ended Sept. 25, was 5.460,609,000
and the public at large,
f
Continued cool weather in many parts of the country favor¬
kwh., according to the Edison Electric Institute.
This was an increase
In my feeling that the oil in¬ of
ably affected consumer response to promotions of Fail merchan34,362,000 kwh. over output in the preceding week, and an increase
dise. yy-;y;, yy
dustry is one of the great indus¬ of 504,194,000 kwh.,1 or 10.2% higher than the figure reported for the
Yy'Y'v :Y;Y-; './y/^y yY,';;' yY'' Y Yy.:y". ' y v. ' • ':
trial forces in the world, I have in week ended Sept. 27, 1947.
Consumer interest in Fall and Winter apparel increased moder¬
It was also 942,735,000 kwh. in excess
mind, too, the fact that our in¬ of the output reported for the corresponding period two years ago. ately. Women's Fall suits and dresses continued to receive consider¬
dustry can be one of the potent
able attention in many localities.
Women's tweed and sueded wool
Y
forces to aid in bringing peace to CAR LOADINGS SHOW GOOD RECOVERY AFTER
coats were very popular along with zip-in lined coats which remained
HOLIDAY
WEEK
the world.
in large demand. .Consumer purchases of furs were limited.
There
The development of better liv¬ r.Loadings of revenue freight for the week ended Sept. 18, 1948,
was some increased demand for men's coats and suits with worsted
ing standards everywhere is one totaled 909.733 cars, according to the Association of American Rail¬ and gabardine tlie favored materials. Men's furnishings were gener¬
This was an increase of 121,033 cars, or 15.3%'above the ally in larger demand than a week ago.
of the cornerstones of world peace. roads.
With
them
come
more
hopeful preceding week this year, which included the Labor Day holiday, but
Retail food volume increased slightly during the week.
While
conditions
of
manufacture and a1 decrease of 21,339 cars, or 2.3% under the corresponding week in the demand for fresh fruits and vegetables varied considerably im
1947.
trade—of agriculture and indusHowever, when compared with the similar period in 1946 an
different localities, the over-all demand compared favorably with
Y try and transportation. But better increase of 10,681 cars, or 1.2% is shown.
that of the preceding week.
1"; ■'; y;y:y
living standards depend, in large
AUTO OUTPUT HIGHER AND INDUSTRY'S PROSPECTS
There was a moderately increased demand for meats with measure, upon adequate supplies
BRIGHTEN AS STRIKE ENDS
less expensive meat cuts continuing to be favored.
of oil.
With expanding supplies
of
fields
~
'
of oil
products can, and I believe
will, come significant progress in
the satisfaction of the basic wants
trucks in the United States and Canada
94,410 (revised) units the previous
week, according to "Ward's Automotive Reports."
'
;
/-Production of
increased
to
cars and
97,424
units
from
I
Meat
retail
substitutes
butter
and
were
volume of canned and frozen
frequently requested.
The
foods rose moderately in many
parts of. the country. "YVYY: ■Y.y.;Yy;;YY
Y yyy Y:
y;-Y
everywhere. As these
vTY With partial resumption nf ooerationc bv Cb^T*,w. cjOvicinn* ^
met the conditions of Friday, last, Ward's estimated that production of 45,000 cars was lost y - Y Consumer demand for furniture and household appliances was
dissatisfaction
which are the tolhe industry as a result of Briggs Manufacturing Co.'s plant guards' slightly above last week's level:
Instalment purchases increased
breeding ground for war are les¬ strike, which was finally settled Thursday,.'.,
1/Mt<
a
w moderately, although instalment promotions prior to the recent re^
sened.
I cannot say that an able,
.Output in the similar period a year ago was 106,894 units;a striction were not as well attended as had been expected.
Consumer
effective oil industry world-wide
year ago and 77,035 units in the like period of 1941.
will bring world peace. But with
purchases of radios were limited and retail volume of paints and
This week's outont consisted
66.499 **«»*•«
*40
our
contribution to better living
building materials declined fractionally.
Y'^yY-' ^;
made in the United States and 3,944 cars and 2,241 trucks made in
the course toward peace is more
>
Retail volume for the country in the-period ended on Wednesday
Canada.
'
'
comprehensible.
?
/
:,V
>jC " •
** '
/
;
< ' r„ fi'i }
;
, ' •
:
\
was estimated to be from 2 to 6% above a year ago.
These are all elements of the
BUSINESS FAILURES ADVANCE IN LATEST WEEK
Regional estimates compared with those of a year ago by i
"new look" in the oil business. ^ I
the following percentages: New England up 5 to 9, East 1 to 5,
Commercial and industrial failures rose to
101 in the week
think we should all take heart in
ending Sept. 23 from 84 in the preceding week, reports Dun & Brad- y South 2 to 6, Middle West and Southwest 3 to 7 and Northwest
them.
They should give us great
6 to 10, while the Pacific Coast was down 0 to 4.
street, Inc.
This compared with 77 in the corresponding week of
inspiration
to ;d rive forward.
1947 and with 28 in 1946.
It was below the prewar level; total
Total wholesale order volume was sustained at a high level
Nothing has ever been too much
failures were 264 in the comparable 1939 week.
s
for this industry. We are used to
during the week with dollar volume fractionally above that of the
.Failures involving liabilities of $5,000 or more numbered 79 ;
getting things done.j
corresponding 1947 week. Although there'were increased new orders
compared with 71 last week and 65 a year ago. Six had liabilities
for future delivery, buyers generally confined "their purchases to
in excess of $100,000 with two above 81,000,000.
Small failures
of
-
people
wants
are
,
,
;
.
,
v
,
»
v
i
„
•
*
*
'
*
.
With Daniel F. Rice & Co.
V
t,
*
.
(Special, to The Financial Chronicle) £•«''
CHICAGO, ILL.—Russell J. St.
with liabilities under $5,000 rose to
22 from 13.
-I'•;
r
Retailing failures were the greatest in number at 52, followed
by manufacturing with 21. Eleven casualties in wholesaling and less
than 10 each in construction and commercial service.
merchandise for prompt and
tinued
to
nearby shipments.
Many buyers con¬
request accelerated deliveries on current
re-orders.
Good
merchandise was in large- demand.
v-Department store sales on a country-wide basis, as taken from
The Middle Atlantic States reported 32 failures, or about onethe Federal Reserve Board's index for the week ended Sept. 10, 1948,
third of the week's total number; this was almost two times as many
increased by 11% from the like period of last year.
This compared
as a year ago.
, < •
■
'
'
changes.
with a decrease of *2% in the preceding week.
For the four weeks
WHOLESALE FOOD PRICE INDEX OFF SHARPLY FOLLOWING ended Sept. 18, 1948, sales increased by 4% and for the year to
Joins Sills Minton Co.
MODERATE RISE
date to 7%,'
'
(Special to The Financial Chronicle)
The general trend in foods was downward last week in contrast
Retail trade in New York advanced last week with departCHICAGO,
ILL. — Walter F.
to the upward movement of a week ago.
The Dun & Bradstreet
ment store volume showing an increase of about 5% ahead of the
Kusay has been added to the staff
associated with
Daniel F. Rice & Co., Board of
Trade Building, members of the
New York and Chicago Stock Ex¬
Clair has become
quality, moderately priced
,
,
■'
& Co., Inc., 209
Street, members of
Chicago Stock Exchange. ■■■■*.,YY
Sills, Minton
of
South La Salle
the
Joins Herrick
(Special
to
The
Waddell Co.
Financial
Chronicle)
KANSAS CITY, MO.—James
R.
Nugent is now with Herrick, Wad¬
dell & Reed, Inc., 1012 Baltimore
wholesale
trend in foods was also
WHOLESALE
Following
to
The
Financial
Chronicle)
PETERSBURG, FLA.—Os¬
J. Cordray has been added to
staff of W. H. Heagerty & Co.,
ST.
car
the
& Co.
Florida Theatre
Building.
index
recorded
a
13-cent
drop
to
$6.82 on
sharply lower.
COMMODITY PRICE INDEX
SHOWS DOWNWARD
TREND FOR WEEK
Inc.,
a
;
slight upturn early in the preceding week, the daily
moved steadily lower during
the remainder of the period to
on
Sept. 21.
and with 278.66 at
this time
Movements
wide
in
This compared with 280.78 on Sept. 14
a year ago.
continued
in
the
corresponding period of a year ago.
Colder weather expanded consumer demand
and
September
Liquidation
corn
contract
for Fall apparel
brisk con¬
sales further served to encourage
promotional
sumer
response.
According
in
to
the
New
store
sales
1948,
increased 10%
a
Federal Reserve
Board's index, department
Sept. 18,
York City for the weekly period to
This com¬
*5% (revised) in the preceding week. For
Sept. 18, 1948, sales registered no change, but
above the same period last year.
decrease of
the four weeks ended
for the year to
date increased by 5%.
using year-ago comparisons for the weeks ending Sept. 11*
allowance should be made for the fact that in observance
the Labor Day holiday stores in many cities were closed this year
*In
and Sept. 4,
of
leading grain markets were mixed.
fluctuations
v
pared with
compiled by Dun & Bradstreet,
close at 278.72
and
v
commodity price index,
wholesale
With W. H. Heagerty
price
level to
the lowest since April 27, when it stood at $6.76.
This week's index
shows a decrease of 1.3% from the $6.91 of a year ago when the
Avenue.
(Special
food
Sept. 21, from $6.95 a week previous, bringing the current
during the week ending Sept.
during the previous week.
11, whereas last year they were
closed
30
(1338)
THE
Piice Trends and
.
—
a
.
a
^
A
V
In
explanation
partial
larger
the
of
prices
the
tive
Civil War)
(7)
national
the
to
istic
to
States
with
today
the
that
assume
national
enormous
an
tolerate
would
debt
United
as
a
lowed
Civil
effective
more
combat
instruments
to
decline in prices than it
a
possessed in the past. For ex¬
ample, even as late as 1930 the
expenditures of the Federal gov¬
ernment
less than 5% of the
were
national
income.
In
1900
they
in 1880,
3.7%; in 1830, 1.5%. Even
if the Federal government in the
19th century had desired to use
fiscal
policy to influence prices,
employment, and production, it
would
able
have
not
in
been
favor¬
a
position to have done
The
Federal
about
one-fifth
so.
budget
is
of
national
the
now
income and the budgets of all gov¬
ernmental units
are
over
onefourth
of
national
the
income.
Expenditures for military pur¬
poses will remain high during the
indefinite
future.
Various
groups
achieving more and more suc¬
cess
in obtaining large expend¬
are
itures
from
the
government, and
of all parties are be¬
politicians
coming more and
more
inter¬
ested in using appropriations to
favor
from
doubtful
the
,
whether
public.
the
fall below $40 billion
a
It
Federal
expenditures after 1949 will
ever
and
year,
160 years the Federal
budget
Federkl
expenditures
almost entirely
years
imports
with
(which
most
in
was
most
by
duties
popular
were
Americans)
few excise taxes.
and
with
With expend¬
itures far larger in relation to the
national income than in the past
and with the necessity of
levying
heavy taxes to meet them, the
budget of the Federal government
is likely to be in the red even
more
frequently than in the past.
Certainly the influence of the
budget is certain to be consider¬
ably greater in the future than in
the past, whether the
community
intends
this
result
not.
or
large size -of
the
Federal
budget assures that there will be
considerable
segment
of ex¬
which will not drop
penditures
when
business
-
prospects
become
unfavorable and that the govern¬
ment will have no
difficulty in
running
one
the
per
nearly
growth
ever
industries
2%
seen
rapid.
increased
The
year.
a
industrial
of
rapid
research
to hope that the in¬
future will be more
in the
Perhaps
it will
be
as
much as 3% or 4% a year—which
would be a considerable improve¬
ment over past performance.
Are powerful trade unions like¬
ly to be content with putting
up
money wages no more than 3% or
4%
year?
a
No
knows, but it
they will not. If
unions push up wages faster
than technological progress raises
output per manhour, a compen¬
sating
rise
in
prices
will
be
one
is probable that
the
needed
to
prevent
unemployment.
a
growth
Even
if
in
the
unions do not
push up wages fast
enough to require a rise in the
price level, they are likely to push
them up fast enough to prevent a
drop in the price level—not fast
enough to prevent a drop in the
industries
where
technological
rapid, but fast
enough to prevent a general drop
in prices. This
means, of course,
that nearly all of the
gains of
technological progress will go to
is
progress
people
in
ployees
most
their
rather
pacity
as
a
sizable deficit whenever
to
seems
be
needed.
Indeed
capacity
than
in
as
em¬
their
The
consumers.
ca-?
most
on
spending
the
volume
be expected to be
far less susceptible to a
drop in
private business than in the past.
may
reason
is
that private credit
far
less
important
level.
Eventually
community will wake
fact that
slow
a
to be expected.
tion has not
rise
Such
money.
As late
as
1929
cial
of private loans of
banks was almost
high
as
deposits
banks.
the
vol¬
commer¬
66%
as
all privately owned bank
and
money
outside
Today the loans of
of
com-
in
prices is
an
expecta¬
of
constant
invention
will
un¬
doubtedly continue to be the
which
capital
inventions
because
sist very
enable
kind
increases
worker
per
con¬
worker
efficiently to
manage more and more apparatus.
Economists call
such
inventions
labor-saving inventions because
they enable goods to be produced
with
smaller
a
capital.
trial
in
twice
in
as
labor
to
indus¬
on
rapidly rising.
as
large
they were
times
1920 and
large in 1946 as in 1940.
expenditures should be
as
these
added the
of
are
nine
were
1940
To
of
Expenditures
research
They
ratio
rapidly growing outlays
the
government on research
because this research has
many in¬
dustrial applications.
During the
next 20 years
prising
were
in
it would not be
sur¬
if
worker by the end of 20 years
1948
prices would be
roughly $8,400. The total amount
of plant and equipment would be
about $561 billion—an increase of
$274
billion
above
the
present
level off roughly $278 billion. r
increase
in
national'
the
product might not be in propor¬
to
the
rise
in
plant
and
equipment because the output of
goods would be accomplished by
tion
of
use
relatively
more
capital
relatively less labor.
the
than plant and
during booms and
inflation when a short-
rise in prices was
anticipated.
seen how the op¬
eration of the economy will be
capita
80.6%, to $2,602 instead
as
Let
us
rate
same
about
of
$1,435
in the
affected by a
general expectation
long-run rise in prices. Why
should any one wish to own a
2%
middle of 1948, and the
total
annual
national
income
would be about $421 billion. Dur¬
of
ing
bond
1948
a
if
the
principal is going to
purchasing power about
drop in
2%
year?
a
•
•
'
What
HI
/ v
■-//"■■;■
the
are
,
the / 20-year
national
tional
income
national
purchasing
the
demand
most
ing
funds
power) increased al¬
eight-fold. Is the rate of in¬
crease
likely to be as rapid in the
During this period about
future?
of
of the
the
national
product
was
In
sented
relative
repre¬
the
'
net
for
in
to
investment-seek¬
the future may be
be
somewhat
less
to
The
increasing the capital
demand
for
investmentcountry.
'-v; ■/.; -;:;//•/' 4 seeking funds will be
abnormally
underlying determinants of
for
capital
are
the
high for
haps for
the
of
technological
labor
of
force)
the
that
the average
1947
the
change.
life
a
and
of
the
has
This
rate
been
in¬
has
re¬
force
with
amount of plant and
about two-thirds of the
this
will
than
in
be
the
much
past
a
of
capital
usual
rate
for
large part of
used to provide
demand
make
and
come
(per¬
10 years)
as
failure
United
growth of plant and equipment is
attributable to the expansion of
the labor force. In the future
of
of
long
as
During
Indeed, between 1879
important
to
to
some years
depression
very
capital be
increased labor
equipment.
less
of
Consequently
incomes in the future
than in the past.
the
source
8.7%
n c o m e.
expected
of
and
equipment
about
i
be
required.
1879-1929 increase
period
plant and
cause
new
will
the
in
rate of population
growth (which
in the main determines the
size
the
total
to
demand
most
the
produced
' (in
dollars) would be about $6,390 billion. In order to
accomplish
the necessary increase in
capital
formation, about 4.3% of the na¬
prospects for the
long-run demand for capital? Be¬
tween 1879 and
1947, plant and
equipment in the United States
(valued
in
dollars
of
constant
,
period
income
be¬
most concerns
expenditures
during the
the
war.
In
at
great
fact,
considerable part of the
pe¬
riod,
the
expenditures
on
plant
and equipment were not
sufficient
to offset consumption of
plant and
equipment. ' In
the
meantime,
there
has
been
a
large
increase
in the
labor force—about 12 mil¬
lion between 1929 and 1947. This
is about twice as large as the en¬
tire
labor force of Canada. Little
been done,
however, to
has
pro¬
vide
this
increased
with
new
plant
As
a
there
result,
was
at
and
the
labor
force
equipment.
end
of
The
war.
financial
Consequently,
one must ex¬
in
considerable
plowed-back
measure
earnings
credit.
.
Does
the
limited
upon
- and
*
.
bank
./.'
,
ability
willingness of individuals
and
to
save
country will be confronted mean that one should expect
a
surplus of investment- the long-term a substantial
seeking funds? :,/y, •../ >/,if/v ■;/. v; in interest rates? I think
I think not.
ple
have
over
rise
not.
1947
about 9% less plant and
Some rise in interest rates above
the low levels of recent
The American peo¬
been willing to
never
years
would; not
funds.
be
surprising.
The
tendency for interest rates to rise
would, of course, receive a con¬
of the
siderable
save
enough to meet the need of
industry
for
investment-seeking
Hence a -large proportion
capital requirements of in¬
dustry have been met by plowing
back
and bonds
but
plowed
back into
the business $37.3 billion of
prof1
its.
In 1947 the retained profits of
corporate industry were twice as
large as the met new security is¬
Even
sues.
plowed-back earnings
have been insufficient to meet the
and long-term bank loans. Z
/ One
why
reason
savings
of
the
the
'
personal
American
people
have been insufficient to meet the
needs of the corporate part of ih-
dustry is that
large fraction of
a
personal savings are used to buy
homes
or
to increase the
plant and
equipment of farms or other un¬
incorporated enterprises. For ex¬
ample, in 1947, $3.5 billion of per¬
$4.1
and .equipment on farms,
to increase plant and
billion
equipment of unincorporated,en¬
terprises, and $4.8 billion to
chase
non-farm
dividuals
porate
made
pur-,
residences.
available
In¬
to
cor¬
industry
only $1.0 billion
by the purchase of private; secu¬
rities and $3.3 billion
by the pur¬
chase
of
insurance.
In
other
words, considerably less than half
the net savings of individuals
of
and
less than one-fourth of their
savings in 1947
gross
able to corporate
There is
no
were
avail¬
industry. Z
y
a
long-run
large increase
in the
supply of •investment-seekf
ing funds from individuals./ For
from
the
of
trend
general
view
of
that
prices
is
the
up¬
ward—in
other/words, from
ac¬
ceptance
of
the
the
view
that
purchasing
pal
power of the princi¬
fixed-income
securities
of
must be expected to
bit each, year. The
drop
little
a
public, how¬
will probably require some
ever,
to become convinced that
the. long-run movement of
prices
is upward.
years
Furthermore, the rise
interest rates will be retarded
of
by the,, increasing use of bank
credit to meet the capital needs of
business. The growing
reliance
.
banki credit
upon
instead
of
the
planned savings of individuals to
meet the
fiscal
needs
of
business
and government has been one of
the most striking
developments of
the economy
during the last
tury,
the
Today
country
better prepared than
to
meet
cen¬
is
far
before
ever
capital needs by the
use
of bank credit. The
competition
of bank credit with
planned sav¬
ings will prevent for
come a
/
time to
some
substantial rise in interest
rates;--///
'Z/'Z;/
;:VV-Z
v.;////:^^:/';;,,;■/.:;'/
What about the short-term out¬
look for
business?
Previous wars
have ; been
followed; first by a
brief but pronounced boom and
then
by ,.a; sharp,
depression.?
the
The
Second
though
boom
World
short,
following
War
is-
now
nearly three years old. Is not the
postwar recession overdue? /
•
Throughout
tions
by
the
boom,
economists
of
predic¬
early
an
recession have been numerous. At
the time of V-J Day,
government
economists predicted 8 million
employed
..
prospect in the fore¬
seeable future of
impetus
acceptance
earnings. During the period
1910 to 1929, for
example, cor¬
porations raised $56.6 1 billion of
capital by public issues of stocks
sonal savings was used to increase
It remains to be
the
the
plant
run
more
with
in¬
be Z up
or
consider¬
group
pect corporate enterprises to con¬
tinue to rely for investment funds
met,
the
slightly faster
would
,
$25,000
a
com¬
persons
government,
as I have
pointed out above, will
continue to be large and will
pre¬
vent any substantial reduction in
war
In
equipment.
before
large
national
assume, therefore,/ that the
of increase in income is the
as
the rate of increase in
the
fact,
needs of the Federal
capital relative to
accumulated shortages of the
and the depression have been
as
of
In
save.
have
year
taxes.
that after the
mean
capacity
to
incomes of
ably less income after taxes than
long-run
ciency has been made up by bor¬
rowing from banks. In 1P47, for
example* / corporations
obtained
about $2.9 billion from short-term
The
a
ply of investment-seeking funds?
the prospective decline in
the demand for
the
munity
with
do
severely
limits
at
worker by as much as
year.
Plant and equipment
per
terms of
the
billion
capital needs of industry during
periods of expansion.
The defi¬
a
per
$90
over
technological change
to increase plant and
equip¬
ment
3%
largely upon the persons who
the most
saving and thus
.
largely of changes which
one
has
IV
income
of
worker
per
.
demand for capital will be
greater
than in the past. The
predomi¬
per
for
trend.
Does
type
seven-fold
increase (between $17 billion and
$18 billion per year) in income
tax payments. This
increase falls
present prices would be necessary
to bring plant and
equipment per
worker up to the level that would
chasing power. The influence of
technological
change
upon
the
nant
years there has been a
What is the outlook for the
sup¬
pur¬
of
except
*
mercial banks are less than onefourth as high as the
privately
dollars
of
equipment
penditure
year—meas¬
periods
quired
a
in
ured
per
the
1929. ; The
increase in plant
be normal in view of the
short
decisions
source
is
worker
per
in
in
equip¬
grow.
times
economic
the
of money supply than in
past.
Hence fluctuations in
the volume of private credit have
less effect upon the volume of
to
up
the
the
previously influenced
States, population
creasing rapidly.
today
2%
a
rate
than
per worker at the end of
1947 would have been almost onethird larger than it was. An ex¬
require
plant.
In 20 years, if
per capita income
increased at 3% a
year, income
The
spending
duced
States
ment
change has pro¬
growth in capital of about
has increased
are
supply and
of
private
capital to
come
price
12%
Technological
however,
the
money
cause
worker
per
United
been about 2% a year. Had this
normal increase occurred between
1929 and 1947, plant and
tion will depend, of
course, upon
the rate at which other conditions
past,
needed.
The
probably
and
9%
restrictions
will
push up wages fast enough to re¬
quire at least a slow increase in
devoted
difficulty is likely to be one
avoiding deficits at times when
(6)
hence
population
Thursday, September 30, 1948
normal
and
<■
less than one-fourth of all capital
formation.
The
precise propor¬
the
the
ume
pow¬
last hundred years
manhour in non-agri-
reason
of
The
most
aggressive in press¬
ing economic demands. They have
made
an,
almost
revolutionary
change in the American economy.
And
the
a
the
are
probable result, in my judgment,
likely to be consid¬ is
that, collective bargaining will
higher.
During the last
in the red in about two years out
of five. It was possible to finance
,
States
I
1
During
last
The trade unions of the
A
the next 20 years the increase in
of
and they are
gives
equipment
will probably be only about
above the present level.
prospect
States during the
erful that the world has
crease
CHRONICLE
the growth of population
declining. Indeed, by 1970, the
population# of the United States
Hence
trend
4- "U
A A A tin /V
because
63%
are soon
erably
a
United
3.2% of the national income;
were
on
long-run
cultural
(5) The government today has
win
15 years.
the
War.
they
loans.
immediate
The
decline in prices as fol¬
Napoleonic Wars, the During
War, or the First World output
large
:
their
no
the United
low rela¬
income, and
was
population and production were
rapidly expanding. It is unreal¬
is
is
about
are
problems—though prices will be affected by the
was
hardly true of the '70s. large and powerful trade union
movement which has grown up in
public debt (even at the end
this
FINANCIAL
is
serious
create
The
Vv
¥
private credit will become
as
important a source of money
supply as it was during the '20s.
these declines did not necessarily
far
1
that
after the great wars of the past
should be mentioned the fact that
of
banks
than
there
laissez faire policy of the govern¬
ment toward the decline in
r~i
/%
supply.
The gov¬
security holdings of all
commercial
'70s.
«*•
money
ernment
depression of the
severe
1
Mil VtVt
owned
(Continued from page 2)
the
out
&
Capital Demand and Supply
J
A
COMMERCIAL
In
the
in
fall
the
of
un¬
spring of 1946.;
1946
a
group of
under
the
auspices of the National Industrial
Conference Board, reached a con¬
economists,
;
meeting
sensus that there would
least, there
be. a re¬
cession in 1947—some said in the
tendency for
American people to become less spring, others in the fall. In the
thrifty. The rise in per capita fall of 1947, 75 out of 100 econ¬
incomes has
been
sufficient to omists polled by the F. W. Dodge
prevent a drop in the proportion Corporation predicted a recession
several generations at
has
been
of
a
slow
savings to personal incomes
taxes, but the decrease in
in 1948.
February and March were
most frequently men¬
the beginning. In
March,
after
the, months
thriftiness has also been sufficient
prevent a rise over the longin the ratio of savings to in¬
tioned
to
1948
run
omists
The very rapid rise in real
comes.
capita
per
incomes since
1929
or
1940, it is true, has caused during
that period a small rise in the
ratio
of
personal incomes after
but- even at the present
taxes,
time
personal- savings
about
6%
of
personal
are
only
incomes
as
the
postwar
fall
of
of
consensus
polled
Ward and
-
by
Company
boom
1948.
75
econ¬
Montgomery
that the
was
would
end
in
the
This
year's bumper
crops have greatly increased the
supply of grain products relative
to
demand,
12
months
and
a
promise
sizable
supplies of meat
and
within
gain in
the
dairy prod¬
after taxes. After individuals have
ucts.
spent
early reversal of price trends and
part
of
their
savings
on
housing and
invested
part
in
owner-operated enterprises and
part in the bonds of local and
state
leave
governments, this does not
enough to meet the needs
of
corporate industry.
siderable fraction of
In
a
years
con¬
the
Federal
budget Will probably be
in
red
the
and
savings will be
the
some
needed to finance
expenditures of
government.
personal
the national
During the last eight
hence
Does
not
indicate
of-buying policies?
There
are
the postwar
These
this
signs
in
"
-
plenty of signs that
boom is leveling off.
are
slackening"" rate
spending,
Z.
an
the
found
of
in
increase
slower
rise
the
in
in
prices and
wages, in the halt of
the increase in bank
credit, and
in the drop in the net
export sur¬
plus. It is instructive to
compare
changes between the second
ters of 1946 and 1947 with
quar¬
changes
between
1647
quarters of
the former
second
In
the
1948.
and
force some curtailment of private
buying of durable consumer goods
total spending increased
12.5%; in the latter, 8,3%. In the
former period the wholesale price
level increased 28.8%; in the lat¬
period,
and
-possibly
equipment.
the
the
and
money
outside
of
in the lat¬
0.7%. In the second quarter
of 1948 the net export surplus of
was
1947. The boom now
,
a
depends only
small
This
answered
better
two
or
from now when the
of recent decisions
(or of recent failures to face is¬
sues) are plainer. Nevertheless, it
is
useful to take stock
at the
three
years
present time.
/
-
of boom the
country on the whole is in a re¬
markably strong position. Despite
the large expansion of production
and the rapid rise in prices the
ing
the
magnitude
off but the economy during
last year has become more
vulnerable to unfavorable influ¬
ences. This is a result of the in¬
crease in the relative importance
of business spending. In the sec¬
ond quarter
of 1947, gross
investment
was
about
private
11.6%
of
national product; in the
second
quarter. of 1948, it was
about 15%. Private investment is
the type of spending which is
most sensitive to favorable and
unfavorable
influences.
If -the
economy
accompanied
little" reckless
by
speculation.
so
Per¬
the prices of agricultural
products cannot drop from their
present high levels without sooner
or later giving the country a bad
12 or 18 months. In two or three
haps
less, the community may
regret that the farmers had so
many "friends" in 1948. By and
large, however, the condition of
the economy after three years of
boom is remarkably sound.
;
years or
been
have
and
conservative
Bad
commendable.
items
so
(Continued from page 4)
credit
in the fall of
Such
1947,
(4) The government—The gov¬
separate from the
ernment is not
the
country
whose
and prejudices help mold
of
money and credit pressures more
directly than any other move. The
Treasury had an excess of cash
income over cash outgo of $9 bil¬
Nevertheless, the
make
important contributions to policy.
policy.
public
The
in the several agencies
Federal
System has
Reserve
undoubtedly been the strongest
anti-inflationary influence in the
government, though its policy has
been cautious. The influence of
Congress
has
been
almost
com¬
pletely inflationary—except in the
summer
of
1948
when it
was
forced
some
reluctantly to
anti-inflationary
reduced
has
taxes,
it
authorize
steps. It
has main¬
tained the farm support program,
it
encouraged the expansion
credit for the purchase of
has
of
surplus means
part of the debt held by the Fed¬
eral Reserve System, reduces the
winter of 1948.
men
Treasury
is
removed
spending stream than our national
expenditures put back into it. The
difference, if used to retire that
System, and the demand for
reductions in 1947 and the
views
a
a
money
serve
people
of
tenance
opposition to the control of stock
market credit by the Federal Re¬
tax
main¬
surplus.
that more
from
the
ernmental standpoint is the
for
the termination of controls of con¬
sumer
Problem!
A Monetary
been
the demand of many managers
31
Inflation—More Than
the
in
record of businessmen have
(1339)
CHRONICLE
also, on the whole, have the credit
policies of both borrowers and
lenders. The change in the lend¬
ing policies of the banks after the
second-half of 1947 is particularly
.
has developed few seri¬
ous weaknesses. Indeed, there has
never been a boom of comparable
the gross
,
be
After three years
extent upon the net
export balance.
;
Not
only
is there
abundant
evidence that the boom is level¬
to
can
about 60%
second quarter of
less than in the
the
question
consequences
ter,
the United States
job has the United
in controlling
the
stable?
economy
period private bank
banks increased 4.0%;
-
postwar boom and in keeping
earnings of factory workers in¬
creased 13.1%; in the latter, 7.6%.
deposits
done
States
in the latter, 9.3%.
former period, the hourly
In the former
industrial
•
How good a
creased 17.8%;
In
of
even
VI
13.9%. In the former period
consumers' price index in¬
ter,
both, will undoubtedly have to
or
FINANCIAL
COMMERCIAL &
THE
Number 4738
168
Volume
housing, and, in the fall of 1947, it
refused to authorize an extension
lion
in
But the
under
or
mental
guarantees
Commercial
barked
of
govern¬
agencies.
on
a
have
banks
program
em¬
of volun¬
tary restraint in the extension of
credit, under the auspices of the
American
Bankers
Association.
This
is
an
teamwork
excellent
and
sets
a
example of
pattern for
cooperative effort which might be
copied with profit by many other
1947-48.
enterprises and organizations. And
let me say right here that this
nation owes a debt of gratitude to
prospects for the current
commercial bankers for their task
the
fiscal
year
for only a fraction of this
amount. This difference in the
in
surplus reduces considerably the
most important anti-inflationary
influence in this situation.
operation With the supervisory au¬
thorities in combating credit in¬
year are
in this
audience who would like me to
I
know there
are
many
something about our price
support of government bonds. I
will here repeat what I told the
House
Banking
and
Currency
Committee on August second:
say
view that the System
maintain a market
government securities and to
assure orderly conditions in that
market, not primarily because of
an
implied 'commitment to war¬
time investors that their savings
would be protected, nor to aid
the Treasury in refunding matur¬
"It is my
is obligated to
for
assisting with the financing of
war and for their general co¬
the
flation.
Few anti-inflationary moves are
In fact, checking infla¬
unpopular pursuit.
Each, of us is inclined to feel that
inflation is wrong and certainly
something should be done about
it—by someone other than him¬
self.
The Federal Reserve Sys¬
tem
has a responsibility to the
country to use its statutory au¬
thority to the best of its judg¬
ment.
Certainly we would be
derelict in our duty and would
violate our oaths of office if we
did not "call them as we see them"
and
act
accordingly.
But the
popular.
tion
is
a
very
if important
;
This fortunate result, I think, of consumer credit control. The
uncertainties are developing with
has been more the consequence of
Treasury opposed tax reductions
respect to the immediate future
happy accidents than of wise and in both 1947 and 1948 (an anti-in¬
of many prices, and if the boom
courageous policy. Let us review flationary stand), but its influence
is dependent upon a large volume
briefly the contribution of the on credit policy has been infla¬
of business spending, must not an
principal groups Of the community tionary. The government has had ing debt, but because of the wide¬ problems which now face the
early recession be expected? Cer¬
are
not the exclusive
(trade unions, farmer organiza¬ many policies, but no general spread repercussions that would country
tainly an early drop in the high
•; ensue throughout the economy if
tions, businessmen, and govern¬ policy of promoting economic sta¬
problems of the Federal Reserve
rate! of business spending is a
the
vast
holdings
of
the
public
ment officials) to the problem of
or
the commercial banking sys¬
bility has commanded acceptance
probability and, if it occurs, will stabilizing the economy.
debt were felt to be of unstable
tem.
Action in the monetary field
throughout the government.
there not be a recession?
value."
alone cannot readjust the unbal¬
(1) The trade unions — The
Since the present strong posi¬
1 I agree that an early drop in
When
you
consider that the anced relationships within the
trade unions have had no planned
tion of the economy is not the
business spending is a probability,
economic
structure which have
result of planning, how can it he public debt is one and a half times
but 1 do not believe that it will policy of contributing to stability.
all
other
debt
in
the-country com¬ already been created by infla¬
In fact, each union is too small a
explained? It is partly the result
go very far or that it will pro¬
bined,
it
seems
obvious
to
me
that
tionary forces, and cannot check
duce
a
recession.
It
will
be part of the community to be easily of the fact that the boom started
inflationary
pressures
persuaded to consider the general with huge accumulated needs for the market for the Government further
promtply offset by a rise in con¬
debt securities must be one where arising from nonmonetary causes,
effect^ of its policies. The rapid goods, with debts low, with in¬
sumer buying and in government
rise
in
wages
has greatly in¬ dividuals and enterprises in pos¬ investors can deal at all times with A great responsibility rests upon
buying.
The .rise of; consumer
creased consumer V incomes and session of enormous quantities of confidence.; I remain of the con¬ every citizen, upon every group or
Spending and government spend¬
viction that for the foreseeable fu¬ organization of Citizens, upon the
thus has contributed to higher
liquid assets, and with tax rates
ing will limit the drop in business
prices and has also helped to raise high. For these conditions the ture the support program should housewife, labor, industry, busi¬
spending.' ./i:-:,'
be continued.
This conviction is ness and financial institutions of
costs and thus to assure that many
country may thank the long de¬
A
drop in business spending
prices will never drop far toward pression of the thirties and the shared by all the members of the all Character to unite in combat¬
Would produce a rise in consumer
their prewar levels. In my judg¬
Second World War. Even three Board of Governors, the members ing inflation and by cooperative
spending because it would make
ment this result on the whole is
years
of high
production and of the Federal Open Market Com¬ effort accomplish the objectives
more
goods available for con¬
rising prices have not mittee, and by the Treasury. It is which all recognize as essential to
sumers
to purchase. !: Consumers good. It will help the country in rapidly
the
long-run obtain
a
greatly been sufficient to eliminate these also supported by the weight of our well-being.
are
not yet buying at a normal
needed increase in imports, it will elements of strength. This explan¬ financial opinion in the country.
■,;i rate.; This is shown by the fact
reduce the burden of debts—per¬
ation, however, is obviously in¬
that personal holdings of cash and
During the past three months,
Egan Dir. of Chase Bank
haps unfairly, but this result is complete because the conditions nonbank holders of Government
bank deposits are still high in
favorable
to
production.
High which I have enumerated might bonds—insurance companies, sav¬
Joseph L. Egan, President of the
relation to expenditures for con¬
wages of city workers will prob¬
easily have given rise to an enor¬ ing institutions and others—have Western Union Telegraph' Com¬
sumer goods by prewar standards.
ably
make
the
troublesome
prob¬
mous amount of unhealthy spec¬
In 1939 the annual rate of ex¬
greatly complicated our problem pany, was elected a director of the
lem of farm prices less difficult.
ulative buying. The reason that in this
regard for they have sold Chase National Bank on Wednes¬
penditures for consumer goods
These results of union
policies, this has not yet happened is the
over
was
about • 1.90
times personal
$2 billion of these securities, day, it was announced by Winfavorable though they may have memory of the collapse of 1921
holdings of cash and bank de¬
thereby creating additional bank throp W. Aldrich, Chairman of
been, cannot be credited to a after the First World War and of
posits; today it is about 1.70 times
deposits
and
reserves
of that the bank.
deliberate attempt to promote na¬ the
depression of the thirties. amounts One of the results of the
Mr.
Egan
succeeds Newcomb
personal holdings "ofcash and
tional stability.
-rw;-':):, ';;'
These experiences have imbued
bank deposits. Hence output and
recent
increase
in reserve re¬ Carlton, Honorary Chairman of
(2) The farm organizations — the whole community with a pro¬ quirements of commercial banks Western Union, who has the dis¬
prices are not yet high enough
The influence of these organiza¬ nounced spirit of caution. Indeed will be to take
to give the .output of industry a
tinction of being senior member
up those additional
value equal to the amount which tions seems to me to have been there has never been a boom of reserves so that they will not be of the Chase Board, having served
substantial
magnitude
^
accom¬
more bad
than
good/
Strong
in¬
consumers are willing to spend.
the basis of multiple credit ex¬ for more than 31 years prior to
centives to increase agricultural panied by less optimism and, as I
pansion at this time when our his resignation yesterday. In ac¬
V
A drop in business spending
have said, with less speculative
output
have
been
needed
and
are
credit volume is already out of cepting Mr. Carlton's resignation,
would also be offset at least in
probably still needed. Neverthe¬ buying. To 1921 and the depressed
proportion to the amount of goods the Chase Board passed a resolu¬
part by a rise In government buy¬
less, reasonable incentives could years of the thirties, the country available.
ing. State and local governments
tion of appreciation for his long
have been provided without com¬ may attribute its ability to ex¬
have great needs which they have
and valued service to the bank.
years of
boom
Less Spending Advocated
pelling the government to support perience three
been unable to meet because of
while
developing
few i serious
the prices of potatoes, eggs, tur¬
Mr. Egan, a native New Yorker,
The problem of inflation is so
shortage of men and materials.
keys, and other surplus commodi¬ weaknesses in the economy. The vast in its
Their expenditures on goods and
causes, as well as in has been associated with Western
American
ties at unreasonably high levels. :
people have not yet
its effects, that it is everybody's Union for 36 years, having joined
services in the second quarter of
been required to face squarely
(3) Businessmen—Business con¬
1948 were running 19.3% above
duty to help in the solution. The
the company as an attorney in
the corresponding quarter of last cerns, like the trade unions, have the question of how well they welfare of our entire economy is
Elected Vice-President in
no
way of adopting and enforc¬
understand the conditions of sta¬ at stake.
Each of us must exer¬ 1912.
year and will continue to increase
if men and materials can be ob¬ ing policies designed to represent
bility and of how far they are cise real restraint in the use of 1939, he organized the public re¬
tained. The expenditures of the the interest of all business con¬
money already in existence, and
lations department and has taken
willing to go in ,enforcing a policy
Federal government for goods and cerns in economic stability. The
not bid for the scarce articles if
a
leading part in directing the
of stability upon reluctant specialrecord
- of
individual
concerns,
services reached a postwar low
purchases can be deferred.
The
however, has on the whole been interest groups.
in the last quarter of 1947. By the
;-X.y
hard fact is that we simply do company's relationships with gov¬
second
quarter \ of -V1948,
the good. Sellers have shown remark¬
not at this time have endugh real ernmental agencies, stockholders,
seasonally adjusted annual rate able restraint " in raising prices
resources to provide all the things
other companies and the public.
With Cartwright & Co.
when it became evident that de¬
was 14.1% above the last quarter
we
would like to have.
If we He became President in 1945.
(Special to The Financial Chronicle)
of 1947. The military needs of the mand exceeded supply. Although
insist on trying to acquire them
Mr.
Egan
attended Columbia
CINCINNATI, OHIO — Charles
government
are
growing and a substantial rise in the * price
anyway, we shall end by dissi¬
A.
Ault has
become connected
University and graduated from
meeting these needs cannot be level above wartime levels is in
pating
our
resources
through
with
Cartwright & Co., Inc., Union
indefinitely
postponed. : Conse¬ the national interest, it is desir¬
higher prices.
The gospel of re¬ the New York Law School in 1909.
able that this rise occur slowly so Central Building.
quently the military expenditures
straint in the spending of money
as
not
to
detonate
speculative
of
the
government
must" be
should be taken to heart by every
With A. Lepper & Co.
stepped up during the next six buying. Business concerns have
individual and by every organized
With Morrow & Co.
:
(Special to The Financial Chronicle)
also
shown
considerable
restraint
months. The durable goods indus¬
(Special to The Financial Chronicle)
group, public and private. The
ST. LOUIS, MO.—Lloyd I. Mil¬
tries
are
already producing at in raising dividends and have
CLEVELAND, OHIO. — Adel- greatest possible economy should
ler has been added to the staff
capacity. r If business and con¬ plowed back a high proportion of
bert R. Schwede has joined the
be practiced by the Government, of A. Lepper & Co., First Na¬
profits into the business. This is
sumers do not voluntarily reduce
staff of Morrow &
Co., Hanna
their
expenditures for durable the least inflationary way of fi¬
not only in direct spending, but tional Bank Building, members of
Building
members
of
the
Cleve¬
the Cincinnati Stock Exchange.
goods, the government, through nancing capital expansion. Inven¬ land Stock
also in the extension of credit by
Exchange.
tighter credit policies or priorities tory policies of business concerns
\\< : i
'•* .j < \ ' u" i ? i
3J 1:i> 7
boom is leveling off,
*
.
,
*
.
,
Vi: t
■„<* T 1 l l ,Vi 1 i l
l"
i
»;|i M--
r) i
lis-1
Vt
11,
:i»
q 4t
1
■"
J. »•'
:
\\
32
(1340)
THE
COMMERCIAL
ity
level
private borrowers is a traditional
weapon for combating an infla¬
tionary boom.
ating
of
without
interest
issue
CHRONICLE
to
debt from
2Vz% bond issue fall¬
a
it
have
27-
a
Under
offer intermediate-term ob¬
can
ligations
from
time
to
refunding purposes.
12-year obligation.
a
and property credits of
approxi¬
maturing mately $15 billion between
July I,
budget surpluses. And 1945 and Dec.
31, 1947.'
lunds
And if it waited until I960
due in 1972, it would
shifted the 2
rate from
Thursday, September 30, 1948
is to be hoped that it will obtain
for
paying off
15
to
ing
Such
time
the European
Recovery
the United States has
for
.
over
$5
billion
for
Program
provided
the
current
a
refunding policy of post¬ year, and it is expected that if
But please note that outstand¬
poning offerings of new long-term conditions warrant, further
appro¬
ing long-term marketable bonds marketable bonds and
utilizing priations will be made in future
rater
running the risk of cre¬
disorderly governmen,
a
21/2%
new
to put out
year
long-term
its
on
years.
(Continued from page 5)
in interest rates payable by
FINANCIAL
would have shortened the matur¬
Mutual Savings Banks, Inflation
And Public Debt Policy
crease
&
would all have the same maturity,
bond market in the process..
or
a
funds from
maturity shorter than, the
offering and so would not be
other
to
sources
for
years
pay
the
economic
recon¬
off
maturing obligations provides struction of Europe.
*
automatic means for
objectives of checking
Stake In Pablie Debt Management
restoring
marketwise
a
East-West
inflation now and of gradually depressed
Trade
by
this
large measure of flexibility to
Our banks and their depositors
In
restoring flexibility in long-term process of shortening the matur¬ die long-term interest rate struc¬
speaking of the Economic
liave a very great stake in public
interest rates, without disrupting ity
on
long-term
governments ture, and an eventual return to a Recovery Program for
Western
debt management policy, in view
while maintaining the 2 Vz % cou¬ freer
the market for government bond
market
for
government Europe, I would like also to draw
of their very large holdings of
It would thus be entirely bonds.
in the process, are attainable.
attention
1 pon.
to
East
West
trade
government bonds, All are vitally
consider that a
within
good start ha£ possible to continue to peg longIt is thus
Europe.
Such
trade
apparent that we can
*
new
The twin
an
'
-
interested in the current debate
over continued stabilization of the
been
to both
government bond market through
the
purchase
of
government
by the Federal * Reserve
banks at existing support prices,
commonly characterized as "pegging the market."
A
disorderly
ernment
market
bonds
savings
for
is
bad for
and
for
bad
road
combated
needed,
in
requirements
somewhat
the
member
of
reserves
increased,
under
tions,
market
by
present
being
support
because
bonds
would
in
the
entire
market
of
There
ernment
also
sales of
on
cur¬
also
gov¬
from
the present level of W\%
1V2 %, or even more/ Thif
would cause commercial banks tc
to
restrictions.
A
door
to
would
decline
might
also
unsound
gov¬
would
competition
institutions that have
invest
to
money
Jiigher yields
sets
and
could pay more interest
so
not
The institutions that
on
growing,
by
contrast,
would
mortgages
under
as
well, and would be
pressure
from
the
super¬
visory authorities to pay out less
depositors. All past experience
us
how unhealthy is com¬
petition for savings among finan¬
cial
institutions
paying
widely
varying rates of interest on de¬
posits.
to
tells
a
disorderly market
Federal
Reserve
government
to result, the
banks
would
reserve
have
re¬
of
risk
funds.
severe
squeeze
has
accompam'ec
combat inflation
to
increases
£
■
in
mem
be?
bank
legal reserve requirement®
needed, and higher shortterm interest rates, it is possible
to prevent further inflation of the
when
supply while keeping the
money
government
bond
through
Federal
support.
But
solved
the
market orderly
Reserve
that
leaves
long-run
bank
to
problem
be
would
bond market.
then
have
But what
been
accom¬
lic
It
aebt
policy,
that
some
in
place
are
of
being
of
not
provide
dnance
ative,
nor
all
can
take
which
are
must
the, needed
its own ini-
on
To
play
member
their
includes
part,
anc
countries
able
to
export capital as well as those
which seek to import it. /
:
International Exchange Problems
With your
Chairman,
for
permission, Mr
I
would
like
to
turn
moment to the international
a
monetary and exchange problems
which
the
are
It
Fund.
was a
of
concern
significant step in
international
cooperation
the
nations
member
their
values
par
rates to the
national
time
to
time,
when
submitted
and
exchange
scrutiny of
body.
the
an
Fund
about
in
their
matters
exchange poli¬
other
than
rates
Problems of discrimination, mul¬
rate
systems, and related
devices were discussed. The Fund
tiple
advice
to
its
gradually restore a
long-term interest rate
1
and
a
free
market
for
Treasury securities, automatically,
while
the problems of foreign
exchange
cannot
be
separated
from
the
v
can
flexible
keeping
the
problems
of
domestic
monetary
and fiscal policy and of the inter¬
national trade situation.
Most of
the
Fund's
suggestions
government
are, ac¬
cepted, and this is also important
bond market stable and
orderly/ as a
stage in international co¬
by means of a
proper debt refund¬
possible
a'
gradual return to
flexible long-term interest rate
operation.
There
nately, been
riences.
of
We
some
have,
nomic recovery of Europe is essen¬
tial to the weil-being of the other
continents
contrary
hope
that
large-scale
the
expe¬
soon
all
the member nations will have
reached conditions which will en¬
able them to establish and main¬
the
which
well.
as
Other
coun¬
tries, too, have, in proportion to
their abilities, supplied aid in the
of
high levels of production
abroad../' ■//-''/'• :■ >/■ -V."
//■:
Assistance abroad in this large
international
adjustment o'
„
exchange rates. With the help of
European' Recovery Program volume
the
was
necessary under the
prevailing circumstances.
It
should go far toward restoring
levels of production and
fostering
may
expect that substantial
equilibrium will be reached in the
international accounts of most oi
the
participating
this connection,
countries.
change without the suspicion
any
one
an
ol
special bias in favor of any
country. It has available to if
vast store of technical infbrma^
tion.
It is studying the
a
experv
of each
ences
country,! Its v!ews:
therefore,
should
be
regardec
with great respect by the member
countries.
'.
y.
.
;
Both
run
the
Bank
created
objectives
not
were
in
intended
the
Bank.
of
the
Fund
used
deal only
of
oart,
deal
wit!
from their
exports and other services at the
prevailing levels of output.
international
credits
that
'/■/
these
of payments deficits far
other
or
and.
coming
bal¬
ex¬
investment.
years we can
currencies
needed
to
purchase supplies.
The Bank
also could not finance
the-
In
look forward
to
having these institutions real¬
ize more fully the ideals contem¬
plated for them by the United
Nations Monetary i;and Financial
Conference of
With
1944.
;//•;.:'
Walston,
Hoffman Co.
(Special
SAN
to
The
Financial
FRANCISCO,
James
J.
Hoffman
Bach
&
is
Chronicle)
CALIF.
with
Goodwin,
—
Walston,.
265
Mont¬
gomery i Street, members of the
New
York
and
San
FranciscoStock
Exchanges.
>
:
.
ceed the Fund's resources in dol¬
lars
most
satisfied, at least in
postwar programs, the
by
needed
view.
to
earn
now
the
Bank will be in better position to>
its functions in providing
materials and sup¬
exceeded
the
amount
It is clear
With
tional finance
raw
they could
countries.
pressing requirements for interna¬
facilitating the expansion of in¬
ance their international accounts
Their needs for goods, foodstuffs
far
temporary
ternational
after the end of the
w?u
that the most fundamental prob¬
lem, of the European countries a
least, was their inability to bal¬
plies,
be
with problems
disequilibrium in
payments of mem¬
the balances of
ber
re¬
Fund
clear
which
to
of the
The
should
longThe;
became
ance
and
the
^ome of the immediate problem?
of
reconstruction.
It
industrial
the prime objectives
Fund
sources
certain
and
with
among
fulfill
Long-Run Objectives
were
trade patterns which will make
possible that balance growth of
international
trade
which
is;
Ir.
the Fund has
important role.
It can deal with
questions of monetary and fiscal
policy and of international ex¬
unfortu¬
structure
a
can
form
of
loans or trade credits
which have made significant con¬
tributions toward the restoration
inter¬
countries have consulted with the
cies
through
assistance and
Moreover, from
various member
recognized tha*
Proper Debt Refunding Policy
that
Europe have been most acute and
have recognized that the eco¬
quarters.
we
large
a
countries
own
the
steps
for sound in¬
programs.
the
the
of
many
necessary
vestment
extent,
of
it,
■
A
all
to other countries from
the Euro¬
pean aid program.
The needs of
the
advo¬
(Continued from page 13)
regaining flexibility in long-term has
given valuable
interest rates.
-v,/.../! -(..! members.
It has
requirements,
fo check the liquidation of Treas¬ ing policy by the Treasury. Ac¬
ury obligations. Such a return to tually the Treasury has been pur¬
easy money would rally the gov¬ suing just such a policy as will
make
ernment
It will be sell¬
Bank and Fund
as¬
Wc
but
dangers of
Snyder Reviews World
this
higher interes'
the
that
Through
entirely and structure
doubtless intervene and resort to
easy money measures, such as re¬
ducing bank
thus
ratio
capital
without
efforts
We
Were pegs under
bonds to be removed
or
The
eagerness
0
to make rev
by monetary means.
are
Jhave suffered considerable
depre¬
ciation on their bond
accounts,
and perhaps on low-interest-rate
rates
investments tha
or
the
their
credit
past
-
savings.
to
rates
obtain
investments,
raise
would
new
on
would
on new
the
banks
business loans
the
open
interest
lessen
commercial
in
among financial
institutions for
the people's savings in the future.
Those
higher
sulting increase in bank earning.'
wese
;
considerable
ernments
charge
loans to their customers.
prove
oi
nu
by
exists,
we
credit expansion.
raising the interest rate
Treasury one-year obligation.4
on
tutions
and
once
such
controls
jhave been imposed by Act of Con¬
cpiite aifiicult to get
unpegging gov¬
time, with¬
.
Treas¬
otherwise, it might
base for additional commer¬
a
of
out.
refund
to
cated in
of
Higher Short-Term Rate
•.1 ■'
Advocated
?/
Inflation
could
be
combated
obligations by financial insti¬
gress or
obtain funds
can
sources
to the trust funds and agencies.
return
some
A
bond market would lead
restrictions
Treasury
several
fireworks
cial bank
dis¬
disorderly
reasonably be done to maintain
its flow is to the interest of
all.
•'
advocates
ing special issues of its obligations
in¬
the
by
ernment bonds at this
bonds to investors.
the
financial
is
tinct uaiiger that a
of
already
chases of government bonds, gold
deprecia¬
value
this
realize desirable objectives
sought
imports and
as
of
along with
causing
portfolios
stitutions.
classes
decline
governments,
tion
other
while
par
or
,
pur¬
if
more
above
at
The people of the United States
incurring the many grave
a disorderly market for have not been unmindful of the
its maturing bond issues, pending Treasury securities.
Mutual sav¬ needs of other areas.
They have
;he time when it will again offer ings banks and their
depositors provided for direct aid to China,
and they have expected that
ong-term marketable bonds.
It have a great stake in the
adop¬
large
will
be
selling non-marketable tion of such a "safe and sane" pub¬ benefits would accrue indirectly
condi¬
Sharp declines in prices,
rency
from
circulation.
But
temporary, would!, disturb
through raising legal reserve re¬
depositors in banks, policyholders
for
member
banks,
in insurance companies and indi¬ quirements
these additional reserves become
viduals
holding savings bonds.
They would be disturbed all the impounded and may not be used
to
The
rom
banks.
are
issues
government
change is taking place.
by increases,
legal reserve
the
Member bank
country.
even
ury
term
leading
these objectives.
being
as
gov¬
would be
banks
the
on
The immediate inflation danger
bonds
■,
made
'
Two With Merrill
and a free market for
these bal¬
plished by unpegging the market
Lynch Co.
tain stable par values for their
ance
of payments
government bonds, but I am not
deficits, con¬
(Special to The Financial Chronicle)
in the first
place? We would con¬
currencies.
The
Fund will then sidering the terms of its Article®
aware
that it is
front all over again the
receiving the use its resources to
CHICAGO, ILL. — James A.
danger of credit it
of
provide tem¬
Agreement and its available Hochstettler
deserves for what it is
further
and John C. Neff are
inflation
due
to
easy
porary assistance, when needed, resources.
We must bear in mind
doing.
now with
Merrill Lynch, Pierce,
money policies of the Federal Re¬
to maintain
that the Bank has a function to
exchange stability.
The United States
Fenner & Beane, Board of Trade
serve banks.
Treasury has
;
When the original par values perform for many years to come
not offered a new
Building.
long-term mar¬
i
were
Should the 2i/2% Rate Hold
agreed with the Fund, it and that its charter obligates it to
ketable bond issue since the Vic¬
use
was
its
funds
recognized both by the Fund
I do not believe
"exclusively for the
that the really tory Loan was floated in Decem¬
With E. D. Baring-Gould
and by the member nations that benefit of members with equitable
decisive issue in public debt
(Special to The Financial Chronicle)
pol¬ ber, 1945. With every year that the declared
consideration to projects for de¬
pars
could,
at
best,
icy is the pegging program which passes, the maturity of outstand¬
SANTA BARBARA, CALIF.—
be tentative.
Conditions were not velopment and projects for re¬
is
now
the subject of so much ing
long-term
issues
is
being
ripe
for
the
The Fund, John C. McCarthy has become as¬
establishment
of construction alike."
controversy.
There
are
other shortened. The longest-term mar¬
on
the other hand, "is not in¬ sociated with E. D. Baring-Gould,.
eauilibrium
rates
of
exchange
things that the Federal Reserve ketable government bond is now
-
banks
the
and
to
check
without
ment
.
longer
as
inflation
at
disrupting
bond
run,
whether
forever to
ernment
Treasury
this
the
market.
do
can
time
govern¬
Over
the
however, the question
we
are
to
be
bound
2V2% long-term gov¬
bond rate.
Conditions
a
may arise in the future that would
make
a
higher rate
economically.
mir
way,
sible
more
desirable
We should conduct
public debt policy in such
therefore,
an
as
eventual
to
make
2
pos¬
change in the
Victory 2V2S of December.
1967-72, callable in 19 years and
maturing in 24 years. If the Treas¬
ury were
a
new
to refrain from
long-term
selling
marketable
is¬
sue, maturing in
it could then sell
actually raise
1972, until 1952.
a 2Vz%
bond and
the long-term in¬
terest rate by means of
shortening
the maturity by seven
years
as
compared with that of the Victory
bonds on their < date of issue. If
the
offering of
bond
a new marketable
falling due in 1972
layed ' Until
1957„
were
de¬
the ..Treasury
an
could be maintained
indefinite period without
over
un¬
tended
relief
to
or
provide
facilities
reconstruction,
for
to deal
or
international
indebtedness
making use of the Fund's with
Measured in terms of arising out of the war."
Thus, if
relative prices and other factors, these international institutions are
duly
19 East Canon Perdido Street.
He
formerly with Bourbeau &
Douglass and C. A. Botzum Co.
was
,
resources.
there
be currencies today to serve their long-run purposes,
over-valued, and an other ways had to be devised for
orderly adjustment must be made financing the postwar deficits.
are
in
the future to bring about sta¬
bility and to facilitate the expan¬
sion of international trade.
The
Fund's resources should not be
used to support untenable rates or
to meet deficits on international
account
and
With F. H. Breen & Co.
may
which
which
which
are
canine
fundamental
,met
only
The people and Government of
United States have realized
the
that1 they had
an
the
war.
world
to
The
Financial
Chronicle)
nected
with
F.
H.
Breen
W.
—
&
con¬
Co.,
609 South Grand Avenue.
important role
in the restoration of the economies
of
(Special
LOS ANGELES, CALIF.
Porter
Reno
has
become
dislocated
by
the
The United States provided
Conrad, Bruce & Co. Adds
(Special
to
The
Financial
Chronicle)
assistance
to foreign countries in
the
LOS ANGELES, CALIF.—John
C. Strieker is with Conrad, Bruce
of
&
form
relief
grants,
loans
Co., 530 West Sixth Street.
COMMERCIAL & FINANCIAL CHRONICLE
THE
168 4 Number 4738
Volume
question,
Money, Credit and Inflation
(Continued from
conditions
9)
page
it seems to me, lies in our
error,
failure to
mental
understand
nature
the
of
funda¬
the
economic
phenomena involved in the infla¬
tionary spiral.
This spiral results
from the simple fact that a cause
today becomes an effect tomor¬
and
row
tomorrow's
turn, becomes
a
effect,
in
commercial
banks
of
the
tastically oangerous proportions.
Their power to do so lies in their
trend
ing government bonds in a mancec
the Federal
wnere
Reserve
banks
virtually the only buyers.
are
ing day.
pattern
banxs
Underlying Cause
If
wish to point to the un¬
we
derlying
flation
more
postwar in¬
cause of our
we
can
do
with
so
It has
assurance.
much
been said
that the beginnings lie in 11 con¬
secutive years of peacetime defi¬
cit
financing before the
war
fol¬
established
called
were
about
in
fi¬
one-third
$200
billion
Federal
banxs
buy
tween
of tne
this
only $27 billion in cash?
ernment
deficits for 11 peacetime
years—from
1930
1941.
to
How¬
the increase of government
placed with the banks was
ever,
debt
of
be¬
1941 and Dec. 31,
1945 when, on Dec. 31, 1941, they
had only $82 billion in deposits
plus some $8% billion of capital
of
True enough, we had Federal gov¬
could
wortn
31,
and,
government during the war.
tne
bonds
government
Dec.
by
How
billion
$75
than
more
borrowed
Government.
additional
to absorb
upon
lowed by the unavoidable deficits
our
not
of
total
liquidate
increased
in
resources,
They did
in fact, they
from $26 billion
loans,
loans
600 million to $30
billion, 300 mil¬
lion in the four year period.
process
When
relatively
was
the
Tne
to
a
pet increase in the nation's money
supply,
as
deficit
financing,
great
nor
result
a
of
>
peacetime
important
an
neither
was
source
of
concern
our
bank
well
is
simple.
ers.
of
be
restraint
banking
or
authorities
granted
additional pow¬
The American Bankers Asso¬
ciation
recognized - this
choice
clearly when it launched its anti-
inflation
paign
credit
or
in
control
January,
of
cankers'
the
cam¬
1948.
The
country
v/ere
urged to adopt measures of re¬
straint, to weigh all loan applica¬
tions
in
the
light of their effect
the, nation's economy.
They,
urged to preach the need
on
were
for thrift and for
deferring all
un¬
necessary
purchases in their
munities.
While it is too early to
com¬
it
work,
is
a
fact
that the rate of loan expansion by
all banks in the United States has
decelerated
been
The
in
trend
points
far
so
recent
Time
alone
will
tell
voluntary
a
self-restraint
banking system because they
dollar
and
its
some
mand
government debt placed with the
commercial
1945
and
banks
that
the
peacetime
and
brought
on
between
outshadowed
far
deficit
our
financing
current
lemma.
i;
di¬
vv
Increasing
bank-held
securities
ment
1941
by
some
govern¬
$75 bil¬
percentage
of deposits required by law.
As
this
problem
came
up
it was
solved
trol
constituted
from
the
dash
banks
reserve
to give them the
they needed^ - With
b&serve
,
purchases and to withhold scarce
goods from the market as well as
to increase production.
By and
large, in my opinion, most of the
expansion in bank credit up to
now has been helpful to the econ¬
that
the
nation's
15,000 privately
owned and
managed banks are in
position to keep on expanding
credit as long as they own gov¬
a
ernment
bonds
Reserve Banks
and
are
the
Federal
able and will¬
On the other hand, it must ing to buy them. At the present
that some part of time the commercial banks own
money borrowed has, and is, more than $65 billion of govern¬
adding to inflationary pressures. ment bonds: and it is estimated
As
a
matter of fact, after the the Federal Reserve Banks could
omy.
be quite obvious
the
physical facilities for production,
including the labor force, reach
capacity beyond which expansion
absorb
bonds
$40
billion
without
any
additional
of
change in the
present laws. Following the rea¬
of. production becomes impossible, soning outlined above, $40 billion
then all increases in bank credit-- in cash reserves
could
support
for
any
purpose
whatsoever—are
inflationary.
C
:
(* V.".",'-"-;7;..'; \iv-t.
,:, •
have tried to demon¬
strate, bank loans are not dan¬
gerously high and have not yet
been ai major cause of inflation,
If,
as
I
concerned about the
is
really the $64
question, because clearly we come
to the crux of the problem when
we
ponder the questions—when
why are
trend?
and
of
we
This
where will the
increased
use
credit
credit expansion of five times $40
billion,
or say, $200 billion. May¬
be there is no cause for alarm in
the
total
of
$43
billion
in
outstanding at Dec. 31, 1947 nor
the doubling
of loans since
1939, but alongside these figures
the potential $200 bilbon really
becomes
a
with
nightmare.
any
sense
Now,
,
of
ure
as
a
serious
no
respon¬
sibility would suggest such
a
possibility.
fig¬
In
stop and who has the
power and responsibility for put¬
ting on the brakes?
The back¬
ground 'for this- problem lies in
limits of the problem and the real
the-fact
in
that
under
present
day
using it I only wish to point the
reason
for
concern
bank credit.
W'
over
the trend
and
1937-38.
It
may
Federal Reserve System did
bring
an
end to the inflationary trends
under way prior to the dates men¬
tioned.
However, it should be
noted that the excesses leading to
corrective action were not brought
on
by the monetary authorities
had
ancl someone
rection
before the
times led
trous
to
on
results.
wishes to
bringing
to
force
even
Of
a
more
course,
cor¬
of the
excesses
disas¬
no
one
be held responsible for
serious deflation and
everyone agrees that bringing on
a mild or healthy deflation is like
courting a mild case of leprosy.
This
is
on
why the political leaders
both
of
parties shy
the problem
meeting
from
away
head-on.
Facing Serious Situation
Aside, however, from this del¬
problem of stopping infla¬
tion without causing serious de¬
flation,
there
are
even
more
grave
problems to be faced in
icate
1948-49.
parallel
of
debt
A
annual
low
rates
est
bill
ment
of
raises
with
upon
a
which
interest
now
billion.
without
nation
billion
$250
the
$5
situation
faces the
bill, at the
prevalent, is over
Increasing
the
a
the
Federal
government
would
re¬
15
inter¬
Govern¬
controversial social
all
theoretically
ques¬
United
crease
security
new
of
a
Increased
it
is hard
to
power
to
increase
the
of
be
achieved by
granted by
power
last
month
be
can
—
really effective. Aside from the
psychological impact of such a
it
would
probably have no
result
other
than
cause
the
to the
^Federal Reserve Banks.
to
transfer of
government
boncjs from the commercial banks
drop o.
wipe
a
for
likely to
use
appreciable
the
authority to increase
reserves
stop-gap measure offering a
breathing spell while we observe
a
it
of business in the
course
eral
the
It
realisitic to conclude that
more
the
would
par
need
requirements by a mere
$3 to $4 billion—which is the in¬
move
capital structure
which $137 billion of depos¬
upon
its
of
fi¬
suddenly
bonds,
the
Congress
any
points below
the
reserve
the
This
the
how
see
attractively
more
ever-interesting
show that
out
months ahead.
becomes
has run
its
rest.
course
sev¬
Obviously, if
evident that
inflation
further
no
ac¬
Now, indeed, this appli¬ tion
need be taken.
If it hasn't,
simple arithmetic is dra¬ then
only time has been gained
matic in making a point, but it
and the fundamental problem re¬
does depart somewhat from the
cation of
truth
tion
mains.
because
of
substantial
a
commercial
ings
are
bonds which would
low the
short
por¬
banks'
term
intermediate
and
led
a
taking
rect
If
outline
to
not
and
the
answers.
problems
cor¬
one
V■:'■
take the
to
cares
be
done in the monetary field
continued
prevent
The
first
One
by
is
the lending
serve
policies and
lost
was
are
the
—particularly the
companies—are in the
position as the banks except
they lack the ability to use the
bonds
ernment
insurance
same
as
funds several times over—an abil¬
ity peculiar to banks because of
qualitative in the operation of reserves.
and
quantitative.
A soIt seems quite clear that plaus¬
qualitative
control
over ible objections will be raised to
"
The
country's commercial
not the only institutions
the
large institutional owners of gov¬
re¬
result of the wartime financing
the Federal Government.
:
of
of
concern¬
money and
the country
power
to add to the
spending stream—almost at will—
by selling government bonds to
the Federal Reserve Banks. The
position of the commercial
banks—a control that
a
to pay.
observation
mechanism
this:
with
be done by regaining for the cen¬
tral
banking
authority
control
over
to force banks to buy
its securities bearing
final
banks
This would
dead stop.
because for
history it
our
control over the
ing
past two years are all in the di¬
rection of tightening the reins on
the money market without bring¬
a
opposed
ernment chooses
the Federal Reserve Board in the
ing it to
government
suggestion has been
time
own
credit
advanced
the
puts the government in a position
to
!;v
suggestions
at
whatever rate of interest the gov¬
inflationary
pressure?
short-term
This
bonds.
and,
tightening
the money market, what else can
which,
reserve
in
vested
sponsibility for precipitating a se¬
virtually
time-tested
rious deflation by the
method of drastically
excessive
to suggest that
required to keep a
be
vigorously
*
re¬
of
circulation, have
the experts, including
option of the banks, could be in¬
the
no
of
Eccles,
banks
secondary
under¬
necessarily give the
some of
the
complex problem.
.am
inflow
from
Marriner
all of the pertinent factors in thin
such
gold
poss'ble
reasons,
banks
the
to
currency
Perhaps I sound alarmist—per¬
haps I haven't taken into account
brief look at
continued
return
same
If so, remember that I
other
and
from abroad and the ever
fol¬
not
the
as
'f
,
These
hold¬
price pattern if gov¬
ernment support were abandoned.
well be that the action of the
very
loans
in
one
1929-32
to
as
in
deficit
Again,
with
the
commercial
banks owning some $65 billion of
substantial part oi
potential demand upon it?
Aggravating the problem is the
thority. The chief objectors to ad¬
ditional authority all seem to
$ay
in
so
of
Reserves
this
country's
bankingau¬
requirements of approx¬ the Federal Reserve Board and
imately 20% of deposits the bank¬ the: Treasury Department have
simply resulted in the generation
ing system could
sell
$100,000 enough power now if they would
of a like quantity of purchasing
worth
of
bonds,acquire
that only use it and they
generally end
power in the form of bank de¬ amount
of reserves and then pro¬
up
by
suggesting that
money
posits and currency in circulation. ceed
to buy .bonds of five times
rates should be allowed to rise
This huge quantity of purchasing
$100,000, or $500,000, and again and more or less seek a natural
power, like water impounded be¬
swell
its
deposits to the limit. level. This end could be achieved
hind a dam, was held back from
This process went on and on and
by a variety of means but all
the market by wartime restric¬
did not stop with the ending of
plans contemplate either dropping
tions and scarcities^ In the early war. It
did not stop because the
support for government bonds or
years of a boom the pressure of Federal Reserve
System has seen allowing their price to
drop some
pent-up purchasing power is not fit to continue to
support the points below par.
Historically, the
immediately
relieved
by
free market for government bonds at
device of allowing, if not encour¬
spending because spending itself levels of par or above. The bank¬
aging, money rates to rise some¬
stimulates production and produc¬
ing system — postwar — has con¬ what
precipitately has been used
tion, in turn, generates additional tinued to
acquire reserves but in¬ to stop inflation. In
fact, the use
quantities of spending power. This stead of buying government bonds
of this device by the Federal Re¬
"being the case, the only hope of has made loans.
serve
System has been pointed
slowing down a boom lies in de¬
out as a primary force behind the
Banks Have Possibility of
ferring the spending of money
deflation that occurred in 1920-21,
Excessive Credit
and speeding
the
Expansion
production of
goods and services.
Bank credit
This situation,
unique in our
may be used to make unnecessary monetary history, can only mean
payment
may
Effectiveness
Treasury obtain the funds
meet
lion in the four years of 1941-1945
up
ii
Would not the hold¬
the
the
States
the
as
option,
bearing
and G bonds be
exercise their option
to
in
raises
of
program
central
de¬
priced marketable bonds?
in
Board
on
F
demand
invest
controversy has arisen con¬
cerning the need for additional
power to be granted the Federal
Reserve
bonds
E,
tempted
to
a
buy
government
bonds
G
and
is
In this field of government con¬
by the simple device of
having the Federal Reserve Banks
enough
holder's
and G bonds.
suc¬
>
that
F
which,
return
a
cheap market
issues.
E,
the
of
of
nancing,
of
in¬
terest of 2V2% per annum are al¬
lowed to drop marketwise, the>
could reach a price placing their
yield on a basis higher than E, 1
ers
Treasury
event
form
States
at
States
$51 billion of the total
the
United
fact
tne
no
conceivably
reaching for loans
higher rates of in¬
direction they may cease to be a
reliable market for the United
mately $66 billion of government
bonds.
Simple
arithmetic
will
how
■
below
is
cost
earn
might
carry
terest than government bonds. If
banks are pushed too far in this
is
were
reaeposited
by
those
to problems at the local level re¬
pressure prior to the
whom the Treasury made its dis¬ gardless of the nation's over-all
beginning of World War II. The
bursements.
The net result was problems, has led to considerable
huge influx of gold in the thirties
that as the banking system's hold¬ discussion
concerning
measures
was a prime factor in increasing
ings
of
bonds
grew so did its de¬ the government might and should
the money supply .of that period.
posits, and money in the form of take if the bankers cannot wont
It was the really great deficit fi¬
cash
was
not
needed
until
the out a sound solution among them¬
nancing of the war years and more
cash reserves of the banks began selves.
"'K'-l-'particularly the large amount of
shrink
in
colossal
bonds that are redeemable
inflationary
to
Aggravating the
problem oi a huge debt
that
be.
can
pressures
fixed
a
income.
overall
that
reserves
they
start
which
the country with about $10 billion
in
capital funds own approxi¬
tendency of bankers to meet local
Treasury drew against these
tive
happening to
in
really
fact that the commercial banks of
upward.
cessful
i;eturn,
1948.
the
cash.
consider what is
those who must live from
is
to
when
no
33
larger and larger portion of their
funds
again
in
weeks
returns
unequivocal
an
to
at
higher
a
in
government secur¬
The answer to this question
cannot be
we
take
we
taxpayers
own
tion—Where
force
from
pay
sole
credits but the funds did not leave
The
books—not
tneir
on
to
judge, and it is probably unwise
to single out this campaign as the
Competi¬
banking and
from
loaning
agencies
outside
banking, plus the understandable
credit
order
ities?
the
over
credit
measure
central
the
banks
bought bonds
large degree by Jhe
lrom the United States Treasury
shrinkage of private loans held
they simply gave the Treasury
by the banks and, as a result, the
offset
of
proper
must
It seems to me- that we
bankers, along with many others, nancing World War II has cre¬
ated
a
serious
dilemma
in the
beg the question when we assert
that rising bank credit is clearly postwar management of our mon¬
etary affairs. During the war the
a result and never a cause of in¬
pressure.
tnii-—if
was
founded, what can be done about
ability to replenish their cash re¬ it? Clearly, either the banks act¬
serves practically at will
by sell¬ ing
voluntarily will achieve a
The
flationary
question I raised at
beginning of these remarks
iunds
shall
wit:
to
more
those who
The fourth
tne
couniry
can
continue to
expand credit until it reaches fan¬
the follow¬
cause
the
(1341)
controls
nature
are
,
'
called
bank
lending exists today in the
any
form
of
trol away
pjan looking to taking con¬
from bankers and giv¬
ing it to duly constituted author¬
sets the percentage a banker may ities.
In banking, as in many
loan on
listed
securities in all fields of private enterprise today,
cases where
the proceeds of the we still hope to find some means
loan are used to carry or purchase by which we may "eat our cake
listed securities. A second quali¬ and still have it."
Federal
tative
control
sumer
Credit
be
November,
is
1947,
by
'
In
Con¬
over
shortly to
lapse since
;
'
■
••
:•
,
by 4%
demand
on
m
summarize, it is my belief
Americans have been
we
temporizing and compromising m
a result of the
Congress last we
quantitative field Con¬
gress took mild action last month
when it gave the Federal Reserve
Board
power
to raise member
reserves
that
as
the
banks'
To
is
a
enacted
month...
•
that
which
after
resumed,
laws
"U" of the
System
which
Regulation
Reserve
•
face
of
a
dilemma—because
still fear the
flation
'
more
possibility of de¬
than
the
conse¬
inflation. Time now
runs against the likelihood of this
course proving to be a happy one.
We had better begin contemplat¬
ing the wisdom of taking unpleas¬
quences
of
deposits and I ¥2% on time de¬ ant medicine before we are the
The
posits. In trying to solve the prob¬ victims of a serious illness.
lems of control
over
credit by prescription is simple: "do any
and
all
things that will curb or
merely increasing the amount of
required
reserves
some
really postpone spending by government
ticklish problems are encountered. or private buyers in the market
In fact, results somewhat the op¬
place until and unless real pro¬
posite of those desired
tually be achieved.
.
may
ac¬
duction—not
production measured
.
by dollars of decreasing valuethere is the prob¬
lem of bank earnings. Obviously, begins to catch up with the de*
if banks are forced to immobilize mands of an over-eager world. "G
For instance,
■
~«r* ■" "
xxxxj
^\^x*xivxxjxx^xxxxj
06
x
ix^inxKuinxj
v^xmvji\xv^XjILi
first.
The Groundwork for Foreign Investments
bers
(Continued from page 10)
vana, where the
ITO charter
was
drafted.
It is easy to criticize the early
results of these first efforts to ob¬
tain
international
the
field
cooperation in
foreign investments,
of
and it is true that the results have
been too impressive;
not
but it is
hardly to be expected that mis¬
conceptions and abuses of long
standing can be corrected over¬
night by voluntary agreements,
made
the
at
political
level,
by
representatives of nations in va¬
rious stages of economic develop¬
ment, of diverse social traditions
and
political
philosophies. I am
-hat progress is being made,
sure
however, and the effort is well
while, if only to clear the
worth
air
of
of
some
the
confusion
on
foreign-investment matters
that
these
international
conferences
have brought into the open.
Businessmen who
participants
as
these
at
muddled
positions
It
there
the
confused
and
foreigrj. in¬
exhibited
of
by
in
men
political responsibil¬
all
was
too
to
as
that
apparent
fundamental
were
ceptions
on
at
frankly
were
thinking
vestments
present
observers
or
conferences
appalled
ity.
were
the
miscon¬
nature
and
>
it
enterprise,;' the
capital formation, the
potentialities of various countries
of
for
industrialization, its benefits,
and its limitations in specific situ¬
ations;
and
that
there
too
was
much faith
is
with
another
one
the Straits of Sicily.
be
the Charter may evolve into some¬
thing worth
most
while.
significant to
tors,
however,
Article
12,
investors
is
What
that
designed
and
revive
new
to
reassure
the
interna¬
but
it
honest to
seems
the
diplomatic,
man,
which
ment
to
.
.
them
take
over
it
does
frank
and
where
considers
it
scribe
requirements
ownership."
their
to
as
In the absence of any
requirement
for
the
of
payment
prompt, adequate, and effective
compensation, this statement of
the "rights" of capital-importing
nations is, indeed, disquieting.
is
that
not
investors
It
doubt
the
right of sovereign nations to
na¬
tionalize
foreign
property,
upon
the payment of satisfactory com¬
pensation; but it seems the height
of
absurdity
need
and
for
nations
seek the aid
capital to
to
say
which
of foreign
the foreign
vestor:
i
l,
.
in¬
/
,
develop our resources,
mote
our
industrialization,
to
us
crease
pro¬
in¬
productivity. Come to
us
with your skills, your enter¬
prise, and your money. Go into
our
con¬
venient.
it
would
be
worth
tories
to
Build
and
subsoil,
fac¬
us
of
their
its
share of
politicians who do not
that when you injure your
neighbors business, your own suf¬
fers to an equal degree. My coun¬
try has had, and still has, its share
of
starry-eyed
but7* misguided
idealists and planners who, in pro¬
moting their dream of
omnis¬
an
and
industrial
-
miracles
furnish
ITO
to
write
This
Article,
the
controversial Article 12, began at
Geneva as a simple statement of
the
in
value
of
foreign investments
promoting
economic
ment and social
agreement
develop¬
jfogress,
by
with
participating
an
na¬
tions to provide the widest
oppor-.
tunities and the greatest security
for
such
investments,
consistent
with the obligation of investors
to
refrain from interference in the
internal
affairs
of
the
receiving
country. An agreement along these
lines, faithfully respected, would
undoubtedly have
value.
from
When
it
'committee,
agreement
was
been
of
finally
great
emerged
however, -this
so
modified
to
as
provide full dispensation for
gov¬
ernments who desired to continue
to
discriminate against
existing
investments
for
or
even
themselves
or
to seize them
for
their
na¬
tionals. True, there was an obli¬
gation to provide "just
compensa¬
tion," but this was nullified
by
defining
payment
no
"just
compensation" as
local currency, with
in
obligation
to allow its transfer
abroad.
,tin>
,
,
,
.
investor's hair grey
course, you must re¬
sovereignty. We know
you understand that; but we must
also inform you -that, after the
spect
our
mines
are
producing, the wells
are
pumping oil, the factories are con¬
structed, the turbines are turning:
shall
we
feel
enterprises,
free
in
to
whole
seize
your
in
not concern ourselves
to
their
their expenses will be met from
the public purse. We will, in the
words of the Havana :: Charter—
as
quote
give due regard to the
—
desirability of avoiding discrimi¬
nation as between foreign invest¬
ments
our
of
unquote—but
—
we reserve
right to practice other types
discrimination.
Perhaps our
to
reasonable,
and
trust
us,
and
and
cooperative,
will
you
not
regret it."
This may seem
but,
extreme
make
grow, to
with
profit
a
its service to
make
must
we
—
we
our¬
are
to
leisurely. As a firm believer
private enterprise, I say that
in
this belief is false.
It is true that
industrialization under
private
en¬
terprise
cannot be accomplished
overnight. It was not so in my
country, in England, in Switzer¬
land, or any of the other advanced
industrial
nations.
I
believe
the
obvious. Private, com¬
petitive enterprise, which must be
efficient,
productive, and eco¬
nomic, if it is to survive and re¬
reasons are
turn
nrolit
a
to
proceed with
in¬
its
some
has
owners,
caution.
It
unfortunately it is illustrative of terpretation of the views of coun¬ must investigate carefully, buy
the muddled
thinking responsible tries in need of foreign capital, as wisely, build soundly, and oper¬
for
the
eign
There
distrust with which for¬
investments are regarded.
is
investors
deterrent
no,
as
strong
as
to
foreign
the fear of
expropriation
when
panied by prompt,
unaccom¬
adequate, and
effective
compensation
(which
means
compensation in a
currency
that is acceptable to
the
investor);
but it proved
Geneva and
an
impossible, both
at
Havana, to
outright commitment
all-important
at
obtain
on
this
matter.
the investment
To be
sure,
provisions of the
Charter, as rewritten at
Havana
do away with
some of the absurdi¬
ties of the Geneva
Draft, includ-
ing
the
definition
pensation" and
the
rule
of
There
now
is
the
of
"just
excellent provi¬
sion in Article 12
requiring mem¬
Bogota, and elsewhere; but
unfortunately for the hopes of the
vana,
millions
to
whom
ate
efficiently. It cannot invest in
ill-conceived, high-cost projects
with
tion.
no
real
unless
tariffs'
or
foreign invest¬
economic
protected
other
justifica¬
by
artificial
high
trade
barriers, which represent an in¬
ments offer the best
prospect for direct
tax on ihe consuming pub¬
material
improvement
of
their
lic. Private enterprise must con¬
condition in life, this is how it
sider such things as raw material
seems to
many, many prospective
sources,
the availability of fuel
investors.
To
make
my
point and
power, the quality and supply
clearer, I should
like
to
read
to
from a translation of an edi¬
torial which appeared last
year in
one of the
excellent daily news¬
papers of a Latin American coun¬
you
try: "If the foreign capitalists
ceive
an
invitation
to
re¬
money
in
to
official
the
country
our
will
country and> listen
promise
of labor, the nearness of
consumer
markets, the transportation facili¬
ties, and the relative efficiency of
producing
a
product
importing it from
at
some
home
or
relatively
low-cost producer.
invest
com¬
exceptions to
nondiscrimination.
an
expressed by their representatives
in public debate at
Geneva, Ha¬
that
our
Private Enterprise Builds Soundly
But wherever
private enterprise
truly
competitive,
it
builds
soundly; it has the know-how to
is
be
exceedingly
pleased to respect the
enterprises
done most success¬
been
has
fully, it has been done in cooperaT
tion with private industry, with
the management and direction re¬
world's
to
maining in private hands.
;:
v
to
build
Private
These
discoveries
have
It
been
made
these
and
enterprises
have been built by men who have
carefully calculated the risks in¬
volved,
under the stern compul¬
competing with other men
and earning a profit.
sion of
Despite
the
achievements
of
private
enterprise and the con¬
spicuous failures of government
enterprise, past and present, a
fallacy still persists that govern¬
of
is
not
Govern¬
Fears
Investor
ment
economically than
more
Participation
the
then,
*
fact
simple
government participation
the
that
investor fears.
It is
that government should be
private
right
the
welfare
the
about
concerned
,
of
that it should assist
encourage private capital irt
developing the nation's natural
citizen,
and
wealth
that
so
it
available to all who
share
to
it.
in
can;
be
made
earn
the
right
It is not right for
government to squander the na¬
ments, because of their resources tional patrimony on uneconomic
initiative, can do more for the projects, or projects which can be
people, and more quickly, than carried out to better advantage by
can
the people themselves.
But private enterprise., It is right for
what
resources,
what
initiative government, in its concern for the
does
a
government possess that general welfare, to place restric¬
comes not from the resources and
tions
on
monopolistic
business
the initiative of its citizens and
practices which withhold from the
and
the
business
have built?
and
which they
concerns
Governments
cannot,
do not,
citizen
ceive
benefits
the
under
he
would
competitive
re¬
condi¬
have
productive, and it is
ask
justify such interven¬
tion
questions: If, I
by the enactment of delib¬
had free choice, would I consider erately projudicial legislation or
this enterprise a suitable invest¬ by otherwise creating conditions
ment for my savings?
Would I under which private ; operations
willingly entrust its operation and are unprofitable."
Hi- ^
■
to
an
of the
the difference.
build;'to
mankind
as
economy,
basie
are
progress
voices of the false prophets of the
to
commensurate
more
efficiency imd
industrial
the
nation; but I also know that where
which
monuments
are
which
and
investment
finance
to
high capital
a
socialist millennium if
it will, to seek and find new and
better ways to perform old tasks,
part,
stem the advancing tide of state
compensate you in pesos.or dol¬
enterprise which has engulfed so
lars, and allow you to take the
much of our world.
I know that
compensation home or not, as dic¬
there is a curious but widespread
tated by our foreign exchange pol¬
belief that underdeveloped coun¬
icy of the moment. Furthermore,
tries, in particular, require an un¬
we may set up government-owned
usual amount of governmental in¬
enterprises to compete with you,
tervention in business, as com¬
They will be tax free, and their
pared to the older industrial coun¬
capital will be interest free; and
tries,
whose
development
was
we need
or
much of the
so
These
requiring
selves heard above the persuasive
private
enterprise free to venture where
-
be
enougii
an
modern
past record has not been good, but
.,,
Muddled Thinking and
Distrust
This was certainly
turn
of
institutions
needed
funds
the
of
any
capital tions; and it likewise is 'the part
they take from of government to enact demo¬
their
subjects.
My
money
and cratic measures for the regulation
your money is in these govern¬ of
industries which are natural
ment enterprises/ If they are un¬
monopolies — industries in which
able to operate at a profit, it is
the element of competition does
,your loss and my loss; and if, be¬ not exist.
But it is not the part
ing high-cost producers, they need of government to intervene di¬
high tariffs, you and I must pay rectly in the management or con¬
We who believe in
words.
comforts
and
projects
•
see
cient and
on
before.
iso¬
Of
the
of
efforts
to
nationals.
narrow-minded,
financial
and
instances,
are
country
discover something new
and useful, to do something better,
I regret that my country has had
living.
drafters
their
an
there
Call the roll of man's great¬
ture,
policy which have
affected the security of the foreign
investments
sincere desire to bring
a
productivity;
finished
enterprise.
They repre¬
sent the eagerness of men to ven¬
financial
and
the
in
difficulties
the
private
guilty of mistakes in commercial
known
the
Charter
the
for
achievements—his discoveries,
carry
my talk today.
\ know that you
gentlemen are not responsible for
the
mistreatment
that
foreign
capital has suffered, and I know
that the great creditor countries,
including
my
own,
have
been
Development.
by
review
market
work.
acceptable Article on Interna¬
tional Investment for Economic
met
to
estab¬
an
by
quickly to the people the advan-^
tages deriving from an increased
list
hesitant to include them in
was
employment for wrought by free men under our
our people.
Help us clear our for¬ system of democratic capitalism.
ests and tame our rivers.
Bring
light to our cities, roads to our
Time Has Come for Plain Words
hinterlands, and the hope of a better
But the time has come for plain
way of life to many who ha vfe never
while
vated
I
social
believe
our
even
or
It
source
this
beginning of time.
I
jungles
iron,
or
participation or intervention in inT
I know that these govern¬
ment
activities often
are
moti¬
dustry.
mill
steel
a
nearby
can
ment and
and
all-powerful state, have
found it convenient to ignore the
and
the wealth of
ture.
est
are
which has lain dormant since the
mountains
buy airplanes.
no
pushed at too rapid a
bring only disillusion¬
heartache. It is this im¬
or
patient urge to industrialize that
frequently leads to government
plain words, cynical
words, perhaps brutal words; and
These
our
uncover
pace,
than
to
islative decree through the
public funds.
'
of
sound,
inventions, and scientific miracles;
the great commercial organi¬
zations, industrial establishments,
in the ability of gov¬
ernments to create wealth by leg¬
use
is
is basically un¬
trialization which
its
locally-
product.
lationist
.
"We need your capital to assist
home
sell
^eptemoer' ou,
I know that
in my own
elsewhere, of enT
This is not to say that private lightened
governments which
enterprise lacks foresight or vi¬ have cooperated successfully with
sion—that it is not willing to ven¬ their citizens in providing some
the enterprises
of
movement
to
rather
construct
there
lished
govern¬
We have a greedy bu¬
private capi¬ reaucracy, disrespectful of prop¬
tal, calls attention to the rights of erty, and leaders of syndicates
sovereign states to take safeguards who want possession and adminis¬
against foreign
investments;
to tration of the businesses, though
determine whether to accept them they may be incapable of man¬
or
exclude them; and to "pre¬ aging them properly."
tional
materials
not
coal
of
have
we
the
processes
the desire to
nor
hu¬
the
for
seeks
commodities; it
does not construct airplanes where
the public needs clothing, farm
implements, and building mate¬
rials, but has neither the funds
nor
...
enable
when
.
be
it
imported
costly
It would no'c
wise,
nor
would
tell
laws
inves¬
many
produced
the
possible that, through the
the investment section of
years,
meaning of free
process
consult
to
negotiate bilateral and xnulti-
produces
before
abroad; it
wares
they establish, they must think of
legendary song of the sirens
lateral agreements on foreign in¬
who, as the fable relates, lured the
vestments.
Article 11, which also sailors
of
old
with
melodious
deals with foreign investments, is
voices, only to shipwreck them
a good, well-balanced
article; and and destroy them on the reefs of
and
Jt
market
inursaay,
do
things well; it does first things
other
than
what
those
Let
ment
to
f
who
private
themselves
trol
•
prefer
govern¬
enterprise
political appoint¬
How will this enterprise, and
other like
it, affect the buying
ees?
of
able
to
sell
Will
wages?
my
product
will
be
of
my
much after the
as
it
equal
cheaply than private
a
quality more
enterprise, and
buy
money
inevitable
inflation which results when gov¬
ernments
than
spend
their
and
peoples
build
can
faster
and
save
produce?
And they may well ask
price' government enter¬
—what
prise
and
industry which is law-
an
these
management to
power
of
abiding and
not right to
what price
to
to
inflated
°
create
sure
principles,
do—if
we
want
we
an
defend them at all times, in all
with V all
places,
the
cogency of argument
capable.
are
ourselves
in
What
am
foreign, can be productive and
profitable—we must stand ready
of
a
believe in these
we
atmosphere in which
all investments, both domestic and
cost?
at such
in
If
and I
industriali¬
zation if achieved
price
Must Create Safe Atmosphere
-
We
more
vigor
and
of which
we
must
concern
with the processes
government—participate
more
the councils of state and in the
living
future
various
international
organiza¬
costs?
What
price in a
tions— wherever policy is being
mortgaged by debt? What price in made, wherever the democratic
a
constant narrowing of the op¬
process is being followed.
If the
portunities for private enterprise?
specious arguments of the apolo¬
What price in the encouragement
gists of state enterprise, who re¬
it gives to the exponents of the
gard foreign investments as an
Godless doctrine of the all-power¬
obstacle in the way of achieving
ful State, where the common man
their ultimate goal, do prevail in
has neither enterprise, nor free¬
our
legislative assemblies, in the
dom, nor individual dignity?
X conferences j; of
the
American
I trust that you will understand
the
spirit
questions.
tious,
full
or unduly critical.
I am in
sympathy with the natural
desire
the
in which I ask these
I do not wish to be cap¬
of
of
most
would
every
be
its
the
nation
to
and
resources,
last
to
make
decry
I
the
benefits of sound industrialization.
I
have
of
devoted the greater part
life to the development of
states,
and
United
Nations,
in
the
halls
of
the
shall be partly
to blame.
We have given inade¬
quate expression • to our faith in
private,
competitive
enterprise;
we
„
and
have
we
what
Those
nofalways practiced
have preached.
we
*
" v
who
deprecate the
achievements
of
private enter¬
prise are aided, unwittingly, by
businessmen who, in their disre¬
industry in gard for the public welfare, pro¬
Latin America—a key industry in vide the evidence for their own
the
process
of industrialization, arraignment
before
the
bar
pf
and one which is largely depend¬ public
opinion; and it is indeed
my
the
electric
ent
on-
power
industrialization
for
well-being; but out of this
rience I have learned that
its
unfortunate
expe¬ Lmust
indus¬
suffer
course,
that
with
the
the
innocent
guilty.
the guilt is not all
on
Of
one
Trr
Tt'
THE
side; but it is a fact that foreign
are-haunted, not only by
Tc7TT-"TXT-
"T™ r~yr~vi~*
Number 4738
163
Volume
p
COMMERCIAL
;''rtrtT*rrrrt'r- r- mrTTTf
Progress
must, indeed, be made financed from
government bor¬
fronts simultaneously.. Bi¬ rowings.^ -No one with any knowL
all
(1343)
CHRONICLE
FINANCIAL
&
edge of the nature and extent of
their
investors
on
the
lateral agreements, regional agree¬
ments
and
international
agree¬
alert
edge of the subject would seri¬ for means to develop these re¬
ously argue that governments can sources and add to their produc¬
ments are all to the
do
misdeeds of the exploit¬
ers
of other generations, but by
the fear of violent public reaction
past
the present-day excesses
capitalists.* In some of the
against
focal
or
countries,- where
standard of living is
underdeveloped^
the
general
deplorably
low,
little
ceives
public
the
or
benefit
no
such industrialization
place.
re¬
from
has taken
as
Wages paid by local indus¬
tries have tailed to keep up with
the soaring cost of the necessities
of
life, produced in part by these
industries and
same
made
unnec¬
essarily costly by
unreasonable
profits. Furthermore, these prof¬
its, to which are added those of
retailers
and
be
may
other
protected
distributors,
by
tariffs
and
other
barriers, erected to keep out
competing products, produced at
lower cost, in other countries.
In
a
tries
country where local indus¬
tail
accustomed
are
profits
more
of
from
mark-ups
are
of
to
50%
100%
oi
re¬
200%
to
V' competitive
common,./ true
,
annual
to
25%
invested capital, and
on
conditions, the hallmark of pri¬
vate enterprise in the more de¬
veloped countries, do ; not exist;
and the future of all
domestic
ness,
ardized.
the
One
foreign
private busi¬
or
foreign, is jeop¬
of
the
ironies
that
investor .sometimes
faces in these situations, especially
if his investment is in a public
Even
more
educational work.
capital and
in
The
business
countries
be
hardput
to
earn
its cap¬
on
in
the
investments
public
is
that
we,
patriotic
of
foreign
assist
to
citi¬
respective
our
field
as
in
this
educational work.
During the
decades
association
of the
course
and
of
more
with
the
two
close
my
electric
industry in 11 Latin Amer¬
xnver
ican
countries,
I ' have
found
friends, in all walks of life; and
their
confidence
and
friendship
most cherished pos¬
I know that they are as
are among my
sessions.
distressed
at
I
as
which
standings
the
misunder¬
sometimes
arise
between these countries and North
American
>■
interests,
agitation
cussions
with
friends
my
associates
reached
b 1
p r o
these
I
conclusion
the
and
on
e m s,
have
that
only real remedy lies in
in¬
a
dissemination of the fundamental
underlie
facts' that
the
relation¬
ships
invested, and the public it is de¬
public
unrest
against
into
divert
to
resentment
benefits
often
bear
domestic
rate of
I
or
enterprises
indicting
whose
any one
of economic nationalism,
which add
much to the hazards
so
foreign
purpose
na¬
with these
group of nations
excesses
of
more
profits is much greater,
not
am
tion
investment.
'is
to
present
My
to
only
as
you,
irankiy as possible, the unfavor¬
able
aspects of foreign invest¬
ments.
as
vestors
in
they
my
country.
in¬
to
appear
Many ol
the nations represented here have
had
an
which
in
investor, the
his capital is
signed to serve.
I would like to
suggest
some
of
these; funda¬
mentals to you.' '
;
foreigner, and de¬
higher wages and social
heavily
on
foreign enterprises which may
pay their workers higher wages
than
the
between
industry
the
mands for
admirable record in their
treatment
of
foreign capital, but,
unfortunately, the prospective in¬
vestor does not always distinguish
between country A and country B.
For
Fundamental Facts
*
,
^
First,
to
as
the
nature
Vestment capital and the
of
capital formation.
of
in-j
processes
In the
pop-
jlar mind, capital means moneyactual
currency,
money,
or
checkbook
borrowed money—anc
it comes from
one
of two
in
The
>
Latin America.
That is
Bogota Agreement
tfte rich,
tho coffers o
the government which, in turn
obtains its funds by borrowing o:
by
taxes against thesf
wealthy corporations and
same
That
individuals.
tions
the
are
be
to
na¬
congratulated for
is the popular
enter
in
was
such
government
programs
development,
fi¬
by borrowing, is built on
the illusion that government cap¬
ital
is
easier
to
get, easier tc
nanced
service and easier to repay.
penses
Now
ing
efficiently,
more
larger
increment to
wealth?
ing recent
ital
it
the
adds a
national
I will concede that, dur¬
have
may
obtain.
government
years,
seemed
cap¬
easier
However, the illusory
to
the
Bogota
Agreement.
It
is
his
Posterity will hold
achievements.
to account if
us
while
rest
of
government
credits, largely of United
States origin, can meet the world'?
loans and
needs
for
capital already
new
enjoyment of the good things tha<
these savings might buy; in the
for
enjoying
government
its,'citizens
poration
or
what
de¬
shall
their present savings
ernment,
but
an
our
America, this
free
hemisphere which Providence has
endowed with untold
riches of
field
forest and mine,
and
impersonal
gov¬
there
an
human needs and
content to
are
of our resources
materials
remain
We
and
America,
in these
of economic strain
unproductive.
and
who represent the commerce
industry
critical
of
years
and social ferment, have a
unique
responsibility to our own and fu¬
ture generations.
Here in Amer¬
ica is man's best, perhaps his only
keep alive his age-old
a place where men can
in freedom, live in peace
to
hope
of
dream
work
and
fellows,
their
with
dignity
the good
combined
Working
and
enjoy with them
things
which
their
labors have produced.
together, with all the energy, the
enterprise, and the will of free
men,
in
Here
to
help to make this
can
we
and the benefits,
dream come true,
will spread through¬
of necessity,
out the world.
Railroads—Victims of
r
Not only'the
willingness but the ability of the
people
of
the
United
States
becoming apparent.
through their government, to con¬
tinue to generate and supply the
vast amounts of capital required
for
reconstruction and
world
de¬
velopment needs, is wearing very
Furthermore, all the funds
thin.
Gigantic Squeeze
(Continued from page 14)
cannot
industry
the
at
and
represent
only ; a
small
fraction
of
the
world's accumulated require¬
emergency
ments;
measures,
New capital required in
t
thq United States alone to replace
worn-out and obsolete plant and
equipment and provide for neces¬
industrial expansion has been
variously estimated at. between
$35 billion and $45 billion a year,
sary
for
the.
five
next.,
years,|
in excess of
amount considerably
the estimated
an
capital formation
or
be
bled white,
expected
time
same
the future and
for
build
to
that will encourage rather
hamper the free flow of
price
and travel within our
rvV-.V
tools to easq his job, in¬
his production, and shorteji
ficient
crease
his
working hours.
ther
in
that
1947
He stated fur¬
wages paid to
$100
billion,
workers
totaled
for that
which
about 18 times
TJ. S. Has No Surplus Capital
quite
belief,
which
to
seems
be
that the United
a huge surplus of cap¬
capital goods beyond it?
general,
States has
ital
and
own
sort
needs, which it is under some
of economic compulsion
tc
ients, is
of
very
far from the truth.
comparative
advantage,
deviations from
ciple, resulting from
any-
that
and
prin¬
emergency
acts of governments, are bound tc
be
short-lived.
dance
With
an
abun¬
of
profitable investmen'
opportunities at home, the hard¬
working, thrifty individuals whose
savings, invested in banks, insur¬
ance policies
and securities, con¬
stitute the real source, and only
dependable source, of capital for
new
investment, must be shown
advantage in risking their cap¬
ital in foreign lands.
The mem¬
ory of previous unfortunate ex¬
an
periences has made many of them
wary.
Yet if they can be shown
an
enterprise that has a sound
economic basis, managed by men
who know their business, and lo¬
cated
in
a
was
as
much
.
was
as
The
v'C:
President
of Harding College, Searcy, Ar¬
kansas, a great educator and a
recognized authority on the sub¬
ject of economics, in a recent
speech entitled "Make Mine Free¬
dom," made the statement that it
was industrial profits, hot wages,
that provided the worker with ef¬
Dr. George S. Benson,
total savings, in the United States
period,
con¬
package its services at a
tinue to
than
erned, normally, by the principle
be done with
them.
we
any
and
men
dormant
man's
to
limit
no
ture of the belief that
productive work and the will¬
ingness
of
untold
numbers of
hard-working, thrifty people to
consume
less so that they may
in
cides
ready to cooperate with
be
country
which
will
permit the enterprise to operate
on
business
principles,
earn
z
profit, and transmit the earnings
to
its owner, this natural hesi¬
paid to the owners of the
tools—yet the tools did the ma¬
jority of the work. If there is any
all
are
when the
unfairness
actual
before
facts
is
the
of
the tools are
If they are get¬
ting too little, it will ultimately
decrease investment in tools, de¬
getting too little.
production of the worker*
decrease wages, thus
crease
one
no
can
editorial
This
So
see
was
Weekly"
"Harper's
1857.
Of
our
the end."
printed
in
indifference.
feel
troubles
on
10,
Oct.
people in all
see,
you
have their troubles, but al¬
ways
hard work, understanding
and faith have led them from the
shadows into the light.
ages
Threat of Nationalization
V I
wish,
do
however, .to leave
a vital thought
consider
I
what
with
Because the railroads
you.
the most basic and vital indus¬
are
try in any country, any attempt at
nationalization would likely be
first
focused,{-.on
industry.
that
Once this should happen,
then the
would be made easier for
government control of other in¬
dustry.
We have seen this happen
in England — where democratic
path
government was born — yet we
say
that it cannot happen
still
here.
it would appear
us
owners
solemn moment, and no man
a
can
.
that
thing is certain—we must
must not submit to
One
alert—we
be
insidious
this
invasion
of
our
free men—and I say
again that forces are at work
within our democracy aimed to
rights
as
and thereby
bring about just such a
injuring the entire economy of the
No doubt many of you
phe. The problem facing the rail¬
roads is a problem that will face
all industrv if we fail to act and
nation.
find that this description fits your
own
immediate problems.
act
Perhaps some of you believe I
painting too pessimistic a pic¬
I am certainly not a pessi¬
mist.
In fact, I am just the op¬
posite.
But I do believe in facing
catastro¬
promptly.
The
problem
belongs to all of
am
ture.
the facts.
We
;; /:•
the
on
f■
Katy, despite these
problems, and many others have
greatest confidence in the fu¬
ture of the Southwest, of Texas,
of Wichita Falls and other cities,
and of cur railroad. We believe
the
energies and thoughts of
citizens of our great nation
that the
the
will
eventually solve the problems
are at present threatening
which
Surely a
country that has become as great
our
as
democracy.
very
are
we
in less
can
cope
which
are
arising
It
will
take
all of us,
the
than two cen¬
with the dangers
turies
on every
hand.
united efforts of
repeat that the Katy be¬
Let me
lieves
in the future of the nation
and of the territory we serve,
we
and
believe that democracy in
do
will prevail. As evi¬
in the fu¬
this country
dence of our confidence
ture, I would like to remind you
that the Katy is constantly mak¬
ing plans for new equipment, im¬
proved facilities, better roadbeds,
more rolling stock, signal and ra¬
dio control.
We have spent and
are
millions of dollars
improvements, all of
spending
these
on
which
safe
adds
to
efficient
the
and
operation of the railroad. We
hope to continue these programs,
and
continue
to
serve
Wichita
Southwest
stable and free enterprise. '
Falls
and
the
as
a
individually and collec¬
tively, but we can do it.
connection. I wish to
individual with tancy can be overcome.
read
to you an
editorial taken
I know that few nations delib¬
desires, will not
from "Harper's Weekly": "It is a
particularly 'noteworthy that a willingly forego the present en¬ erately create conditions which
gloomy moment in history.
Not
provision was written into this joyment of the fruits of his labors make it impossible for foreign
for many years have there been
section for prompt, adequate and unless he is assured that they will enterprises to operate profitably
The few that do, inevitably suffer such
effective compensation in cases of be returned to him with profit.
grave problems—In France
the economic penalties of their
expropriation.
It is also encour¬
the
political
cauldron
bubbles
No Substitute for Profit Motive
misguided nationalism.
Usually,
aging to note that bilateral nego¬
with
uncertainty;
Russia hangs
It
is
one
of
the
tiations have recently been ini¬
peculiar the difficulty lies in fundamental
tiated
between
several
of
the anomalies of our time that those balance of payments problems, or as usual, like a cloud, dark and
American reoublics for the pur- who are least in sympathy with in persistent errors in financial silent, upon the horizon of Eu¬
pose of writing reciprocal agree- the need for encouraging private and economic policy. Reduced to its
rope; while all the energies, re¬
ments on commercial and finan-; foreign investments are most vig- simplest terms, it comes to this: na¬
sources
and
influences
of the
cial policy^ including the treats orous in their sponsorship of gov- tions, like individuals and corpora¬
British Empire are sorely tried. It
ment
of foreign
investments, eminent developmental programs tions) need to have a definite knowl¬
of
horizon
no
—
na¬
national investment funds is gov¬
the
we
must
expenditure of human energy
that
sell,
private capital unless, by produc¬
the
of
must buy; if we
wish to prosper, we must be con¬
cerned about the prosperity of our
wish to
neighbors; if we want our neigh¬
bors to
cooperate with us, we
be
capital
government
can
The direction of the flow of inter¬
hope
expanding with borrowed money.
Finally, and this is fundamental:
neither nations nor men can live
unto
themselves
alone.
If we
easier to repay or to service than
how
export on terms set by the recip¬
a
on
specific
articles of the investment section
be, then, that this pref¬
for
economic
of
But capital, as we know,
made
innervations
produc¬
enterprise.
or
private
can
is not money; it is machines and
tools and equipment, representing
belief.
at and, too often, with the savings of
code millions yet unborn. It should be
and I regret 'that some nations, obvious,
therefore, that the in¬
because of constitutional or other vestor who, in the final analysis
:s
not
a
heartless
or soulless cor¬
reasons, have felt it necessary to
that
writing
progress
Bogota
must
erence
from
or
levying
means
MI believe that the American
It
sources
them later, in
why it is so important to perse¬ greater measure.
I use the ex¬
vere
in our efforts to obtain as pression "out of choice or neces¬
wide an acceptance as possible of sity"-: advisedly,
to
distinguish
an
International
Code
of
Fair between private investments and
Practice relating to these foreign government
loans.
When new
investments. ' i-**V:i;>:;.*• capital is represented by govern¬
ment loans or investments, it only
ments
tnan
ing
from the accumulated fortunes oi
example, if both are Latir
American
New cap¬
nations, expropriation save and invest more.
of
foreign-owned
property
in ital comes only from the saving?
country A raises questions not of the people who, out of choice
only as to the safety of all foreign or necessity, forego for a time the
property in country A, but as to
the safety of all foreign invest¬
financing, building
tivity, they, like individuals, need
to budget their income and ex¬
presently available to the various
international lending institutions, commodities
wide
which, after all, were set up as country.
public unrest, for which it is not
responsible. ; It is always easy for
agitators
efficient job
the
ital, is made the scapegoat for the
incidence of high living costs and
unscrupulous
more
.
investment
frequently resulting in
against foreign - owned enter¬
prises.
Out of innumerable dis¬
feelingly
nominal return
and
render to
zens, can
I. speak
may
essen¬
general
service
men
business
a
if the
greatest
vestment
which
is
importing, country is not
convinced of the desirability ol
receiving
and
safeguarding
it
to
even
It
the
industry
this point, v
that the foreign-owned industry,
of
or
be
should
aspirations
.
subject
on
important, however,
better
a
carefully so that excessive
.There jusLlsmo substitute for the capital expenditures and inability
tial
tnat tne
proper
"ambiente"
to meet current bills will not en¬
be
created
for
foreign invest¬ profit motive in making men pro¬
ments.
It
It is useless to legislate ductive and efficient and there is danger their credit standing.
no
substitute for the experience is better to take the time required
and pass resolutions if prospective
and
know-how
which
to
build
soundly and surely than
private
investors are not convinced of the
to
risk
bankruptcy
by
overadvantages
of
exporting
their enterprisers bring to their tasks.
is
service
whose rates are
political control, and
good.
While constantly
resources.
35
■
In
this
With Herrick, Waddell Co.
(Special
to
The
BEVERLY
M.
Arthur
added
to
Waddell
shire
tye
&
Financial
Chronicle)
HILLS, CALIF. —
Baumgart has been
staff
of
Herrick,
Reed, Inc., 8943
Wil-
Boulevard.
Joins C. E.
(Special
to
The
Abbett Staff
Financial
Chronicle)
CALIF. — Ed¬
ward A Fitzgerald has joined the
staff of C. E. Abbett & Company,
3277 Wilshire Boulevard.
LOS ANGELES,
38
THE
<1344)
COMMERCIAL
FINANCIAL
&
CHRONICLE
law
new
The Theory of Relativity
In Selecting Railroad Bonds
(Continued
would
from page 8)
have
nut
qualified
under
the standards set up by statute.
New
their
this
amended
governing
savings
laws
year,
investments
bank
railroad
in
Unlike Pennsylvania, Ver¬
Connecticut
the new
bonds.
and
mont
long
a
laws continued to specify definite
yardsticks but yardsticks which
automatically changed with the
changing conditions. When I war
asked to work on changes in the
New Jersey law it soon became
apparent to me that providing for
a
coverage of
fixed charges of
ipii^The
Mortgage Position
Some of you
may wonder why
nothing about mort¬
gage position.
Tne experience of
investors in the depression of the
I
have said
nineties, when there were
siderable
of.
number
con¬
a
railroad
bankruptcies, had been that even
case of bankruptcy sound un¬
derlying bonds proved very satislactory. Not only were these bonds
undisturbed in the reorganization
in
plans adopted but during the pe¬
of bankruptcy there was in
cases no interruption of in¬
riod
say. two times,
most
sion and
terest payments. This same ex¬
perience was repeated in some of
the railroad receiverships of later
would keep out too
many roads in a period of depres¬
let in too many roads in
period
a
of
prosperity,
and
the
modify them slightly without
changing the fundamental con¬
,
cept, namely the variable yard¬
Their bonds, therefore, sticks. However, until events have
qualify for savings bank proven that my hopes are well
investment.
So one of the trou¬ iounded I would prefer, in the
that
ments, to err a little on the con¬
servative
'\rr
in
hand,
periods of depression,
when the old rigid standards disr
qualify all but a few roads the
elastic
standard
allows
savings
is
average
I
yardavailable—the
a
readily
for all Class I railroads.
periods of prosperity the Class
will
average
be
up
in
and
pe¬
riods of depression it will be down.
I
suggested,
therefore,
law provide that
do
must
better
that the
qualify
road to
the
Class
I
As specific yardsticks I
average.
chose
a
than
the
coverage
for
bank investment officers to choose
from
a
reasonable
number
of
In
roads.
fact, the number of
roads shows suprisingly
eligible
litUe
change
period of de¬
pression as compared with a pe¬
riod of prosperity.
\ A
;
in
a
To make both these points
let
us
see
clear,
fixed
issue
General
Mortgage
underlying
the System, were undis¬
the
of
principal
what would have hap¬
18
roads
qualifying in 1930 none
others
which
in
1930
were
con¬
This record shows that the pro¬
visions of your new law would
the payment of fixed
charges.
The coverage for fixed
charges is
er
important yardstick but it
docs
not tell the whole story.
If
fixed charges are
yery low in re¬
lation to gross revenues a road
may
even
show
of
a
large
coverage in pe¬
prosperity and then tail
to
earn operating exoenses
falling off in traffic. For
instance, it the fixed charges of
a road amount to
only 1% of gross
revenues, it could show a fixed
with
a
charge coverage of one and onehalf times, the ratio
formerly used
in your1 law, and still
have only
one-half
of
one
percent
of
gross
remaining after the payment of
fixed charges.
Such a road ob¬
viously would be extremely vul¬
nerable
or
of
to
any
decline
in
traffic
increase in costs. The inclusion
the
second
yardstick
been advisable even
would
periods.
The
these
strong
fault
for
that net
reason
issues
why
were
some
in
of
de¬
in
the fact
earnings of fome of the
years
lay
bankrupt systems declined to such
a point that the bankruptcy trus¬
makes the weak
roads protect the
so
limited that
explanation
ing
the stronger roads.
Although
railroad system is made up of
number of independently owned
cur
and
operated railroads (there
130
some
I
Class
roads
are
the
at
present time), each of these roads
is m a sense dependent on all the
and.
the
on
close
other
hand,
relationship
between
xhe
which
various
rail¬
roads is not found in other indus¬
tries.
The situation in the utility
for
industry,
different.
example,
is
quite
Electric light and power
companies do not
pete
with
cept
for
as
a
rule
com¬
one another and
ex¬
interconnections which
permit exchange of
under
power
certain
conditions,
the
various
systems are virtually independent.
The fact that utility company B
is not earning its operating ex¬
penses
is no protection to the
stronger utility company A.
B's
position can be strengthened with¬
effect
on
another company
even
I must make
brief
as
and
lem
share of complications.
other
are
bonds
ships.
One
differentiating
good
-
leased
For
recent receiver¬
difficulty of
in a law > between
the
underlying,-' divisional,
line
bonds and
or
poor ones.
instance, in 1930 Old Colony
were legal in Massachusetts
bonds
?nd Harlem River & Port Chester
4s
were
will
not.
fare
has
at
least
its full
How divisional liens
in
roads.
reorganization de¬
considerable extent on
That
industry is
well recognized.
railroad
the
cycl ic^l
now
is
Gross
revenues
years
past. have
tori a
Freight rates cannot be
duced
considerations ; * Railroad Industry Is Cyclical
in
is
which
is
besides the poor record of under¬
lying
sur¬
vive and the government' has ■ to
the
over
railroads, certainly
roads, outstanding at a very mod¬
erate amount in relation to the
which
on
should
be
they
fully
se¬
are
protected.
In conclusion, I.want to say
all
laws
sarily
this
of
type
restrictive.
are
An
that
neces¬
institution
free to invest without restrictions
make
may
better
a
record
than
which is compelled to stay
within the provisions of a statute;.
one
It may make a worse record.
The
results will depend upon the judg-'
ment of its responsible officers.
Yardsticks
standards
or
type must be based
formance, not
on
of
any
past per¬
estimates for the
of
statutory
standards in the railroad field has
future.
on
The
use
the disadvantage of preventing the
of the bonds of a road
onrcbase
which has done poorly in the' past
which may do well in the
but
future.
However, it also has the
advantage
of
preventing; the
purchase of the obligations of a
road which has done poorly in
past
but
which
the
investor
some
thinks will do better in the future
but
which,
as
a>
matter
of
fact**
does do any better. But if
are to have restrictions on the
never
ws
investments
of
savings banks I
provisions em¬
bodied in your revised law are a
great
improvement over ' those
formerly employed; and I nope
believe
and
that
believe
the
they
will
work
out
though it may be located in ad¬ satisfactorily.
shall have to say something about jacent territory,. \
the railroad industry. My time is
dNot so the railroads. Compara 4
to make up
There
gov-*
In explanation of this, I
stiong.
segments covered by these bonds
on
;'V
private ownership under
regulation does not
cured,
a
are
invest¬
ernment
sults in the weaker roads protect¬
the tively little
freight traffic moves
simple over only one railroad, Most of
tees were compelled to use the as
possible, even though I run the it moves over more than one,
surplus earnings of the profitable risk of over-simplifying a prob¬ much of it
over several different
operating deficits
other parts of the System.
If
bank
;v;
property
and the
percentage of sidered well secured underlying
remaining after the payment bonds and carried Moody's highest have worked well in the past. It
of fixed charges, both
figured be¬ ratings all went into default, and should work equally well in the
fore Federal income taxes.
in reorganization received stock future. Its provisions are fitted to
or contingent interest bonds for a
the peculiar characteristics of the out any effect on company A.
The "Fixed Charges" Coverage
substantial portion of their claim. railroad industry. Two of the out¬ However, if railroad B in a sim¬
The coverage for fixed charges In a number of cases even small
standing characteristics of the in¬ ilar predicament is to be strength¬
is a yardstick with which you are underlying issues which had been
dustry are first, the cyclical char¬ ened, the stronger railroad A is
all familiar.
The other yardstick considered proof against any pos¬ acter of railroad
earnings and sec¬ necessarily helped at the same
is the "margin of safety" or the sible vicissitude went into default
ond, the interdependence of the time. A rate change by one utility
percentage of gross remaining aft¬ and remained in default for long railroads
which,
paradoxically, company is not likely to have any
riods
savings
ments.
the holders of bonds of the strong >
others
and
charges
very
excellent
take
competes with all the others,
paid interest regu¬ got into trouble and of the 16
larly
during
the
receivership. qualifying three years later the
However, the experience of in¬ only casualty was the New Haven.
vestors with underlying bonds of In other words, in 1930 you would
bankrupt railroads during the-de¬ have been immune to trouble and
pression of ; the 1930's was very in 1933 you would have had plenty
disappointing. Rock Island Gen¬ of opportunity to buy sound bonds
erals, North Weit Generals and at bargain prices.
turbed
essential to
I believe
the country,
of
industry, as 1
have
said, is that the interde¬
pendence of all the railroads re¬
pened if the provision now in the
law had been in force in Massa¬
gro-s
a
obviously
are
The other peculiar characteris¬
tics of the railroad
bonds,
In
roads
Interdependence of Railroads
the railroad
the
of
invest¬
type of savings bank law brought
On the other
about is eliminated.
The
when
case
savings-bank
matter
exists
notably in the
date,
of
bles which the old rigid standard
1930, the bonds of 18 roads would
industry such
roads
fair degree of prosperity. For
this reason, and because the rail¬
very
the life
have qualified and in 1933 16 roads
would have met the test.
Of the
a
earn oper-.
there are many
which will enjoy a
expenses
the bonds of the better roads
to
1925
slick
ating
strong
fail
chusetts in 1930 and thereafter. In
was
only the weak roads to
average.
the
Chicago, Milwaukee & St. Paul in
needed
was
it would be very simple
case
to
yardstick
which would automatically
adjust
itself to changing conditions.
In
what
to be some¬
If this should be
prove
may
what too strict.
.
Jersey, in 1946, and Mas¬
sachusetts '
given year although it has
previous good record.
Thursday, September 30, 1948
number of
fluctuated
with
on
showing
very
the
heavy industries. I think it is safe
this
will
be
the
no
matter how much
increased
in the future and that there which have
will
be
cycles
as
in production and
have been in
there
revenue,
raising the rates
case
business
earnings
enue.
no
One
examples
page
13)-
living
throughout
standards
the
reducing World."
earnings showing may be
Neither can
rate3 of. the weak roads be
need
that
time
unsatisfactory.
raised,
assume
same
(Continued from
ing to raise production levels and
number of weak roads
a
whose
fluctuations in the volume of the
to
substantial
without at the
rates on
re¬
strong railroad which
a
McGloy Reports on
World Bank Progress
is
of
they
without
strong roads
need of higher rev¬
on
the
the
most
position
striking
of
the
The
Loans
Situation in Europe
which the Bank has al¬
ready | made to Europe* by per¬
mitting the borrowing countries
to sustain for
volume
of
a
time the necessary
essential
imports, ac-v
cording to the report have helped
prevent a disastrous drop in pro¬
duction and possible economic col¬
period of prosperity so-called Pocahcntas roads—the lapse,
The Bank has- been fully
railroad wages are increased and Norfolk & Western, Chesapeake & aware, however, that these loans,
pre-depression days. It has now
segregation and severance studies costs
generally tend to rise.
The Ohio and Virginian. A large part vital as they were, provided only
become vitally important by rea¬
which are not made until the road
ensuing depression brings a falling of the traffic of these roads is a partial solution to Europe's prob¬
son
of the drastic
scaling in the is in trouble. Although there are
coal and
off in traffic, the extent of the bituminous
they have lems. It has been clear: for some
fixed
charges
of
many
roads exceptions, my general
feeling is decline
/ depending upon the; se¬ been for many years extremely time that United States financial
through reorganization. Many of that "if a road
cannot meet the
verity of the depression. Because prosperous. Even during the worst assistance to Europe, in the form
the reorganized roads have
.fixed requirements of the law savings
the margin of profit of the rail¬ years of the 1930's they not only of the European Recovery Pro¬
charges amounting to only 1% to banks
are just as well off avoid¬
roads Is relatively narrow and be¬ earned their fixed charges by a gram. would greatly exceed for
2% of gross revenues.
ing all of its mortgage bonds and cause a substantial
proportion of wide margin but were able to the time being any amounts which
There arc many tests that
might if it can meet the requirements expenses is more or less constant pay substantial dividends on their the Bank
might lend.
have been used but the provisions then it is up to the individual inand varies little if at all with traf¬ common shares.
Obviously none
ERP funds are being used pri-;
of a statute of this kind must be situation to determine whether it
fic, railroad net earnings during a of these three roads is in need of
marily to furnish urgently-needed
kept
relatively
simple
and
it wants the added protection of an
depression tend to decline con¬ increased revenue in the form of food, fuel and raw materials. The
seemed impractical to
J:
use
more
underlying mortgage. In any event siderably faster on a
higher freight rates.. Neverthe¬
percentave
report points out, however,'that
than two yardsticks. I think the the
question of underlying bonds basis than gross. If the decline in less, in each of the several freight
the fundamental need of Europe
two chosen are the most
important today is far less important than gross is not too severe the roads rate increases which the Interstate
is for a far-reaching reorganiza¬
ones.
i
it formerly was as most of the
may be able to absorb it without Commerce C o m m i s s i o n • h a s tion of its
economy.
It will -not
I do not wish to
imply that the recently reorganized roads have any upward adjustment of rates granted it has been compelled to
suffice, the report says, to restore
relatively
simple ■< requirements only, one fixed interest mortgage. or downward adjustment in unit order
rate
increases
for ; these
European production and trade as
which are
all that can
be
set
It is evident that your law re¬ costs. If the decline is severe re¬ roads in order not to give the
they existed before the war. The
forth in a statute are
entirely suf¬ stricts purchase tot the bonds of lief in some form become neces¬ producers of Pocahontas coal an
magnitude of Europe's problems
ficient to
comprise a workable railroads which have done better sary. But there is an unavoidable advantage over coal producers on
makes thinking in prewar ternis
standard under anv conditions. On
coal
than the average of the railroad time lag between the falling off in other
carrying . railroads unrealistic.
New and bold con¬
the contrary I think there should
industry. For this reason even in earnings and the relief, whatever which needed the higher rates.
cepts 'are required if Europe's
be a provision such as
you have
times of prosperity when prac¬ form the latter may take.
It is
If the country is to continue to fundamental weaknesses are
to be
in Section 15c of the
Massachu¬
tically all the railroads are mak¬ during this period that conserva¬ have a railroad system under pri¬ corrected and
new
sources 1 of
setts law giving the
banking au¬ ing money it still excludes the tive institutions like savings banks vate
ownership, and I think the strength provided. The volume of
thorities power to waive the
are
pro¬ bonds of the weaker systems. Un¬
glad to be invested in the last few years have conclusively
production must be greatly - in¬
visions of the law at
their dis¬ der a rigid standard of
bonds of the stronger lines.
coverage
proven that an efficient railroad
creased,- the costs of production
cretion. I think that this
provision, for fixed charges these-- weaker
While I expect business
gen¬ system is absolutely necessary in substantially reduced,
and there;
however, should be sparingly used
systems might qualify in a time erally, and railroad traffic and either peace or war, and tnat pri¬ must be a reorientation of Eu-<
and I am cure that it will be. For
of
great
prosperity/ Under the earnings to fluctuate much as they vate operation during World War rope's trade channels to conform*,
example. I think it should be used flexible
standard, although they have in the past I have some hopes II was more efficient than govern¬ to the fundamental changes which1
to qualify
the bond? of a road may have
covered
their
fixed that the down swings will bring ment operation during World War have taken
place in world condi¬
which,; through
some
extraor¬
; charges two or three, or even four fewer railroad bankruptcies than I. the weak roads must be per¬
tions. The basic objective of ERPr
dinary event, such as losses sus¬ times
over, the strong roads are they have hitherto.
If my hopes mitted to charge (rates which will
tained by reason of a flood or
doing so much better- that the jare well founded it is possible that at least permit them to operate. the report says, is to enable EuJ^fgjeane* TaRsto qualify4 ~.ina weaker- roads are still. brelow the the standards embodied) in*Even if the' rate structure permits ropcv by its own jpfioxts*-to
have
in
the
pends to
a
the past.
In
a
„
-
your
achieve
Volume
a
THE
Number 4738
168
fundamental readjustment in the
structure
The
its economy.
of
fect of ERP
cannot, therefore, be
discussions
points
The first is the
necessity that the ERP countries
to
jmport,
ment
to
which
put.
are
fundamental
meet
It is whether the
one.
available to
are
consumption
standards, will be able to use the
opportunity thus afforded to ex¬
pand. modernize; and reorganize
their productive mechanisms and
to effect the necessary changes in
the pattern of their trade."
their
support
the
of the ERP
end
countries
dent of
the
accomplished
faced
period these
than
The measure
to.
up
complishment
than
ment
stantial
tion
and equipment.
This cannot be accomplished, the
report says, without the continued
diversion of a considerable part
of
producers' goods; and while such
a policy is severe, ERP countries
become self-supporting by
cannot
The
'
'
*•
■
.
'
-
'
tance
trade.
Trade barriers in whatever
form, it says, tend to breed pro¬
ductive inefficiency,; and I unless
for
markets
the
ucts
European
prod¬
be broadened and greater
can
of
freedom
atttained,
intra-European
hope
the
trade
ultimate
for
European recovery will be dimmed
the
and
opportunity afforded by
be lost.
f
" •
will
ERP
otherwise,
or
to unlock the
find the key
gates which now ob¬
struct the free flow of goods, man¬
and
power
capital
there is grave doubt
among
them,
tain
peoples at a standard
approaching prewar lev¬
their
of living
els."/
Germany, the report says that the
low level of production in Bizonia
stimulate trade.;
estimate
possible
Bank
all
monetary
conditions, the
disruption; of
and the over¬
It says
political uncertainty.
that the condition of Germany
direct
and
immediate
has
in
on
the
the rest of Europe.
vThe
terns
shift
is
in
world
pat¬
af¬
another factor which
Europe.
war
de¬
pended on its trade with the Far
East, particularly Southeast Asia,
to provide it with dollars to fi¬
nance its import surplus from the
Western Hemisphere. The report
points out that this situation no
longer obtains, and says that the
long-run need is clearly for Eu¬
rope both to increase its exports
to the dollar area and to decrease
its
imports from that area.
As to
all
which
terms
on
.
/
„
;,
-substantial
are
op¬
portunities for the development of
productive resources of its
member c bun t r 1 es in Europe
the
which
not
are
ERP.
participants
It is unfortunate but
in
none¬
theless true, it continues, that
ex¬
isting/political
difficulties
and
uncertainties -which may have a
direct effect, on the economic and
financial conditions in those coun¬
present Y special -> problems
tries
which have thus far prevented the
Bank from
making loans in those
countries. The Bank hopes, there¬
fore, that the existing uncertain¬
ties can.be
clarified to
extent
an
which will enable it to render fi-.
nancial assistance in the develop¬
ment of such countries, which will
be of benefit not only to them but
to
Europe generally.
There
is
.
,
,
clear
interdepen¬
dence, the report says, between
European, recovery
and
eco¬
nomic
progress
in the rest of
the
a
The
world.
rehabilitation
<
providing
both
an increased source of supply for
the goods needed for development
of
v
Europe,
such other
and Asia,
ket
:
for
industrialization
and
an
of
Latin America
areas as
increased
mar¬
their
products, will
substantially to their
con¬
pros¬
Equally, the further de-
perity.
world,
of
other
of
areas
the
both a market and
supply, is essential to
the long-run economic well-being
as
of
source
of Europe.
>
broad
there
-
general
are
principles
which must guide its action. First,
because the Bank's resources are
,
well
as
as
tal
'
/
.
•
America,
Middle
and
Asia,
Far
recovery has
definite increase
European
in
foreign capital
development pur¬
the
production
member
bottlenecks
or
increased output of re¬
goods or in related areas.
contribute to
world
trade.
Third,
of
most
Defining the Bank's role in -the
development
field,
the
report
projects,
'-/■'■ YyY V:>.;
-y."
"The Bank is convinced that its
cannot
resources
tively
to
be
expand
raise
living
used
effec¬
production
standards
and
unless
■
'the
better
a
that
^"/^Y
balance
projects which
tion
private
be
may
useful
large
and
is
also
convinced
,
projects.
that sound
development is best promoted, not
by. sporadic injections of large
amounts of capital, but rather
by
a steady flow of
capital in moder¬
ate amounts. The Bank's,approach
to
its
underdeveloped T member
countries
has
been
framed
ac¬
suggest
capital,
Bank
possible
bring the
projects to the attention of invest¬
ing groups, or otherwise assist in
arranging the necessary financing.
or
The Bank may sometimes also be
able to facilitate the
raising
private
capital
for
of
meritorious
In
the
risk
private
lish
a
the
private
direct
which
lead
through
the
and
to
borrower
other
credit
guarantee
a
nancing without eliminating the
private
nancing from other
ment,' /, Y ,Y; ;
Iii general,
sources.
And
or
on
other
rea¬
of transfer of
to reduce the special
risks involved in international fi¬
conditions necessary for their fi¬
available
can
made
relationship between
lender
may
interest
not
loans
of its guarantee
powers/ Such
ample
first; the Bank
satisfy
this
requirement
by financing such projects
or
by helping to promote
channels is
of
funds
loans, the report points out, estab¬
must
itself
part of the capi¬
addition, the Bank itself
assume
must be dealt with
either
cover
tal cost.
amining the possibilities of grant¬
ing limited guarantees — for ex¬
small
nancing through private
well-pre¬
suitable
the
urgent
alike'
and
It
in
to
provide
Bank's
pared and well-planned
invested
are
of
sources
to the atten¬
appear
financing,
able
period
a
falling prices;
development
come
the Bank
of
for
or
operations without the Bank's in¬
tervention.
The Bank also is ex¬
the
Agreement
in
finally, the Bank's loans must be
confined to projects for which fi¬
they,
during
where
projects, the report says, by mak¬
its
of
strategic projects which will elim¬
capi¬
problems
cases
ing loans to
needs
Articles
character
able to
.
of
the
invest¬
;■
V
the
Bank
contribute to
.
be
may
the
flow
of
private capital by encouraging the
development
of
principles and
practices fair to capital-exporting
;V: ^ '
Y
and
capital-importing countries
ig to play its role of
alike.
Many of the Bank's pol¬
encouraging and supplementing
icies afe designed to
help over¬
private international investment
sonable terms."
If the Bank
the report says, it must emphasize
those basic undertakings which on
come
of the existing ob¬
private international in¬
some
stacles to
cordingly,^ That approach is one the one hand are relatively less
help its members attractive to private capital, and
vestment.
to
effectiveness, according to the
re¬
port,
the
of willingness to
analyze
their
development
problems, to work with them in
mapping out the broad lines along
the other, will help to promote
the flow of such capital into other
on
sectors of the economy.
which their development
may be
Since successful development in
advanced most soundly and
rap¬ most cases depends just as much
idly,
and
select
whenever
for
possible
to
the
upon
provision
of
technical
initial
financing those assistance from abroad as upon
most likely the
availability of; foreign capital,
contribute
to;'such advance: the report; terms it an important
Where economic or financial! cdn-? concern of the Bank not
only to
ditions in the borrowing
country provide financial help, but also to
projects
which
such
are
that
seem
they endanger the
productive purposes and the re¬
payment prospects of a Bank loan,
such a loan will normally be con¬
ditioned
upon
measures
designed
to
bring about financial and
tary stability and,"where
mone¬
neces¬
sary, reestablishment of the
coun¬
try's credit.
This approach by the
necessarily ; varies
from
Bank
country to country."
It is important for
Y
i ' ; Y'
an
underde¬
ensure
shape of
sound
a
over-all devel¬
opment program. The Bank avoids
any gratuitous interference in the
internal affairs
of any country,
but is
prepared to undertake, upon
request, a broad investigation of
conditions in any underdeveloped
member,
The Bank is also ready
to recommend, upon request, qual¬
ified
independent experts
vise
member
to
develop¬
fields
to
finance and
work
out
an
program
over-all
in
order
mini¬
mize spotty and wasteful invest¬
ment.
Such a program should be
based
on
the existing natural
re¬
the
country's
location,
climate and type of population,
and the financial and administra¬
sources,
tive
resources
available.
It should
attempt to balance the increase of
production
mestic
to
needs
meet
essential
with
the
do¬
develop¬
mar¬
The, program should favor
application of the limited sup¬
j
plies of capital to projects which
will result in the greatest increase
will
number
not
be
amounts
or
much
so
and
its
of
guarantees, significant
loans
be, but rather its
may
as
they
success
in
influencing attitudes—in promot¬
ing a ^realistic, constructive ap¬
proach to development problems
on
the part of its
memb^fs, and
in fostering a greater
degree
confidence among investors.;
<?f
that adequate technical as¬
sistance is available to define the
veloped country, the report states,
ment
The real measure of the Bank "in¬
_
to
the
The Bank's continued interest in
assisting
the
velopment
Bank's Role in Development Field
Africa, ;/ kets,
East
1
consider¬
a
limited in relation to the total de¬
countries, it must emphasize those
,>
ment of exports to accessible
Latin
;
par¬
of
Nonetheless,
certain
underdeveloped
managerial skills,
by
further
and
any
by foreign business Second, as an international agency,
enterprises has the special advan¬ the Bank is particularly interested
tage of supplying technical and in projects which are likely to
;
Before the
Western ,-Europe -normally
fects
made
believes there
situation,
trade
almost
promoting
investment
to
rather- than
grants
The report states that the Bank
:
-
made available in
in ERP countries.
repercus¬
economic
For
techniques.
pattern
nance.
countries,
the
at
ing, ERP aid will facilitate rather
.
sions
assistance
are
are
chaotic
complete
connections,
of
able large sums of money.
of
extent
of
declining trade
In
development
nor has it formulated
any detailed
policies regarding the types of
projects which it is willing to fi¬
than
more
It is not pos-'i states:
the
To the extent that
of
form
velooment
trade
formulated by the
for European Eco¬
sible/to
—still
almost
will also
It
program
tribute
only about 50% of prewar
levels—has been due primarily to
Europe's
and which
than impede the Bank's operations
Y?Y/ Y.v;//regard to the problem of
With
capacity,
to
do not interfere with Bank financ¬
whether they
in the foreseeable future sus¬
can
standing of ERP
permit,
primarily
by,
productive
funds
% It continues: "Unless the West¬
ern- European countries
can, by
union
ticular
in
ments
of
use
resources
loans, and that loans out of ERP
;■-
report stresses the impor¬
of freeing intra-European
terested
It shows clearly that
development requires much
simply making avail¬
sound
tradi¬
upon
introduction
the
lated
Bank's
credit
ERP funds
maintain the
necessary to carry it
discipline
out.
lack-
in
from
present time.
unless: they
1.952
personnel;
build
can
skills
inate
to
'
for
be
capital
private
desirable that
part
poses
of
sound
The report continues:
;
"The Bank 4s not, of course,' in¬
,
production from consumers' to
able
flow
employed
generate
the
nomic Cooperation.
j
is
ing to build up an adequate local
supply of skilled personnel. Direct
that
Organization
plant
Europe's
It
the report
stitute programs of technical train¬
ment
expansion;; of
provide. "
ERP, the report says, to the
intends
additions
the
free
can
supple¬
Bank
that such projects are con¬
sistent with any over-all invest¬
moderniza¬
Western
for
program
and
of mechanized
ensure
sub¬
a
most appropriate
one
permanent
will
standardization, concentration
and specialization of production,
removal of unnecessarily restric¬
tive trade union practices, and in
some cases longer hours of work.
for
for
planning.
funds will be
financing projects which involve
the
need
ERP
the
the. report says, it is
necessary to secure help from for¬
eign technicians and also to In¬
the
and
productive,, and lack of
firm financial policies.
It says
substantial opportunities exist to
increase industrial output through
better /management/techniques,
also
made available by
Cooperation Admin¬
on
countries
rectly
is
ready
stability; lack of local capital; lack
Furthermore, since the
claim
extent
in the past.
;. V 1
difficulties
facing
Europe
the
report
lists
the
"plague" of world-wide inflation,
shortages of goods, governmental
expenditures for purposes not di¬
are
of technical skills and and trained
The
Among
% There
fi¬
.
been possible
tional
managerial
viously the
ac¬
the
ficulties: the lack of economic, fi¬
nancial and in some case political
that
for Bank assistance."
what is
what has
be
must
rather
necessary,
of
they
worker and
to
In large measure, how¬
it reflects other specific dif¬
ever,
Bank
for
where
of
aspect
neces¬
up
cial assistance
must
more
need
bring projects
sential
financing.
necessarily for those imports most
immediately essential, the longrange investment field seems ob¬
be
has yet been
states,
real
a
istration.
extraordinary outside aid,
report
is
point
....'
therefore,
clear,
to
the Economic
first
to become indepen¬
are
seems
re¬
In almost every case,
substantially
originally ex¬
sary
nancing in addition to the finan¬
the report says, but
requirement. If by
is
was
and other technical studies
there
by
60% to 75% by 1952—which is the
stated goal of ERP—may well ap¬
Bank
than
aid, that the Bank would advance
"It
Reduction of the balance of pay¬
the
smaller
requirements.
It
was
expressly assumed, in determin¬
ing the amount of United States
The
port points out development proj¬
ects may take.
37
form of equity
develop¬ investments. The report points out
ment. -It will normally be ad¬ that sucn
investments would-tend
pected.
visable to lay initial stress on light to avoid an undue burden of
fixed
The report attributes this fact consumer
goods and processing charges which might impaif the
in part to the lehgth of time re¬
industries
which
employ
small credit of the borrowing country
quired to complete engineering amounts of capital
equipment per or intensify its 1 balance of pay¬
to
of Western Europe's in¬
rope during this period.
port continues:
with
progress
says, the establishment or expan¬
sound,, productive investment sion of appropriate manufacturing
opportunities thus far presented and processing industries is an es¬
substantial credits to Western Eu¬
ments deficits of ERP countries
pear difficult,
is a minimum
all
in
are
(1345)
of
rate of invest¬
a
vestment
countries
in the program,
while ERP funds
high
as
as
is
compatible
with
monetary stability. The second is
the insufficiency of ERP funds to
participating
during the period
European
help
maintain
the specific uses
particular goods
The test is a much more
CHRONICLE
regard to ether projects.in many
different countries.
Nevertheless
it remains true that the number
during the
the report states that
furnish a significant
by the particular
types of goods it enables Europe
or by
those
FINANCIAL
ERP period,
indication of this.
measured either
&
the Bank's proper role
two
report continues: "The ef¬
COMMERCIAL
as
countries
to ad¬
such
in
agriculture, engineering,
taxation.
Halsey, Stuart Group
Offers South. Ry. Eqps.
A
headed; bv
group
Stuart &
Co.
Inc.
won
Halsey,
the award
Wednesday of $8,700,000 Southern
Railway equipment trust, series
00,; 214% serial equipment trust
certificates, maturing $435,000
semi-annually from April 15,1949,
to Oct. 15,
certificates,
1958, inclusive.
The
issued under the
Philadelphia plan, were imme¬
loans by the diately re-offered by the group,
Bank, the report says. 'need'not subject
to Interstate Commerce
await formulation by the borrow¬ Commission authorization, at
The
granting
of
ing country of an over-all devel¬
opment program
of all necessary
cial and
To
adoption by it
economic, finan¬
or
administrative measures.
the contrary, it is hoped that
it will
prices
to
yield
1.50%
from
to
2.50%, according to maturity.
The
certificates
will
be
issued
to provide for not more than 75%
of the cost, estimated at $11,600,000,
frequently be possible for
of
the following new standardto
select
particular gauge
railroad
equipment:
11
meritorious projects for financing
1,000-hp. Diesel-electric switch¬
concurrently with * the initiation, ing
locomotives;
34
1,500-hp.
by the borrower of such measures. Diesel-electric road freight loco¬
The major effort in the devel¬ motive lead units; and 30 1,500-
the
Y Bank
.
opment of any country, the report
hp.
says. mu«t
locomotive booster units.
Primary
development
needs
may be for improvement in trans¬
be made by that coun¬
try itself.
Therefore, while for¬
eign assistance may be essential,
the labor and the greater part of
problems of the Bank's under¬
developed member countries will
portation
the
capital
must „be
supplied
locally.
Some part of the neces¬
undoubtedly constitute its primary
concern.,. ' " Y /■/
Y,' Y'/Y
- ].
water
tainable
R. W. Pressprirb &
Co.; Bear, Stearns & Co.; Equi¬
table Securities Corp.: Gregory &
Son, Inc.; Hornblower & Weeks;
Otis & Co.; L. F. Rothschild , &
Co.;
First
of
Michigan
Corp.;
through inter-governmental lend¬
Graham, Parsons
rot
in
prevented
a
its activities in
other
the world during the past
parts
of
year.
In
the long run the report states, the
.
.
Aoart
from
the
two
loans
to
Chile for hvdro-electric and agri¬
cultural
development,
other development loans
advanced
several
are in
an
stage of negotiation, and
in
production and trade in rela¬
tion to the size of the investment.
cilities;
and
for
communication
power
projects;
fa¬
for
systems and other public
utilities; for improved techniques
in the production and processing
of agricultural products; for in¬
dustries, irrigation projects or re¬
settlement
a
programs—to
list
few of the forms which the
sary
foreign capital may be ob¬
from
public
sources,
Diesel-electric
Other
group
members
ot'
road
freight
the offering
were
& Cod Wm. E.
but
loans. Pollock & Co. Inc.: R. L. Day &
In the long run, however, sound Co.; Freeman
& Co.: Hirsch &
development requires financial as¬ Co.; McMaster Hutchinson & Co.;
re¬
sistance
ing and International Bank
in
amounts
which
only
and Thomas & Co.
,
38
something better comes along, sold
column written in advance
a
Markets
Walter
other
until The
the
of
Wliyte
have
Says—
l=By WALTER WHYTE=~=i
which
market
stand up
has
to
some
a
if
if
•/• 7'5' ,';7'
if
I suggest holding
have but despite the
fact the stops aren't the best
in the world, I recommend
that the current break will be add
Monday selling due to week¬
war talk.
Basis for rally wiped
I also would
few oils if obtainable at
a
in a new rally. specific prices. These would
There's nothing more sicken¬ be as follows: Pure
now being formed.
Oil, 30-31,
ing than to be sold out just stop 28; Standard Oil of New
I became so involved last before a new
rally. I know. Jersey, 70-72, stop 68; Stand¬
week in trying to get into It's
happened to me.
ard Oil of Ohio, 25-26, stop 24,
if
if
if
somebody
else's
argument
and Richfield Oil, 30-31, stop
that I forgot my own busi¬
Of the list of stocks recom¬ 28.
ness. So, look what happened.
mended here, seven in all,
More next Thursday.
While I was looking the other
only three managed to stay
—Walter Whyte
way the market tripped over above their
stops. And they
something
and
went
ker¬ escaped breaking them by just
[The views expressed in this
plunk.
.'V:"' ..,':'-/'-:,' 'i' '•
fractions.
These are: Alle¬ article do not necessarily at any
out
end
,:V> *?
if
; if
,
'
ghany Ludlum, bought 29-30,
The
motivating reason, at
stop 27; American Airlines,
the one everybody
bought 7V2-8, stop 6, and
is the gathering war
it's
least
likes,
I've
clouds.
been
out/ on
limb lots of times in the
I'm
and
going
out
'■."•■■'•■*7 ;.7:;
v'; sjs
because
But
so,
I don't belittle the selling
that
A
don't think
I
comes
nervous
such fears.
from
public
make its
can
kick it down
and raise it up. It depends on
how it interprets the news or
how newspapers slant it for
market;
own
can
The weekend war talk
them.
undoubtedly responsible
sell¬
was
for much of the Monday
was more signif¬
icant occurred in a field that
What
ing.
required
more
headlines
to
than
interpret
scare
prop¬
erly.
:/'..-::7
7:
The worst
the past
the oils.
..7-:7/77
if
*
*
acting stocks for
few weeks have been
Future cuts in crude
generally ac¬
On this picture of
gloom one of the major oil
companies made a bid for
crude above the
prevailing
price and the oil stocks started
going up again. The rest of
prices
cepted.
Chronicle.
They
those of the
those
are
the
of
presented
were
(Continued 1
1
.
in
women
small
the
sons
engaged
tions
are
they
in
better
different
worse
or
voca¬
off than
in 1930 after allowances
were
help
main
JTjjj
7)
page
threshold
their
of
self-
and
/7:7;;;77
worker,
worker,
.
7;/7;!7;//
no
time in our history has
this, statement the propertied group in the United
purchaser of States, which, of course, consists
a
Savings Bond finds that $100 primarily of the middle class, re¬
realized today from a $75 bond
ceived less for the use of its prop¬
purchased in 1938 will buy less erty than in 1947 when about onethan $75 would have
bought in eighth
of our national income
that year!
went for interest, rents and corpo¬
I do not want to bore you with
rate profits.
Contrast this with
too many figures.
Personally, I 1929. when pwners of property re¬
■
How
At
ironical
must sound when the
detest statistics in
after-dinner
an
ceived
use
you
unavoidable.
seems
Perhaps
roughage to
disgestive apparatus.
been frozen at
mental
Possibly
first
insurance
after I
was
as
interesting
it
out
as
the
with
married almost
I did
as
help of
economist,
I worked
our
Mr.
com¬
Wilson.
Wright.
.
1910
in
when
I
have
close to prewar
or
bers of the middle class who
dependent
was
26
old. The premium was $55.62
upon
for their income
interest
are
rent
or
buy less and
can
less in terms of postwar prices.
The difficulty of raising equity
compels I corporations* to
to a larger pecentage of
their earnings to
provide addi¬
tional fixed and working capital
capital
hold
T took out this little policy for
$3,500
other
Rents
despite
the
inflationary
price rise. As a result those mem-
may
the
while
levels
find the life
20-payment
policy that I se¬
you
of
controlled
have
risen.
prices
as
of the national
Interest rates have been
rigidly
intellec¬
stimulate your
regard them
can
tual
about 25%
income.
address, but in this instance their
years
'20's. Tne Nazi Brown Shirts were
191; the
139; the railway
122; the railway execu¬
tive, 78; the congressman/ 74; the
average pensioner, 65; the bond¬
holder, 38; the small stockholder,
79,
,,7//.:•:/ •/•/:./•;/' 7./7:7/7; ,////
essential
of
self-supporting
reliant."'
pany
rom
the
at
also
at the top of the list,
was
textile
business and professional careers,
and many aging people will re¬
history
It Affects
with
but
educations
as
author only.]
Middle Classes
•
/
of boys and girls are
only assured of college
not
life
As
Inflation
one
:;y7-v:";:7'V.
if
if,
with
coincide
time
a
again. I don't think there'll
be a shooting war in the im¬
mediate future. :///
and
groups,
numbers
now
cured
past
on
"Men
7
their chil¬ for federal income taxes and ad¬
"'■■'7,,7 '77 ;7 ; if
if 7
' >;e■■;■// dren, have purchased the great justments in the net income for
majority
of
Savings
Bonds. changes in the cost of living. Tak¬
Now what to do, is the big .Through ownership and benefi¬ ing the 1930 living standard as
cial interest in these bonds, great
100, the coal miner's 1947 index
because I feel observing them.
this
say
homes," and then goes
to state:
on
income
you
7,v7\ 7
I
losses/,/■;/'/■ ;/7
at
American
were
full week, must
question.
kind of safety fac¬
what
for
tor.
\
stocks
tour
Thursday, September 30, 1948
CHRONICLE
always the best insurance Loew's, bought 16-17, stop 15.
not
in the stock market. But
Tomorrow's
FINANCIAL
&
COMMERCIAL
THE
(1346)
on
than
would
otherwise
be
neces¬
first three annual sary. Due to inflation and an un¬
principally
from
the payments were made in what 1 wise tax' system the sources; of
middle
class
which
had
been
the construction of public works
shall
call
MacVeagh
dollars— equity capital have largely dried
which
might
have been
post¬ pauperized by the printing press Franklin MacVeagh being then
mark. In Italy -the Black Shirts
In the year 1947 the total ' in¬
poned; and heavy outlays for mil¬
Secretary of the Treasury. The
itary purposes and foreign aid. had in large measure the same next payments were made in Mc- vestment in new common stocks
Steeply graduated income taxes origin. Thus far, communism has Adoo dollars.
The next one in in this country was only .4 of 1%
and
low
return on investments never developed in any country Glass dollars/ Mr. Carter Glass of the national income against :8
have
complicated
the
situation which was not first subjected having
been
Secretary
of
the of 1% in 1925 and -.9 of 1%: in.
either to inflation or to invasion
I have picked thgse years
still further for the middle class.
Treasury in 1919.
The next one 1926.
by the Red Army. The conclusion was in Houston dollars and the for comparative: purposes because
is obvious. The liquidation of the
v/. The Middle Class
final nine premium payments 1925 and 1926 were years / in
middle class by inflation is a
What is the middle class? As I
which the domestic economy was
were made in Mellon dollars. The
employ the term, it includes pro¬ major step on the road to dicta¬ total premium payments amounted in fairly stable balance.
I pur¬
fessional
people; farmers—espe¬ torship. j
to
$1,112.44.
The 166.36 Maqr posely have avoided 1929 because
cially those owning their own
.71 do not like to cast myself in Veagh dollars that I paid in are at the height of speculation dur¬
farms; businessmen who own ana the role of a Cassandra but I now worth 65.24 Snyder dollars; ing that year no less than 5.8%
operate their own businesses; ex¬ confess that the present situation the 333.72 McAdoo dollars are now of the national income went into
trades; strikes in key industries;
artificially supported farm prices;
a
year;
7 The
recruited
,
,
salaried
ecutives
and
other
ployees
of
corporations;
sioners
and
means
their investments;
on
in
America
too close
bears
vious
at
attempts
popular
and, finally, skilled wage earners
government to give me any
in the higher
or
paid brackets. These
the groups who have
provided
stability for the American system
in the past. And no lover of our
free7 institutions can look with
complacency on their demoraliza¬
tion under the impact of the in¬
flationary forces which are now
weakening their relative position
are
a
re¬
semblance to the events that have
modest preceded the destruction of
of
^people
living
em¬
pen¬
comfort.7 The
pre¬
to 39.64
dolllars.
my
concern
about the future become
clearer
when
we
explore
more
what
inflation
has
and is doing to our middle
specifically
done
157.63
selfsolace
for
reasons
worth
class.
Houston
lare
are
equivalent
Snyder dollars; the 55.62
dollars to 45.89 Snyder
The
now
are
Mellon
500.58
dol-
worth 351.04 Snyder
In other words, my
dollars.
orig¬
inal investment of $1,112.44 is to¬
day worth 659.44 Snyder dollars—
a
t
The
Snyder dollars; the
$55.62 Glass dollars
shrinkage of 41%/'
The
value
cash
-
v,i-v
-
of/ the
policy
I
stocks.
common
Federal
The
Reserve
Board's
figures for 152 large industrial
corporations show that whereas
for the period from 1932 to 1941
these
corporations
felt
safe
in
paying out 83.8% of their earn¬
ing after taxes, the same compa¬
nies
distributed
only
56.9% of
their
earnings in dividends in
1946-47.
Jf
7
,
/
•
couple? the results of in¬
Mellon dollars. Those 1,799 Mellon flation with high taxes and low
dollars
are
now 7 worth
1,236 interest rates, it can readily be
in
the
national
economy.
For
Snyder dollars. If I had died in 1 seen that the former independent
these are the groups that have a
savings of America were con¬ 1930 my wife would have received status of ; the American middle
real stake in America. Their eco¬
tributed
by the middle income 3.500 Mellon dollars. Those 3,500 class has already been seriouslythe market followed along.
nomic status is prima facie evi¬
Incentives for 7 the
groups.
Not
only
have
these Mellon dollars would have shrunk undermined.
dence of the fact that they have
'7
'7;
if
if '.'*77 *
■;;'-':7
rising generation have been no¬
groups suffered a decline in the to 2,405 Snyder dollars today—a
had the initiative, thrift and fore¬
purchasing power of their cur¬ decline of 31.25%.
tably curtailed. No young man
While all this is interesting sight to look beyond the present
rent income but their past sav¬
starting from scratch today can
If I had died in 1930, my bene¬
to report, it doesn't detract into the future and to weigh gov¬
ings have, in good part,7-been
hope to win a competency for his
ernmental
ficiary might have invested the
policies
accordingly.
from the fact that we have
own
old age and that of his de¬
liquidated through the price rise.
3,500 Mellon dollars at 5% and
They stand in marked contradis¬
The prewar middle class was will¬
been long of various/stocks tinction to the so-called
received $175 annual income. To¬ pendents. 7 Even a man earning a
proletariat
ing to invest part of its savings
salary of $15,000 a year here in
which penetrated their stop who, due to lack of ability or
day, 3,500 Snyder dollars invested:
for risk capital purposes.
New York, living modestly with¬
Those at
3%
will
yield
105
Snyder
dol¬
enterprise,
live
from
day
to
day
levels during Monday's reac¬
elements in the population whose
out allowing anything for life in¬
with little or no thought of the
lars with a purchasing power of'
incomes
have
increased
most
tion.
Such a reaction is one
surance,
would take 22 years to
future.
As
Edward
Armstrong
only 74 Mellon dollars!
In short,
of the reasons why stops are wrote in describing the death of markedly in the last eight years my effort to protect the future of save enough to leave a net estate
are
unfamiliar with the produc¬
of $50,000. Invested at 3% this sum
political liberty in the mediaeval
my family through self-restraint
tive purposes of savings and to a
would give his family an income
and saving over a period of twenty
Republic of Florence:
of $1,500 a year before taxes and
large measure restrict their sav¬
years has been largely defeated
"The masses care little for the
we all know how far that munifi¬
ings to relatively riskless forms,
by the shrinking value of the dol¬
form of government. Their main
cent sum will go in providing,a
such as government bonds; life
lar.
To the thousands of indi¬
interest is necessarily
economic insurance and
savings bank ac¬ viduals whose sole income in old living for even one person at cur¬
dissipation of past savings
through
the
inflationary
price
rise has been astounding. 7 Prior
to the war most of the productive
when it matuied in 1930 was 1,799
one
.
7
Pacific Coast
than
rather
Securities
support
is
ment which
constitutional.
given
can
to
ard of comfort and
Orders Executed
Pacific Coast
on
Exchanges
Schwabacher & Co.
York Stock
Exchange
New York Curb Exchange (Associate)
8an Francisco Stock Exchange
,
■
Chicago Board
of
Trade
Street
New York 5, N. Y.
OOrtlandt 7-4150
Teletype NY 1-928
14 Wall
from
Private Wires to Principal
San Francisco—Santa
Offices
Barbara
Monterey—Oakla n d—-Sacramento
Fresno
their
Their
results
tyranny
gratified
of
the
the
counts.
,77/;
govern¬
provide diver¬
toil.
material
...
The
Medicean
populace.
They did not heed that the theory
of
government
was
being
changed."
7
It is
Members .:■«
New
sion
the
raise their stand¬
significant that no civilized
in the world has ever
country
Effects
The
of
Inflation
holders
of
on
the
Savings
$40 billion
public debt have already
holdings in
buying power cut by
40%, or $16 billion. A dollar saved
five years ago has lost 27c of its
prewar
had the value of their
terms
of
purchasing
A
power.
booklet
entitled,
"Treasured
Possessions,"
published
by
the
voluntarily adopted the extreme
United States Treasury Depart¬
philosophies of either fascism or
ment about 10 years ago to help
communism,
unless the
middle
the sale of United States Savings
class was first liquidated by means
of inflation. The middle class of Bonds, opens with a signed state¬
ment by Mr. Henry Morgenthau,
Germany was brought to despair
Jr.,
Secretary of the Treasury,
by the catastrophic inflation in "Savings Bonds are treasured pos¬
that
country
during
the
early
sessions
in
more
that
a
million
age
will be from insurance,
a tragic one indeed!
that
defeat is
rent
prices.
All
Of
all
the
that consti¬
middle class,
groups
\ ,' -
these
political
deep
Clerical and Professional Groups
of
nificance.
The
'
„
;
„
matters
have
social
and
financial
,
a
sig¬
compe¬
tency of the individual citizen is
essential ingredient of popular
self-government.
The preserva¬
clerical
and
professional group, tion of a representative democracy
hinges
directly
on
the
whose real earnings are in many
willingness
instances lower than
they were of the people to decide public
tuted
the
has
none
prewar
suffered
more
prior to 1940. Many individuals in
this
group
are
now
down. in the
lower third of our income
an
than the
brackets
questions
earning
ual
are
the
average
wage
the basis of the gen-
or
welfare
-—
not
on
considerations of individ¬
narrow
family has moved into the middle
income group. The National City
Bank of New York published an
while
on
erak national
group
not
selfishness.
themselves
competent
but
the
how
state/
are
If
men
economically
the wards of
can
they
avoids
compilation
in
its dealing with nublic questions ori
monthly
letter
for July,
1948, the" basis of self-interest? Further¬
showing the extent to which per¬ more, without a fiancially compeinteresting
Volume
Number 4738
163
THE
tent
would
maintain
of
citizenry, how can we hope to
our
two-party political
system?
The party in power is in
position to use public funds for
political
propaganda.
Financial
the
for
ductive
and without
and
intelligent opposition
the democratic process is self-de¬
feating.
Obviously also, private
business cannot exist without
stant
improve
state
supply
where
stone
no
it;
and, when
government becomes the primary
source
of capital funds, national
socialism automatically displaces
American
to
maintain
10
to
I
furnish
zens
15
or
not hurt
week
years
was
in
ago
ber
that
The
So it
Real
for
time
me
million
that it is high
universities.-
This" is
thing but it
ticularly our political leaders—to
.put in a rousing word for the mid¬
the economic burden of the
dle class
try
gotten
liam
American—the real for¬
Graham
the
Sumner:
quiet
■citizen who paddles
his own canoe
day in and day out, marries and
raises a family, meets his bills
shortages
\
segments
Labor
estimates: that
mendations
by
could
Tax
The
-
liberal
the
.5,400,000
skilled
craftsmen,
619,000 apprentices must be kept
"about
the
Ueviathan
Inflation be
of
control
under
in
ask, what can be done
situation?
Can
the
you
must
or
after year.
tials
gotten
sit by
we
that
we
we
[effects if
stacles
skilled
are,willing
we
tive
measures
that
the
as a na-
will
can
trained
fight for
speedily,
production to
more
correc¬
combat inflation will be
be
hampered.
re-
decidedly
•-[////;';/"//[/;/' //
•
quilted. * Unfortunately,
almost
everything that is needed to com¬
inflation
bat
and
nature
man
'/ Another factor that would help
Personally,
quires.
optimistic
over
being
I
cannot
bedding practices
organizations. If I
reports that
tions
be
[supinely
and
course.
' Raising
adopted
let
'•
_
/
nature take
/ '[
':
its
to
as
requirements
and rediscount rates, and install¬
V
[ reserve
ment credit controls will
Ultimately,
tonight.;
.us
in
grown
his
do
just
much
as
best
level
work
never
a
time
when
it
essential that business¬
.'coinage of gold. Such action prob-
levels,
.ably would have a salutary effect
should
government fiscal policies al¬
though I realize fully that the
their
demands
wages,
than at this juncture when
[government
on
,
and
when
exercise
labor
leaders
moderation
for :
in
increased
could * always
back¬
the Leviathan of Inflation is hard
track and take gold out Of
circu-
upon
tation if it decided that
,
be
a
drive for economy in
national.
and
essary
should
Every unnec¬
service should be
public
eliminated
and the number of.
"least as a minor check on govern-, government
employees
sharply
ment i extravagance
and
deficit curtailed. The United States Bu¬
/
i;
„
A
•
reau
/
taken
April, 1948, there were 5,900,000
public
employees
in
the
check present infla¬
to
United States—more than
tionary tendencies, let me say .in
;
the
first
place that we should
of
reached
this
nature
of
will only
the agony, lead to less
.production, and ultimately to the
[regimentation of the nation's ecotinued
•nate
in
life.
the
"Britain
sorrow
The
con¬
long enough, will culmistate socialism.
For one
economic
as
This, in turn, if
control
begets another,
businessmen
of
Great
civilian
actually
[prolong
^onmic
per
month.
the
In
Federal establishment the number
national
•Controls of
out
ten persons gainfully
Their
compensation
the
enormous
total
of
$1,228,500,000
commodities required for
, defense
program.
.scarce
every
one
employed.
.forget price controls and alloca¬
tions, except perhaps on a few
the.
of the Census estimated that
in
i/jAS for other steps that might
be
;
months ago.
-
employees
higher
than
today
it
was
is
six
//
.
Needless
to
say,
a • balanced
budget must be maintained at all
hazards. To accomplish this end,
it would be wise, it seems to me,
to
defer the
broadening of social
are
finding
today.
out
-
to
*1
their
-['
greatest ameliorative factor
the
rate
security
coverage
and
r
all
new
social ventures for the present
no
matter how desirable
they
—
may
al¬
free
a
aversion
well.
of
"In
Yet
as
describing
the
Federal
those
-
days
American
every
politician."
The
fight
inflation cannot be car¬
be
forced
old
sources
Politics,"
bound
up with the practical ca¬
pacity of the urban middle class
to maintain the balance of power."
So this is certainly no time for
Pollyanna optimism—the
with
the
the
on
sad
a
tion
we
that
will
some
t
re ve n
through.
;
in
contrast
the
tax
vamped,
effect
to
of
old
the
that
to
made
that
me
structure
serious
assump¬
way
other
or
11 y; muddle
u a
;
Is
there
littl?
is
re¬
consideration
''v'';/
dollar
■
f■'/ :', /;• /•'.[ .
.
involved in the
postwar recovery effort may well
reach a total of over $15 billion
by ,1951. This includes ExportImport Bank credits of about $3
billion; the British loan of $3%
billion; surplus property and post
dice
public apathy loaded
against us, unmitigated pessimism
of
the
type of an old British
friend
of
when
it
The
rare
issue
ness
rather
than
doctrines
and
of
lower
and
direct investments abroad
is
income
Long-term
dollar
service
lending
of
charges of around
1960's.
and
This
creates
problem
From
for
the
a
the
stand¬
point of the borrowing countries,
it
that
they will have to
develop an export surplus of ap¬
proximately the same amount to
means
the
meet
service
charges unless
provides them with
this
the necessary dollars through con¬
tinued private lending and direct
largely falls to the ground.
taxes tend to spread the
tax burden equitably among all
of our citizens, and they have the
added virtue of being very diffi¬
cult for anyone to avoid.
should
fight against
be
infla¬
present sub¬
sidies and
price supports on farm
products. Food prices have moved
up far more than those of manu¬
country
investments
sponding
living for the
our
mass
of
farmers
to remain prosperous
jockeying should
but political
not be allowed
abroad
scale.
their
obligations to
tically curtail their
Two Patterns
There
terns of national
part
of
the
units
should
wher¬
possible. Many public works
that
are
very
desirable in them¬
or
dras¬
future
im¬
of
almost
always the
our
result
conviction
But
must
we
rather
wait
not
Each of
us.
Marshall
most
us
must
Foch
com¬
for
an
powerful
like
men
with
that:
weapon
is the human soul
lion
play his part.
said
"The
on
earth
fire." A mil¬
on
those in
this
room
spirits incandescent in their
service
tide.
yet turn the
can
*
:
>;
//.'•/
•
6)
page
ment
problem and thus postpone
the'day of reckoning.
,
Second: We can encourage the
development of an increased flow
of imports into this country suffi¬
cient
to
enable
the
borrowing
countries both to meet the service
it
two
behavior
First:
our
We
or
on
the
not and to what
loans
can
will
be
continue
nitely to lend abroad
to
believe
would
that
con¬
sciously favor sacrificing our ex¬
port interests, or encouraging an
indefinite continuance of foreign
lending with little prospect of
repayment,
an
merely
to
increased flow of im¬
ports into this country. The only
real hope I see for a revival of
true world trade, the reestablishment of an effective multilateral
trading
of
system,
the dollar
and the
solution
repayment problem
lies in the expansion [of this coun¬
try's foreign trade, both on the
import and the export side, and
the eventual development of a
normal import surplus. Our for¬
eign trade percentagewise may
be small. It may be only 5, 7, 9%
but, it is my conviction that it
represents the marginal difference
between full employment and a
rising standard of living, or going
backwards to a period of a lower
standard of living with less pro¬
and substantial
'
[
pat¬
States, the
choice of which will largely deter¬
extent
hard
Americans
duction of goods
unemployment.
Policy
United
mine whether
construction
us
basically,
are,
back.
government
corre¬
stand¬
ports from this country.
tural subsidies.
public
a
the
develop such an export surplus
they will either have to default on
to prevent the prompt overhauling
of our present system of agricul¬
ever
on
From
point of this country, it means that
unless
borrowing countries can
factured goods. They constitute as
we
know the
chief element in
people. We want
to
inspired leader to do the job for
many
groups
the cost of
devotion
specific knowledge of
of
indeterminate magnitude.
Excise
revise the
a
self-discipline, self-
emotional
States.
the
presents
country's
service.
Ideas,
not
things, rule the world. Public ac¬
United
received
in
face
we
unselfish
policy
tion is to
two
reliance, personal initiative, thrift
major
that
that
of
you hear a demagogue on
radio, think of what a George
Washington or an Abraham Lin¬
coln might accomplish on the air
by preaching the old American
by those elements in
population whose income is
ease
step
said
choice
Whdn
eventual
Another
a
the
curtail
the
who
to
opportunity for inspired busi¬
and
political
leadership.
1950's
defer
mine
came
evils, he always took both, would
certainly be the acme of folly.
reduced with rela¬
on
with
even
of
$1 billion throughout most of the
taken
hundred; the chance
Day lend-lease
credits
of charges on their
long-term ob¬
perhaps $3 billion; a four-year ligations to us and also to continue
European Recovery Program loan to buy the products of this coun¬
and
guarantee total of perhaps try on a scale essential to their
$4 billion; and International Bank and to our welfare.
and non-guaranteed private loans
I find
annual
or
10.
V-J
from
from income levies. Income taxes
evaded
in
in 10 billion! But
one
the
(Continued 1 'rom
financing
the magnitude will mean average
taxes
of
one
AndU. S. Foreign Trade
.
be. given
to securing a
larger portion of Federal revenue
excise
chance
is
Foreign Aid Pig
should
our
is
.;/[/:/ /'>-'WC-v'//••'>'";/.;./ country's
Unfortunately
such
1st of August that
obvious
seems
the
a
secure
for
further
of
the
1
working
largely
: in
recent
years
by
graduated income taxes,
have
num¬
drawing 1 to 5 in sequence is
one
in 100,000; and the chance
of drawing all 10 marbles in order
goes so far
to say that: "The insurance of
domestic
tranquillity
will
be
up
enterprise
America great!
tive
in
one
——
to
and
of Harvard University
book, "The Middle Classes
as
capital."
quitting because his father
would have to pay additional in¬
come taxes if he, the boy, earned
any
more
money, this
summer!
are
is
to
a
in American
at
was
All
-
apathy
has
prime dif¬
an
as
almost
a
against
the
burden
there
*
.spending.;
is
faces
state
determined
required such action;
gold coin was
"Nevertheless, if
.available, the hoarding of such
coin by the public would be a
'danger signal that would serve at
////////////
has
development
ried to
problem
that
run
government at every level—local,
Obviously,
•emergency
fundamental
destroying" incentive. A college
undergraduate who had a vaca¬
tion job at one of our factories
It
you
step
"I know not how it is
venture money have been
when
number
plicated facts.
The
What
random,
fhan
not
me
The
citizen
maintaining
economics
(1789)
have ample risk capital at its dis¬
told
is
power-
soon
of the
one
of
Constitution:
in
largely in cash. With a
high progressive income tax al¬
ready in operation, the argument
that excise taxes place an undue
financial
a
heels; /
our
individual
ago:
was
capital solely from borrowings or
plowed-back earnings but should
he
some
will
Carl Van Doren says in
The
10
put
If
in his
additional / fixed
spirit
was
interests,
that
politician
been
citizen
enough to look after
sure
mankind
the
growing population with/its ex¬
panding demand for goods and
services, industry and commerce
which
at
drawing
Holcombe
class.
Economist"
If business is to keep pace
steeply
out
tion
middle
against
are
you
pocket
bered from 1 to 10 and draw them
of
the
If
your
problem. In fact, Professor A. N.
/
men
f should < exercise
wise
stewardship in determining price
think
I
out
can.
more
was
should endeavor to restore the
we
to me, restric¬
notably in the build¬
should
turn
he
There
with
.to the fiscal experts who are
can
labor
believe the
our
Recognition of social responsi¬
bility is the keystone of liberty.
doubt
shall leave these points
I
.help.
no
by
output/have,
on
citizen
."" V
•
of
ing trades. During this inflation¬
ary crisis, certainly every patriotic
but at
'least it is better to try than to sit
"
measures
elimination
come
recent years,
needed
the
the
be
all make-work rules and feather-
political expedi¬
"Doin' What Comes Natur'lly" is so much easier than the
hard discipline the emergency re¬
ency.
[too
would
tiori
free
study of government." I might
add
the increased requirements of our
posal.
in
the middle class presents a critical
economy
should
the
successful issue without
4 great revival of popular interest
in public affairs.
:
;
,;[•/■,
■■://-"/Ql
The weakening of the status of
be re¬
create
which it will create
:
eventuality.
more
to
I
adopted.
psychologically and mathe¬
capital and to restore in¬
long
substantially in combating infla-* dried
counter to hu¬
runs
should
order
most
British
the
be overcome and more
workers
but
the
affect¬
Policy
"London
the
of
year
between
ing trade skills. Unless these ob¬
But
'tion to accept the rigorous
exist
eliminate incentives for learn¬
to
its destructive
inflation.
cure
can
ameliorate
continuously;:
The reduced differen¬
now
of those in the skilled trades tend
Frankly, I do not b'elieve
can
that
earnings of unskilled workers and
;3helpless while the foundations of
our
free institutions are under¬
mined?
training
the
years
////•
■
if
society. As John Adams said 150
analyzing Britain's difficulties not
long ago offered this comment:
/'Beyond very much question,
'
Well,
without
policy
centives to
are
200,000
.
:
tax
vamped in
venture
be
ficulties
to where economies
as
effected
And
governmental
ways
recom¬
'
apprentices now in
training, half of them in the
building trades./ On
the
other
hand, to maintain the 1940 level
children!
What Should Be Done
be
make
ing the nation's defense.
the
there
and
be
of
of
to study the whole military es¬
up
economic
in and do it for him.
composed
of "eminent
civilians should be set
tablishment
and
will
selves.
seeking
going
recited
Both
that
measures
you do draw
number 1
and
then put it back into
your pocket,
the chance of
drawing number 2
his
that
be
matically, the chances
remedial
prob¬
lems. After all, self-government
means literally what it
says: Not
government by some superman or
group, but government by our¬
Services
to
particularly
is
broader interest in and study
political
can
for the
aus4
have
marbles
not interested
many
men
Armed
civilian
a
American
of
:§:
to
as
peace
young
the
mission
that
of
when
men
necessary.
Nevertheless,
it
to me that as a part of our
effort to combat
inflation, a com¬
of
occasioned
165
every
one
likelihood that many of the
tere
postponed
housing and
have
been
Finally, in the fight against in¬
flation we sorely need to encour¬
seems
.J;-;/■//•r;\
certain
only
quiet bit to maintain the
Republic for his chil¬
children's
war.
have
is
make
can
to
strong!
Perhaps such
a
medical set-up is required. Per¬
haps much of the apparent waste
coun¬
just
we
seek
rather
carrying
work
for
seems
men presents a
peculiarly serious
problem. The Apprentice Training
Service
of
the
Department
of
American
his
to
until
should
notably in the building
field, the scarcity of skilled crafts¬
nobody to protect him from "the
and
have
for
Army
39
that
of
layman to under¬
example,
why
the
This
forward
be
(1347)
true of state and local
projects.
age
of
amount
a
doctor
economy,
.cradle to the grave," and thereby
dren
the
the
In
promptly, pays his.taxes," supports
his > church, !' contributes/ to
the
community chest, fights for his
country when need arises, asks
does his
presently
harder
up
that those
means
are
will
much
described by old Wil¬
man
who
us
I
that
could be avoided. It is
predominately
fine
a
to
what
well
building
completed.
but
spring
enormous
too for
comprise
our
and
after
last
phycians in time of
persons
who has the
-future of America at heart—par¬
everyone
the
sane
nation
going
now
industrial
un¬
in
Four and one-half times
population are now in
school, with no less than 2l/z mil¬
lion young people in our colleges
Forgotten Man
to
seems
40
over
are
might
until urgently needed
the civilian population gets
along
with one doctor to 780
persons.
more
in
.
an
be
defenses,
sure
Hawaii
is
hard
the
them.
equally
in
there
logical than to lengthen
work week now when jobs
-church
and
are
tional and philanthropic institu¬
plentiful and greater produc¬
tions would be lost without the' tion is so urgently required? In
this
connection we must remem¬
support competent individual citi¬
democracy.
The
our
private educa¬
am
saw
spread work when em¬
was slack. What could
ployment
be
work
should
the
adequate
stand,
hours would
shortened
order
representative
wants
of 45
The
attention
expenditures
necessary
waste that
48
selves
which
mean
for
one
thing
a
longer work week. A work week
or
CHRONICLE
view¬
military establishment. Every
use
anybody.
long-range
devoted to curbing waste and
technical
our
must
FINANCIAL
the
Particular
needed
unturned
from
&
point.
would
the
must
point
efficiency.
existing facilities
fully wherever possible. This
We
of new capital.
financially competent
in position to furnish it, the
are
be
supply
a
must add pro¬
we
facilities
leave
more
con¬
accretions
Unless
the
services to
met. To do this
opposition can
private citizens,
.
only from
come
increase
to
and
the
enlarged demands of
our increased
population with en¬
hanced purchasing power will be
.
support
be
goods
where
COMMERCIAL
paid
indefi¬
and in this
fashion provide dollars on a scale
sufficient to avoid a net repay-
Increase
The
of Imports Essential
Board
of
Directors
of
the
Bank is of the
opinion
that
this
repayment
problem makes an increased vol¬
ume of imports an absolute essen¬
Export-Import
tial element of
United
trade.
States
The
a
healthy, thriving
postwar
Bank has &
foreign
very
(Continued on page 40)
spe-
THE
(1348)
49
CHRONICLE
COMMERCIAL & FINANCIAL
Foreign Aid Programs
And U. S. Foreign Trade
day and the great creditor na¬
tion.
I am sure all of us look
forward to an early end of United
States assistance on a grant basis.
No one likes to give away money
„
Thursday, September 30,. 1943
-
of an expanding world the
exigencies-, of international
pattern in the : Nineteenth politics are - pervading JjpternaCentury and investment of United tional economic relations; as is so
States funds must now take over highlighted here.. But the extent
the
arch
trade
■
,
this role,
of
.
World War II has brought about
worthwhile
people enjoy receiving on such fundamental changes in the struc¬
(Continued from page 39)
basis. The goal of our foreign aid ture of world trade. These changes
cial interest in this matter by achieve equilibrium in our inter¬
probably
started
before
programs
is
a
self-supporting were
national
balance
sheet.
I
feel,
in¬
reason of the specific requirement
Europe by 1952, but let us not for¬ World War I, but they are now
in
our
statute
that
we
have stead, that we should take what¬
get that" our world position re¬ complete and far reaching. If we
reasonable assurances of repay¬ ever positive measures are pos¬
quires us to continue to invest are to. prevent the serious de¬
ment before making a loan. It is sible to develop an import sur¬
heavily abroad for a long time to pression ih this^ country on which
the opinion of the Board of the plus sufficient to enable foreign
the Russian Government is count¬
come and import the goods and
Bank that, if the whole broad countries to service their dollar
postwar effort to revive world obligations and still continue to services our capital will make ing so heavily,1 we must recog¬
trade and reestablish an.effective buy our exports in large vqjume. possible.
I hope this investment nize the changed character -of the
multilateral trading system suc¬ However, I am quite certain in my will be
Foreign trade
private and not govern¬ world economy.
own
mind
that
it
is
private in¬
ceeds, the countries to whom we
mental,
but
again
let
us have has assumed a new importance.
have made the two-odd billion dustry and not government which
dollars of emergency reconstruc¬ must undertake the leadership in no misunderstanding of its vital Failure to recognize this, will, in
tion loans should be in a position the expansion of imports.
For its necessity. Investment of Euro¬ my judgment, prove a great trag¬
to repay these loans. It is our part, the Export-Import Bank has
pean funds was the keystone in edy for our people.
practical judgment that the great¬ devoted, and will continue to de¬
est hope for a solution of the re¬ vote, a great deal of attention to
payment problem lies; in an ap¬ the import aspects of all the loan
propriate expansion of imports applications before it. In the case
into this country; indeed, in the of ail the Bank's general develop¬
absence of an indefinite continua- mental and reconstruction loans
tion of official U. S. foreign aid, the direct connection of the prothis is the only way in which the posed loan with the creation of
borrowing countries will b6 able additional foreign exchange has
(Continued from first page)
•,
to meet the service charges on always been studied.
The contri¬ tion; the occurrence of such ur.an- 20 countries have sterling bal¬
.their obligations and continue to bution of any loan to the solu¬
;
ticipated world events being of¬ ances in London,
buy ihe products of this country tion at least of its own .foreign ficially
regretted here
by the
But the chief argument justify¬
essential to their welfare.
exchange
problem
has always Finnish as well as the United
ing the present high pound rate
The question that immediately been a factor present in its con¬ States, Chinese and British Gov¬ is
geared to the direction of do¬
sideration.
In
its appraisal of ernors.
comes to mind is: Will it be neces'
mestic recovery; to the need for
f,,
sary to take positive steps to en-I loans the Bank regards financing
goods, for home consumption and
The British Economy and the
sure an appropriate expansion of, of the production oi commodities
capital investment; to the under¬
^£
Pound -'V,1
imports or will such an expansion suitable for export from the for¬
lying policy of adjusting the ex¬
take place more or less automati¬ eign country to the United States
The leading managed economy
change rate to the amount of imcally during the postwar period? as a consideration just as im¬ experiment is occurring in Great
rts
required
for,
and
the
portant as the promotion of ex¬ Britain, a nation making great amount
There are several factors operof
progress
achieved
ports from the United States. But progress in setting its fiscal and
tir»g toward
an
automatic in¬
toward, economic recovery.
the contribution that the Bank can economic
house
in
order
(the
crease in imports:
;
Likewise, present domestic pol¬
make in the import promotion supporting statistics being author¬
icies regarding inflation are seen
First, travel expenditures abroad field js. 0f practical • necessity,
itatively and vigorously endorsed as
should increase substantially _in
requiring the maintenance of
j quite limited. Foreign trade, be- by Sir Stafford Cripps); Inquiry
the
postwar world if for no other cause of its pioneering ; and ro¬ into the justification for the exchange controls. Price controls
reason than the fact that our na¬
and rationing at home need the
mantic nature, lends itself to the maintenance of the
rigged valua¬
tional income has risen so sub¬
accompanying
support
of
ex¬
best in the American tradition of tion of her
currency reveals this
stantially above prewar levels. private enterprise. It is in this
change control.
Devaluation, in
as meyely one of many measures
Some argue that this factor alone
field, perhaps mqre than in our inextricably bound together in spurring exports, enhances do¬
will solve our import problem; in
mestic inflation.
domestic
production,
that
the over-all direction of her economic
any event, it seems very likely United States
opportunity lies to life. And like the public's recep¬
Dangerous
indefinitely,
do
nor
Worldwide Keynote
collectivism and its implica¬
tions should all the more be real¬
ized.
Let it be understood that,
despite
our, nation's life - and political' struggle for free¬
communism,; We. are
financing the .building-up; of col¬
death
dom
versus
lectivism.
If we but recognize
this, it will limit its duration.; 5
Whether it is necessary or not,
us ;at least .realize-that
our
let
ECA funds
in the form of farm
products as Well as capital goods
are
determining the amount of
our beneficiaries' exports as well
as imports.
Not realized, particularly by the
British, is the spuriousness of the
continually-repeated complaint of
foreigners of the raised prices that
they must pay for their -imports
from
because of the rise in our
us.
price
This
level.:
neglects
the
fact that the concomitant of
those
high state
industrial activity which
high prices is the
of
our
very
enables them to make their large
exports to us; and our accom¬
panying
scarcities, which is the
for
us
temporarily
•
sole
reason
taking a large quantity of British
automobiles, for example. What
they really need is the miracle of
►
,
an
...
.
.
,
,
.
•
.
that this will turn out
to be the
important* single
most
extra dollars for
source of
foreign countries.
Secondly, imports of raw mate¬
rials should be at substantially
higher levels as a result of higher
natioral income and the wartime
depletion of domestic supplies of
many
such items. Who would
have thought, for example, that
copper, lead and zinc would ever
have been in.short supply in the
United States?
"
,
Thirdly, imports of luxury and
semi-luxury items, non-competi¬
tive
demonstrate to the'world the true
achievements
American
the
of
why of life.
think that the principal single
can be taken in this di¬
us promptly to re¬
duce our tariff barriers within the
framework of the Trade Agree¬
ments legislation. This reduction
step that
rection is for
be
tific
and
undertaken
on
impartial
a
scien¬
basis
and
should be directed toward achiev¬
ing
greater volume of imports
a
than
we
now
have with due
re¬
gard for the rights and property
our
only partially competitive of
existing enterprises.
I
with United States products,
may realize the many problems in¬
rise substantially with continuing volved in such action, but there
high national income here and will never be a more appropriate
progressive recovery abroad.
; time for tariff reduction than now
or
As against these considerations
—although they clearly presage a
larger total volume of imports In
the postwar period than in the
past—we must bear in mind the
fact that the
of
circumstances
same
high United States national in¬
and
come
demand
for
foreign
products will set in motion as
great or even greater demands in
foreign countries for United States
Experience has already
that foreign
cus¬
buy American goods
products.
at the outset of the European Re¬
Program.
covery
tariff reductions
The
such
sooner
undertaken,
the more effective in promoting
imports they are likely to be.
Moreover, the effect of tariff re¬
duction in this period is likely to
be, not to contract current do¬
mestic production but rather to
minimize
in
crur
Our
are
expansion
less
of
efficient
capacity
industries.
protected industries would, in
opinion, benefit from a move
demonstrated
my
tomers will
which caused them at this oppor¬
to the full limit of their dollar
resources.
It has been the rela¬
tune
uo
tive shortage of dollars abroad and
not lack of demand for American
goods
which
operated since
the late 20's to restrict the vigor
and growth of
industries.
tries
have
since
1945
our
natural
export
Indeed, foreign
consistently
to
coun¬
tended
buy United' States
goods beyond, the limit of pru¬
financial
dent
pressure
than
war
management. The
to do this will be greater
ever
time of high national income
to diversify their production and
direct their plans for expansion
toward new lines of Output.
has
until
the
ravages of
have been fully repaired.
I
certainly do not
mean
to imply
that merely lowering tariffs will
correct the
our
The
problem is
production
more
superiority.
fundamental
and complicated than that.
step
is
no
of
our
can
only help
more
a
Such
little. There
economic issue
vital
time, however, than this
payment
problem
Because of the above considera¬
tions, it is
my
conviction that
we
<aonOt afford to sit back and rely
upon
a
fortuitous combination of
circumstances to bring
about
institution
the
.
of
social-
;
planning
by ■ the
citizens
a nation, its increasing en¬
croachment
and
the
and
permanence
are
being accepted blandly, if not ap¬
provingly, by United States offi¬
cials as well as the Europeans
themselves..
As
American
government offi¬
British problem,
currency freedom now is impos¬
sible there as well as anywherein
Europe.
Export
of
capital
would
prevent "essential" con¬
sumption, whose volume is now
calculated at 77 % of prewar im¬
cials
view
the
exchange rate is if
country's
and
when
it
has
more
goods
to
export than it can sell at the pre¬
vailing
from
price—to
liquidating
In contrast to
pointed
been
such
out
that
remarkably
exports
situation, it
a
and has
for sale at present
Britain
has
more
no
prices—-so why
reduce them?
Goods in current
quantities
are
de¬
and
well
capital
investment;
the
are
required for the
na¬
of the world
held to, be not a question of ex¬
on
the progress
we
make
toward understanding these facts.
an
The United States is the greatest
economic power in thev world to¬
brands—some
of
international
it
realized
generally
some
extent
unrealized
and likely duration.
but
to
as
The determination of "essential"
the
British
Government
to
decision
of
is
to
unsound
found
in
the
so-
use
"counterpart funds" for
capital expenditure in expanding
mine capacity, shipping and pow¬
er plants;
While-this action does
constitute
not
an
infraction of its
agreement, the original intent was
to
keep such; funds immobilized.
Such
capital expenditure, it was
explained by M. Mendes, France's
Governor of the Fund, here today,
will
be
along
carefully directed
lines mutually satisfactory to the
French and United States Govern¬
ments.
Such
control
of. expenditure, this time
rigid direction and
under bilateral
auspices, manifests
another example of the increasing
degree of state management of the
economy.
.
■;/„/
Organization's Set-up Vital
consumption and the observance
thereof, presuppose not only un¬
canny management wisdom, but
the institution of collectivism by
dic¬
In
appraising the status and
functioning of the Fund, we must
bear
in
mind 'that
its
original
foundation is fully as important
as are its present detailed policies
and executive decisions.
Both the
tate who can sell and buy
change
governing factor;
rate, but
them established,
that
nizedly objectionable
even recog-
tions
ones among
members
them cannot be removed.
who
Those
over-valuation
justify
as
between
shall
avoiding
the
of
differ from
not
parity: (i) in the
currency
currencies
the
taking place within their
territories
Repressed Inflation
of spot ex¬
case
change transactions, by more than
in the
percent; and (H)
one
case
the
of
It
aim
that
by more than the Fund considers
gerous course
of
of covering
manifestations of
controls.
a
the reasonable."
up
sick condition
,
The maintenance of
warranted
exchange
institution
rencies
flation
Also it is pointed out as a de¬
,
gin for spot exchange transactions
process
of
rates
multiple
un¬
(as has been assented
to
are
even
Of course,
there
can
in
found in the fact
more
so
conceivable that any
of
case
could
inter-acting.
.
difficulty
Fund's overall effectiveness is
of course; to be
and that,
cur¬
I
fundamental
The
within
of by the Fund)', and repressed in¬
blocking capital exports.
valuation ,; difficulty
repressed
inflation; that is, that most dan¬
overlooked
is the
not
part,
and
abroad
called
the
import by the institution of all kinds of
being of virtually all the peoples
depend, at least in
domestic
France's
her domestically-inflating effects of of other exchange transactions, by
a margin which exceeds the mar¬
goods exports, further the commonly-
surpluses
and
the
because
economics
increasing
tion's reconstruction; and price is
hopes
it entails the di¬
rect practice of collectivism — of
gerous
export glut.
an
velopment of real two-way for¬
The
All this philosophy is most dan¬
get the benefit
eign
trade.
Policies
v
in the wind
furtherance
our
abroad, Annual Report of the Fund and
and how much. A high degree of of
its
Managing Director, Mr.
ports. Domestic rationing being socialism is
certainly necessary Gutt, clearly stress the need for
deemed necessary, exchange con¬
for the attuning of the economy
measures
like expanded ' output
trol is indispensable to support it.
to the
degree and balance be¬ and efficient production to place
Regarding the possible devalu¬ tween consumption and domestic
national economies on a sound
ation of the pound to a realistic
capital investment, as described basis; but there is little they can
above.
The
above
outlined
level, our Mr. Snyder gives lipjusti¬ do to impose their wills. More¬
service to the "orderly adjustment fication of rigged monetary ex¬ over,
in the promotion of ex¬
change
at
artificial
prices is to change stability there must be
in the future" of currencies which
follow, on an international scale, two-sided voluntary cooperation.
"may" be overvalued; but the the', domestic credo that as long
A free market for a currency
American position is just as ada¬ as we have price-fixing, we mpst
internally is actually barred by
mant as is Sir Stafford Cripps' in have rationing, and so we must
the Fund's Articles of Agreement
have both.
Before we know it,
as adopted at Bretton Woods.
opposing the promotion of real¬
Ar¬
there has been such a wide ex¬
ticle IV, sec. 3 thereof prescribes
istic revaluation now. They argue
tension of controls imposed, and
that:"The maximum and. the mini¬
thai the only reason for lowering
such an interdependence among
mum rates for exchange transac¬
a
needed at home for consumption
^Increase in imports sufficient to
to
re¬
.
Export-Import Bank Policy
zed
disequilibrium created is
by
a
tion
within
,
I
must
Implications of Present
of
:<;/;
{c?;tv
:
v
Just another straw
^
.
American boom demand at low
prices!,
a
planning
than
in the
body" of
and
nation's borders, it
possess
the
men
controls
is in-
judgment
be ho de¬ needed for economic management
about nying .thai the threat of. war* and
on a
.worldwide, scale.....
y....
^
Volume 168
Number 4738
THE
COMMERCIAL
ri '» '|V
If. irpin
,m„,^TTn fx-rx T—-THnr""
•SXT-'HT*
FINANCIAL' CHRONICLE
&
Indications of Current Business Activity
The
following statistical tabulations
shown in first column
AMERICAN
IRON
Indicated
steel
AND
Latest
Previous
Month
Week
Week
Ago
STEEL INSTITUTE:
operations
/
capacity).
(percent of
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
either for the week
are
Oct.
3
96.1
96.4
ACCEPTANCES
DOLLAR
STANDING
of
As
—
August
Year
OUT¬
Latest
Previous
OF
Month
Month
Ago
$142,723,090
$150,910,000
$132,792,000
46,762,000
BANK
RESERVE
FED.
—
YORK
NEW
94.4
95.2
«
BANKERS
Year
Ago
31:
'
Equivalent to—
~
Steel ingots and castings
•
,
it
|
(net tons)———
——_Oct.
3
1,737,600
1,732,200
1,716,000
Domestic
Crude
oil
Crude
runs
output—daily average (bbls. of 42 gallons each)
to stills—daily average (bbls.)——
Gasoline
output
Kerosene
oil
Gas
(bbls.)_:
(bbls.)_
output
distillate
and
Dollar
Sept. 18
t5,294,350
*5,346,050
5,521,300
§4,680.000
§4,825,000
5,591,000
5,199,90(
5,280,000
§15,373,000
17,742,QpO
16,388,000
§2,038,000
§6,482.000
1,988,=000
1,993,000
7,338,000
6,275,000
§6,828,000
8,642,000
8,772,000
Sept!
—
(bbls.)————
815,023,000
§1,984,000
§6,401,000
§6,025,000
18
Sept. 18
Residual
fuel oil output (bbl6.)„_
:
X
Sept. 18
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
Finished and unfinished gasoline (bbls.) at
———_
Sept. 18
Kerosene (bbls.)
at___—„—~
Gas oil and distillate fuel oil (bbls.)
Residual fuel oil (bbls.) at
t
,
/_
at
shipments,
Domestic
1.
....
-—-Sept. 18
———_X_——,_
Sept. is
oil output
fuel
'
'XX X
X"/
INSTITUTE:
AMERICAN PETROLEUM
§79,200,000
§80,074,000
§24,613,000
§23,553,000
95,132,000
22,497,000
81,987,000
Sept. 18
Sept. 18
§59,567,000
§36,808,000
§57,355,000
63,524.000
59,283,000
§36,066,000
69,379,000
56,934,000
warehouse
THE
OF
Month
22,254,000
freight loaded (number of cars)-.—
Sept. 18
Revenue freight rec'd from connections (number of cars)——___sept. 18
civil
construction
engineering
vvX'v/X
record:
Total
U.
construction—-
Federal
..' Bituminous
:
(U.
coal
.
coke
.
BUREAU
S.
and
lignite
anthracite
Pennsylvania
Beehive
——
——
—
COAL OUTPUT
.
—
OF MINES):
STORE
(tons)
/
U.
700,591
628,440
696,421
712,316
All
SALES
IN
S.
New
residential
New
non-residential
42,009,000
104,449,000
39,974, 000
55,217, 000
83,105,001
BRADSTREET,
78,831,000
52,078,00(
Month of
37,922,000
20,372,000
66,050,000
48,458, 000
43,802,00(
'
New
——
INDEX—FEDERAL
11,900.000
r
—Sept. 18
r
12,315, 000
*10,830,000
1,228,000
X
/
/ *125,400
146,800
952,000
000
12,235,000
1,260,000
146, 800
139,800
1,170
!
ELECTRIC
Electric
FAILURES
INC.
SYS¬
Atlantic
XX
335
'285
;
X"
*■:.
5,477,741
4,956,415
X
-
$
iX X;/ 84
101
3.75255c
Sept. 21
——Sept. 21
;—___—Sept. 21
;
3.75255c
$44.74
$44.52
X; $43.16
$43.16
$44.74
$43.16;
//Zinc
St. Louis)
(East
:
'
BOND
MOODY'S
.
Sept. 22
**—
'■•//' Aaa
———
„——.—
—
—;—_8ept. 28
-—-Sept. 28
——Sept. 28
—
Aa
-
XX——
—
—XS
————Sept.
Baa ----------.-I---.-——•fc.—w—Sept.
Railroad Group.
X,
——
—
—.———Sept.
Public Utilities Group.
—.———
Sept.
Industrials
——-Sept.
VV A
•
■■
-
———:
—
;
YIELD
BOND
DAILY AVERAGES:"
.
..,(1
k
23.807.000
21,197,000
9,034,000
421
356
379
spindle
1
•
■
.■■■?
23.425c
21.35CI
80.000c
19.500c
19.500c
15.000c
19.300c
19.300c
14.800c
15.000c
15.000c
10.500c
X
{
July
.
.
Number
COMMODITY
INDEX—
100.71
103.8
Sales
(average
111.44
115.0'
X: Sales
(average
116.41
116.22
116.22
120.0:
Saies
ITY
V
115.24
115.43
118.6C
■
3.09 '
3.09
X
2.83
3.09
,
2.84
'
"
.
XX kk'
3.46
X/ vXX 3.13*Xvv i/vr^.is "
•/T V3.45
3.46-
-3.32
V.;
3.14
,
X
,
2.93
2.94
.2.93
■
'
'2 84
s
'
^
.
'
X'!
,3.32
415.6
Disability
213.0
——
Livestock''
———
Miscellaneous
Textiles
—
—
Metals
„„——
,
429.£
233.8
Farm
AH
,
294.6
169.8
194.3
;
187.3 XV
140.8
169.7-
.
'
195.1/*•'■
X/-M87.3 V/.X
XX
/
■..
(DEPT.
COM-
OF
$253,440,000
.
,
July:
month of
Shipments,
—
V
.
-VZ: 214.5
Credit
XX. Cash
extended
net debit balances——
In U. S.—
■
•
■/XV. 132.2
;
140.9
344.5
v//V 144.5vV'X;//
combined——r———————————.Sept. 25
226.3
226.4
'
,
$608,151
345,443
/?;/'/. '398.884.
577,077
71^)55,687
131,644,996
655.900
68,184.123
141,235.834
77.7%
$83,814
/
78.2%
$115,115
78.3%
$150,779
239,675
259,987
211.C
184,631
12-31-24=100—
—
Member borrowings on U. S. Govt, issues—
Member borrowings on other collateral—*—
'index,
price
FINANCING
ESTATE
REAL
NON-FARM
IN
-
Vi AREAS
/ Orders received (tons)—-——————.—Sept.
Production
(tons)
...—
■»»'
-—Sept.
173,044
18
192,334
18
162,353
144,410
175,762
185,537
152,814
181,483
101
362,761
440,769
144.2
144.3
143.3
169.4
168.0
169.2
158.1
———Sept. 18
290.1
188.1
191.0
189.3
—-.Sept. 18
——^-Sept. 18
Textile
products
i
———————Sept. 18
Fuel and lighting materials
——-.——
—Sept. 18
Metal and metal products
———-———
Sept. 18
Building materials
:
—
————--Sept. 18
Chemicals and allied products————
—
—Sept. 18
Housefurnishings
goods—
;
————-Sept. 18
Miscellaneous, commodities
——Sept. 18
189.9
185.9
189.5
182.3
188.2
188.8
189.6
185.5
activity—
Unfilled orders (tons) at
*
97
386,808
X/'/
X-X:
93
XHv
—.—————Sept. 18
—.——.—
—
Sept. 18
of
Percentage
OF
U.
S.
76
410,240
Insurance
Banks
DRUG
REPORTER
AVERAGE=100
V"
**'
ii
/
•
l
j\\
'
•
,
-1.-
•
•
•
•!'•'.
;V '
\
'•
—
•••■'
•
—
-r-(%
"■
!
Mutual
k.' '*'* vV)j
—
Foods
Hides and
•
leather products—
—
ly-
Special groups—
k -k^k' k:' ^'k,:^
Sept. 18
Semi-manufactured articles
;
Sept. 18
Manufactured
products
—
——
Sept. 18
All-comodities other than farm products
.——^Sept. 18
All commodities other than farm products and foods——
Sept. 18
Raw
materials
♦Revised
figure,
^Reflects
refinery strike.
effect
of
strike.; in
143.6
X
Banks
Savings
California,
v-———Z
RYS.
INCOME ITEMS
(Interstate
(Month
147.2
147.5
148.0
140.7
Net
137.7
137.6
137.3
115.0
Other
172.4
172.0
171.5
150.3
203.2
203.1
202.0
180.9
132.5
133.2
131.7
122.2
147.8
147.7
146.8
131.9
Income
120.3
119.9
118.7
115.1
Other
of
Miscellaneous
Income
deductions
for
fixed
182.8
173.6
158.6
159.3
150.9
Federal
165.7
163.9
164.9
152.7
Dividend appropriations:
164V
163.4
164.3
151.1
153.0
153.1
138.0
§Excluding California
figures
which were unavailable
due to
common
stock
income
♦Revised
charges-—
—
-
-
taxes
preferred
of
15,331,899
105,509,965
4,249,721
101,260,244
(way & structures & equip.)
of
defense projects—
180.9
On
to fixed
—
charges
.
-
66,924,922
3,210,407
63,714,515
24.474.38K
85.723,47»
2,782,604f
82,940.874
46.274.2272,863,46343,410,764
31,050,032
31,090,411
29,487,439.'
1,371,679
52,253,433
1,362,078
28,136,690
1,357,236
20,167,672
26,700,522
11,562,292
11,029,522
,
—
stock
figure.
$61,249,092
24,248,471
149,221,335
14,934,404
134,286,931
97,288,833
3,218,247
94,070,586
income
X:
182.0
On
*X
—
-
income
158.6
Ratio
$90,178,066
,X
charges
Amortization
153.7
from
deductions
income
$994,787
Income——X $124,972,864
—
fixed
$1,049,591
X
-
available
after
$1,018,397
$334,343
80,986
234.804
^
70.988
Commission)
X
income
Depreciation
^
Commerce
income
Total
187,409
141,061
/
OF U. S. CLASS I
June):
railway operating
Net
——
X—
Total
SELECTED
186,794
130,806
$316,093
71.622
254.765
50.5G4
166.541
135,202
——
institutions X
lending
Miscellaneous
X'
; >
—Sept. 18
;
—
products
..
LABOR—1926=1 »0:
J
Sept'24
•
•
;■//■ All commodities
Farm
INDEX—1926-36
.
WHOLESALE PRICES—U. S. DEPT. OF
/
PRICE
/"■ X:.'
$322,524
83,710
221.489
73.074
companies
Trust Companies —„X——«.
and
76.590
.
~
BANK
omitted);
LOAN
(000's
July
Savings and Loan Associations
//.Individuals
AND
PAINT
OIL,
HOME
—
of
BOARD—Month
>
V/.'
"
ASSOCIATION:
73,614-
credit balances—,.
free
—
135.7
127.1
customers'
of
$550,116
$572,784
54,395
X/343.111
X
customers—
to
and in banks
hand
on
Total
/' 159.1
,
'
225.6
/
accounts—
margin
carrying
firms
-Total of customers'
Stock
147.5
70,603
490
31,313
1,013
'
149.f
"
30.397
.
•
226.£
14Q.9XXX/
35,822
84,817
709
37,136
1,183
,
15-5.3
—Sept. 25
NATIONAL PAPERBOARD
/v.v •■//
omitted):
(000's
31
August
Member
256.5
395.0
of
As
190.(
v
167.?
187.4
"
*149.8/X; X
149.8
—
CASTINGS
YORK STOCK EXCHANGE—
NEW
'
155.6
40,119.000
$247,203,000
X/ 233.3
-
235.4
XX
52,675,000
$293,863,000
551,393
Market value of listed shares-^-——70,862,046
Market value of listed bonds
>.
131,610.120
>
8,509.000
40,555,000
x_—X—-v; ■;
(thousands of pounds)-———28,944
Copper (thousands of pounds)
———
71,803
Magnesium (thousands of pounds)-—_—-X.
554
Zinc (thousands of pounds)— j———-———/<
32,459
Lead die (thousands of pounds)——.X— ]r.
861
274.5
'
169.3
144.5
——:—
MERCE)
.
—
machinery
groups
258.6
292.6
233.8
X,
36,569,000
I Aluminum
234.1
269.5
289.3;// / / X
>
*244
231.4
XL/
219.7
221.1
•X 284.5
...—Sept. 25
T Fertilizer materials
—
^i—'—Sept. 25
// Fertilizers'.- '■
———Sept. 25
drugs
•
297.1
,
233.3
155.6
and
/
217.4 V.//
235.4
Chemicals
229.9
209.4
284.8
materials——.j——.Sept. 25
Building
,
:
—
295.6
■
245.6
268.3
267.6
25
25
25.
25
25
Sept, 25
———
—
.
•
values : _i——X——-X———
NON-FERROUS
/X-A:'/ /{/■■
-
245.6
,
/XVTotal-5„—
v\'\ ixf
244.8
•'
.
-XX——
payments
;
.
payments
dividends
Policy
V
k'k
V
endowments
Surrender
2.72
425.8
420.6
.
-X—
benefits
Matured
Annuity
2.82
-
2.88
2.89
2.89
X- <•; XX
INSURANCE—Month of July:.,;
X
2.6*
2.75
.vX/i 3.16
3.07
'
232
*178
2.90
3.32
•
3.08
/,
—
INSURANCE—BENEFIT PAYMENTS TO
POLICYHOLDERS—INSTITUTE OF LIFE
2.9(
•X///; 3.29
.
3.06
n
—
Sept.
—Sept.
——^.Sepc.
commodities--^.^———-————
Sept.
—:
—
Sept.
Grains V—
;
32,522.000
LIFE
116.6J
115.24
———————.———
.Fuels/-
19.098.000
43,511,000
110.lt
111.81
..
■
20,337,000
21,685,000
107.8(
107.09
111.62
■.
v.
30,997,000
8.353,000
105.00
107.27
112.00
■
:
$115,858,000
36,316,000
104.83
107.27
•
/
$131,323,000
7.711,0C0
104.83
—-Sept. 25
•Fats/and' oils—.——.——————————Sept. 25,
Farm
products.^^—————-—Sept. 25
';,
Cotton
i—4----—.
Sept. 25 •
/
—.—$116,083,000
-»■.
32,185,000
28
28
28
28
r
,
*207
28
Sept. 28
ASSOCIATION—WHOLESALE COMMOD¬
GROUPS—1935-39=190:
,
<
INDEX BY
215
228
Stocks,
NATIONAL FERTILIZER
Foods
unadjusted as of August 31——
adjusted as of August 31—
215
Stocks seasonally
2.24
*181
242
118.0(
2.45
'
266
115.0<
XXX-
X'".'
X,
.
256
114.46
XV 2.45
.//-XvXv/ XX
*185
190 /! i
.
_
adjusted-
110.34
.
v
.
1935-39
—
August:
(average daily), seasonally
114.27
/XX
37,419,113
181
110.70
2.45
39,555,213
X
187
114.46
;
39,726,494
FEDERAL
Y.
of
monthly), unadjusted—
daily), unadjusted*—.
110.52
■. •
17,307,950
$305,854,609
July 31—*.
at
DISTRICT,
OF. N.
BANK
111.44
19,297,128
$344,778,500
of
SALES—SECOND FED-
STORE
RESERVE
ERAL
19,367,345
$348,135,800
—
-
AVERAGE=J00—Month
;
.
—1
omitted)
customers
ultimate
of
100.69
—-—
MOODY'S
ultimate consumers—
to
(000's
ultimate customers—month
—V.
DEPARTMENT
,
XV.
INSTITUTE:
July
of
Revenue from
X
per
——'———.—
ELECTRIC
111.44
Bonds———
—
hours
August
omitted), August
spindle in place,
(000s
hours
spindle
100.71
-Sept. 28
Average, corporate.————————
———
Sept. 28 ■
Aaa
————.——-Sept. 28
Aa ——t..——-w—Sept.28 ■■
A
i—
—Sept. 28
Baa
^
—:
——
Sept. 28
Railroad Group
..———
—:
———..Sept. 28
Public Utilities Group
—»;—;
—^.Sept, 28
Industrials. Group.
—————,—.——Sept. 28 '
II. S. Govt.
1,745,967
2,800,868
of commerce)
7,923,000
Death
MOODY'S
prior to
———^
(dept.
spinning
RESERVE
.—Sept. 28
.
,—
commerce):
of
'
4
DAILY AVERAGES;"..
PRICES
corporate
(dept.
(exclusive of linters)
————
31,507,404
258,316,107
23.798,000
Active
103.000c
15.000c
Sept. 22
at
Bonds—-
Govt.
S.
327,296,178
City.
21,328,000
'
U.
Average
York
Now
9,384,000
M
VXV^XXXXVoX'XXX Xv'-X/XZ./XXXZ'kfkXXX ''k X '• XX
:...,
—
23.805.000
X Active
103.000c
19.500c
/ X. V >X /■ '■ XX',-.;
9,207,108
52,964,820
21,352,000
$36.93
/23.425c
19.300c
—_X
at
Louis)
(St.
'
$377,081,138
49,784,960
States
City
16
month
at———
—X————
Sept. 22
J Lead (New Yprk) at—i——————Sept. 22
—
:r Straits tin (New York)
Lead
12.126,964
94,356,501
67,009,238
35,685.062
Spinning spindles active on August 31—
$37.75
'■
21.225i
23.425c
;
$289,823,511
20,812,364
62,011,404
31,436,642
Spinning spindles in place on August 31_.—
3.18925c
23.200c
103.000c
at
refinery
$345,405,349
35,561,273
309,844,076
41,474.487
—:
-
—
Kilowatt-hour sales
%
Vs
'' vx
'
at—--—X.-—XX—XX—XXX—.Sept. 22 V
Sept. 22
Export
■
16,898,035
78,650,851
——————————
of
cotton
3.75255c
23.200c
/
19,731,192
10.965,371
72,303,991
—-—
V'"
v
23.200c
refinery.
$14,611,202
29,000,958
——__
United
Sept.
ftffETAL PRICES (E. & M. J. QUOTATIONS):
Domestic
$18,671,510
64,550,181
32,744,718
78,546,812
47.886,574
_—-—
:
—
ginning
EDISON
Electrolytic copper—
$19,641,669
:/'
•
—
Running bales
.
steel
(per lb.)——
«.
Pig iron (per gross ton)——_——
Scrap steel (per gross ton)—;—„
—-—
Xv
85,881
&
61,117,344
——
—
York
New
5,426,247
5,460,609
Sept. 23
•
IRON AGE COMPOSITE PRICES;
Finished
BRAD-
&
;X
vKr
*93,790
CITIES
•
Central
cotton
Sept. 25
INDUSTRIAL)—DUN
•••
DUN
—
215
—
Central
Total
\
1
'vX.X v!•/
■■■"
INC.
Central
Mountain
'
Sept. 18/
—-—XX-
-
;y,k
;. •
141,929
100,916
,
.>V'X/X:X V;X/.
RESERVE
,
AND
(COMMERCIAL
STREET,
;.vf; \;y:_ xv
INSTITUTE:
261,566
*205,619
213.112
'
South
Pacific
—_—.
output (in 000 kwh.)
VALUATION
—
Atlantic
West
$489,376
*358,071
371,744
1
etc
Epgland
South
^$657,480
$685,772
-
August:
Middle
Outside
EDISON
Z.
—.—.T-
———_____—-—.
PERMIT
BUILDING
8,276,001
$84,427,000
of
Month
—
•
alterations,
58,294,000
6,759, 000
OF LABOR
construction
Sept, 23
$135,183,00
$102,942,000
$97,940,000
(in thousands)———..
DEPT.
Sept. 23
—Sept. 18
--—Sept. 18
——*.
$206,307,000
(three 000's omitted);
$95,191, 000
/
X $220,779,000 $235,350,000
GOVERNORS
RESERVE SYSTEM—
OF
PERMIT VALU¬
URBAN AREAS OF THE U. S.
building
East
rX.
(tons).:——:
AVERAGE—100
TEM—1935-39
931,072
.
V^VVXXX/XVX X. 4;/;; Xv^VXXX-X
DEPARTMENT
900,572
12,781,000
5,896.000
—-i-—i
August
$183,280,000
23
17,762,000
CONSTRUCTION
$100,303,000
————Sept. 23
—.
(tons)—--——.——
;
;
——X-—1^.1—-Sept. 23
1,100,000
17.196.000
—-
and shipped between
BOARD
—
Additions,
municipal—_**——X——X———-Sept.
and
788,700
news-
construction—j———^XX^~.*.-—,,-X-,~--~~.-—.-X—;
Public
/X State
909,733
'%kk /X
construction—X————
S.
Private
;Xv
•
engineering
674,000
FEDERAL
of
BUILDING
June
Revenue
11,350,000
1,179,000
/
———
DEBITS
!
;
;
•8,407,000
credits—.—^
9,937,000
countries
Total
ATION
RAILROADS:
AMERICAN
OF
9,374,000
goods stored
on
foreign
—
ASSOCIATION
46,693,000
9,118,000
10,686,000
———
exchange ——;———;
Based
BANK
Sept. ig
39,877,000
——
1,651,900
2,261,056
3.63
*
12,053,517
2.95
799,806i
, 2.26
'■"xu
\JLoovj
tries
The Latin American
If
the
placed
Exchange Situation
it
(Continued from page 9)
bound at some stage to
unprofitable. At such a
exporters will have to be
arise
from government deficits,
Along with these government def-
time
icits
given
exchange rate that will
make it possible for them to mainan
tain
their
exports.
Any
other
there has
feel
Latin America.
credit
While such
measures
depre¬
as
ciation, multiple rates, and ex¬
change controls can meet the im¬
mediate situation, although not in
an entirely
satisfactory way, they
not
are
mental
to
the funda-
problem
of
exchange
in Latin America. I take
policy
it
solution
a
that
there
is
well being of all
countries, and that includes Latin
America, would be furthered by
a general policy of
stability and
order in exchange arrangements.
The question is by what means
can such a policy be achieved.
As
I
in
have
Latin
America
.
said,
the principal
cause of the present difficult ex¬
change situation is the inflation
of prices and costs in Latin Amer¬
ica.
With
few
exceptions,
prices
in Latin American
countries, even
when adjusted for the
change in
the
value
terms
of
of
the
than
more
their
currencies
dollar,
the
in
have
United
m
risen
States.
money incomes have risen rapidly.
It means that these countries find
dollar
goods
States
from
the
United
better
a
bargain than do¬
country cannot
follow
a
policy which permits
prices to rise indefinitely without
endangering the stability of its
exchange system. And that is the
mestic
goods.
"/V/*[%■
There is
easy explanation of
in Latin America.
no
inflation
Part
of
it
is
reflection
a
world-wide sforces
Higher
prices
goods
be
raise
of
the
difficulty,
of
is
the
of
inflation.
for their export
incomes
in
Latin
America; higher prices for their
credit
is
the
inflation. Much
ion
is the
part
of
the
American
Latin
more
inflation
in my.
which
opin¬
is
the
result of domestic
policy—budget
policy and credit policy.
The
of
Latin
the
Fund
American
members
International
are
eager
productive
Monetary
to develop their
resources, to get for
the modern means of
themselves
production. That is the only way
in which real standards of
living
can
ultimately be raised in
America.
The
velopment is
a
objective
worthy
Latin
of
one
de¬
which
ize
or
foreign loans permit domestic in¬
vestment, development can
be
and
investment.
It
be
used
this
may
be.
The
It
difficulty arises when
are
gov¬
determined to carry
what
Latin
some
American
This
is
affairs
to
in
engaged
make
you
in
are
actual
end
These
countries
few
to
seems
that
me
that
level
a
An
a
in
tract
assurance
stability,
the
of
to
of the
overlook the broader
During
and
American
played
a
economy.
scale
far
1938
since
the
1947
implications.
the
the
war
countries
vital role in the
have
world
They have shown their
to supply goods on
larger than before. In
Latin
American
coun¬
provided
about
these
same
about
14%
exports.
countries
In
pro¬
of the total. In
1938 the total exports of the Latin
American countries
of
as
all
large
as
Europe.
were
less than
the total exports
In
1947
the
exports of Latin American
tota
coun-
Indeed,
was
the
neces¬
better
ahead.
ber
of
of 5% is
one
An
25%
for
pital
or
a
additional
new
a
university or a hos¬
pension fund for re¬
a
missionaries
and
ultimately
may
prior to World War
years
during the
I repeat: during this
greatest of all business booms in
America
and
from
inducements
discounts
5%
—
exceeding
liquidating
value—the
concern
that
be
could
I
know
of
other in¬
no
1942-47)
and
hard
stockholders
many
tention
did
•
.
..
of
1.082
stockholders just prior to its stock
offering, No less than 497 of these
stockholders or 46% failed to sub¬
scribe to the new stock. A total
of 368
is
53
page
that
referred
"this
6%
end
the
of
the
so-called
If
be
considered
now
vestment
that
For example, one fire insurance
total
on
previously
to
a
low/
as
to
should
going be the total profit of the - com¬
,/is panies whether it " comes from
Stockholders Necessary
had
averaged
compared with prewar;.' /y/
Let us examine now the con¬
fact
generally supposed. :
company
has
when
savings in
Yet even
offerings.
these
yields
45%
one
margin of
income of
days
difficult
years.
New
the
years" have been
II became non-existent
war
ranged from 4.5% to close to 6%.
That is indeed a far
cry from
Most
few. crumbs
a
Underwriting profit
margins which existed for a num¬
end."
4.5% basis.
last few
lie
than is
a
"should"
years
inspire confidence in investors
today,
on
few
with
a
malnutrition
to
what
ac¬
from
such
would
I
little
in*
were
convinced
am
private
capital
be invested in the
ever
or
underwriting
contention
a
accepted,
very
the
business
fire/
insurance business.
Recently the dividend yield
the
Barron's
conservative
on
50-stock
average,
list
investment
of
a
stocks compiled by Barron's mag¬
stockholders (actually
azine, the national business and
be¬ financial weekly and widely used
of the large amount of stock by investors, was 5.85%. In other
still registered in brokers' or so- words, an investor could receive
new
probably
substantially
more
cause
ministers
called "Street" names which will a return of 5.85% on his
savings
easily mean the difference ultimately be
split up into indi¬ invested in this blue chip cross
between a decision to supply the vidual
of
American
holdings) had to be found section
industry.
new capital or not to
supply it. to purchase the stock which old That' is actual dividend return.
Now the recommendation of. the
However, there "could be no stockholders declined to buy.
greater misunderstanding than to
In ; the
case
off another large McCullough Report is not for a:
believe that new capital was at¬
fire insurance
(a) 6%. dividend return on the
company, no less
can
provision
ought not to
we
with
was
at¬
of
re*
meagre that it is now
from
tired
.
tracted
The
think, however,
past
to
first
6%
a
so
not
25%.
purposes.
development of the econ¬
of Latin American countries
important for its own sake. It
is important for the well being of
the people of these countries,
money.
which
return
4% and
capital for productive
is
the
sufficient
last
satisfied
be
that
company
stockholders
induced to invest their
case
offerings were at 5%. One
largest was at 5.4%. The
difference between a return of
ex¬
omy
no
note
that
.
seri¬
from the table. The "actual results
only under these condi¬
was
suffered
subscribe to the new stock. Far
fewer old stockholders subscribed
of
availability
the
in
It
I
suggestion
;
require
tions, probably the greatest "fire',' dustry
whose
operating
profit
sale in history, that fire insurance
margin (during the past six years'-
these
of the
exchange to make payments
abroad, the steady service of for¬
eign investment, would be a great
encouragement
4%
new
of
that
of
complished
of
of adequate
'
offerings
Furthermore, I know of only
offering, the first, which was
responsibility —a national
responsibility on credit and fiscal
policy, an international responsi¬
bility in securing a normal flow
of foreign capital.
If this were
possible chronic exchange diffi¬
change
:
.
4%,
tional
The
busi¬
"
sary
to attract new money, in
times when interest rates were
somewhat lower than
every
interna¬
an
reveals
return
rate
is consonant with
national and
the
*"
company stock
stockholders within
to
community and
availability of foreign capital.
a
into
.■.
examination of the fire in¬
year
the savings of the
This is
'
surance
policy would be to attempt to re¬
public and private investment
to
'
■
■
Examination of Recent Offerings
late
the
■
underwriting end."
statements
for/the
in
is
the
years." This is like saying
man
and
now
from
or
the
on
change arrangements.
what
the/ investment
business
"should" be adequate "based
actual results of the last
turn
strong balance of payments, with
financial stability, and orderly ex¬
a
your
the
few
should be
from
comes
examination.
ous
all
the
on
last
profit of the companies
the
of
based
the
But this 6%
.
it
so-called
(Continued from page 16)
y
.
of
considered
now
Insurance Industry!
plow back
.
total
whether
Don't Kill the Fire
'
results
years,
the
financial policy is consonant with
of
adequate return
an
you
determine
in
great nart the economic strength
and stability of your countries. It
is your job to see that domestic
ing
of the McCullough
invested in the business should be
As
you.
business firms uncertain and hap-
:
,
Report it is submitted "that a return of 6% on the equity
capita^
;
posi¬
a
their progressive
development
the future.
to
this
Far Too Low
53
page
sure
That is the
best way of assuring the well-be¬
left
in
f
.
6%
On
interna¬
denly
ness.?'
in Nazi
a§
o m
not
businessmen
he
exchange controls are sud¬
imposed which act retro¬
actively and make payment to
foreign
exporters
and
foreign
d
r e e
>
1 y*
a
that rests with them and
as
coun¬
home.
at
that your gov¬
ernments realize the responsibility
tries
Latin American country the wiser
20%
ernments
In
middle- ground must be found in
which development will be pos¬
sible without inflation. '
vided
can
tion
the
risky undertaking and discour¬
ages trade aftd investment.
stagnate than to take the
risks 0f developing a country by
means of credit.
I do say that a
there
which
and
other
difficult
tional
a
j try
of total world
ment, however modest
do
can
which
uncertain
f
that
community
-
at a great social cost to the conSUmption of the people.
I do not
say that it is better for a coun-
81/2%
savings
for develop¬
he
in
left
investment
means
undertaken without inflation. And
in all Latin American countries
local
what
is
of
p^fmtrv
As the business leaders of your
expect.
The consequence is
that
international
business
in
some Latin American countries is
your
country.
But
too
much
credit will inevitably mean infla¬
tion and inflation means unwise
together
some
have
can
modernizing the economy of
tries
are
to
countries to produce can be of im¬
measurable value in developing
capacity
from abroad
regulation
Dusinessman
exchange
on
policy as it may
seem.
It does require greater care
in undertaking commitments and
a greater feeling of
responsibility
in meeting them.
The supply of exchange to
importers and to foreign investors
:is too often subject to adminis¬
with you.
Investment undertaken
to increase the capacity of your
nanced.
come
each
sasis.
trative
in¬
without
be the first step of a
series leading inevitably not only
government control of the in¬
dustry but eventually,
fact
fire
Left
tht ^?ss
businesslike
a
the
to
industry.
commitments
? as
They have not
on
available
obligations payable j
We are discussing here issues of
in foreign exchange must be met I fundamental importance not only
with the same diligence as obliga-; to the fire insurance industry but
tions of businessmen and banks to to the people of America.
many
countries
be
authorities must think in terms of
the
of
sources
That would
businessmen, you must real¬
the responsibility that rests
Latin
To the extent that direct
conducted
foreign
the
to
As
every government must take into
account. The real problem is how
that development should
be fi¬
investments
'
in
controls
American
Deen
available for business.
avoided.
for
Latin
made
culties in Latin America could be
reason
exchange
orderly. This
an
The
policy would
a
off
ance
foreign exchange i
which
their
people
undertake.}
They must make allowance for ic
pay¬
choke
private resources, the fire insur¬
industry would become de¬
pendent upon government capital.
opinion, the foreign ex¬
policy of Latin America
my
America.
America
not been efficient.
too
import goods raise costs in Latin
is
ly,
The
America.
That
■■■■■■
to
private capital that would other¬
essential basis for expansion
of trade and investment in Latin
^ave tf. !iavl, more
exchange policies. Frank¬
on?7v;t
suitable
progressed very far and in which
credit policy of the banking
on the whole quite generous, there are complaints now
enough
7
The result of such
be
.
international
•:
McCullough Re¬
port, would be grossly inadequate.
wise
more
invested capital," as rec¬
on
surance
is
development
an important
as
idend
ommended in the
ernment.
must, become
place
is to play an
important role in the world econ-
the
not
will
We
Policies
in countries in which inflation has
that
in
If Latin
secure
that
countries
more.,
the
on
Must Have Better Exchange
bad servant. Even
a
import
ments.
many
business.
however,
much credit is
stress
established
any
servant
to
great
Latin
unpredictable policies of his gov¬
In
element in this general expansion
America
right to
a
have
has
change
of world trade which is
necessary
to enable a better balance to be
project which is
likely to be profitable.
There is
a natural feeling that credit must
A
situation in much of Latin Amer¬
ica today."
the
they have
for
Too
Latin
he
that the West¬
mean
of Latin America
agree-1 system is
general
ment, that the
Inflation
in
It will
the
on
not because of anything
done, but because of the
abroad,
that the West¬
mean
Hemisphere
ern
a
investment.
private
businessmen
expanded
Hemisphere
more.
steady expansion of bank credit to finance
policy would choke the trade of
y'w
been
require greatly
effect
businessman,
who
is
scrupulously meeting his obliga¬
is
to
impair
his
credit
tions,
self-sustaining basis,
a
The
American
is to be
countries, and I
particularly Latin America,
will have to produce and export
.
are
will
ern
become
on
hazard.
large
Europe.
economy
mean
Frankly, the only on
development
without
adereason for multiple
currency rates quate regard to the consequences
on
imports is to avoid exchange on the balance of payments
posidepreciation, at a time when in- j tion of the country.
When govflationary forces are as strong as ernments run large deficits, to fithey are now in much of Latin:nance the ordinary
budget or to
America.
undertake big development proIf the inflation becomes more jects, incomes and prices inevitsevere
in Latin America it will ably rise.
This rise in prices and
probably be impossible in many incomes results in a big demand
countries to avoid exchange de- i for imports.
No matter how repreciation. So long as exporters strictive
the
import
policy
is
can
benefit from very favorable made, there cannot be enough exprices in foreign markets, it is change receipts to pay for an inpossible to continue the old parity tiated import demand.
by rigorous restrictions on ini¬
Bank Credit Expansion
ports. But once prices begin to fall
in foreign markets, as they have
It would be a mistake,
however,
for some commodities,
and do¬ to assume that all of the inflation¬
mestic costs continue to rise, ex¬ ary difficulties in Latin America
ports
world
trade. It will
solution.
tory
than 40% as
were more
the total of all
as
■
to
the fire insurance in¬
the basis of a 5% yield
dustry
on
alone.
That
was
only
inducements
offered
vestor.
more
Even
to
45.3%
its
the
of
stock
stockholders
of
the
scribed
the
in¬
purchased
one
to
than
was
offered
investment
end
unsub¬
although
has been shown funds
as
the
of
business,
had actually to be invested in high grade commorv
by.: the; underwriters. stocks yield close to 6% today;
and
important, he In this case as in the other, the or for
the opportunity of
(b)6%> earnings return on the
yield to stockholders was 5% and
purchasing ^marketable assets at the ;h discount
from f liquidating investment end of the business,
afforded
was
•
discounts ranging
up to 45%. Fur¬
value
thermore,
available
45%
these
were
ing
discounts: up to
discounts on liquidat¬
value
only.
They
of
marketable
assets
gave no consideration
whatsoever to going concern value.
And
yet, as
going
every one
all
of
which could
not
be
today ' and which
millions
and
millions
Therefore, it is fair to
by
concern
a
value
wide margin.
was
dollars.
say
that the
exceeded
go¬
45%
how
are
not
much/of
of the stock subscribed
taken
activities
by: old
of
by
our
a
stockholders
From the
new.
office
own
it
is
substantial number
of rights was sold by old stock¬
holders to new stockholders who
then did exercise the
rights./Cer¬
although shares of leading invest-*
ment trusts can be purchased to¬
day where the earnings return i$
well above 6% without
any .of the
hazards whatsoever of the insur¬
business, without the risks
City, Florida hurricanes,
Maine
fires
or
just / downright
ance
of Texas
poor,
-•
underwriting experience/
V
Either of these recommendations
been
more
under¬
of the would have
subscribed by old stock* standable although -why dividend
or earnings return on the
invest¬
'
f; ■
ment end of the business-
tainly far less than 50%
is worth
of
Figures
show
and how much
dupli¬ stock
discounts from liquidating and
ing
the 54.7 %
to
recognizes, known that
this
concern value is the
very lifeblood of the companies,
their agency plants and good
will,
their long record of fair dealings,
cated
heavy.
was
holders.
should
4% Grossly Inadequate
r
%-f
From the foregoing it should be
plain that from
a
practical stand¬
point "the payment of
a
4% div-
be. limited
me.
I
at
would
all
is
oppose
not
clear
to
either limi¬
tation
to
as
a
needless strait-jacket
progressive management ^ *
What
has
been
proposed
is
a
Volume
6%
168
total
profit
well
as
When
Number 4738
from
from
as
actual
section
cross
try
today
than
controlled states of Nazi
underwriting.
from
of
from
shares
of
of
should
fire
want
insurance
to
ment trusts and
free
These
are
;Y7:
practical
;{7'7;'
when
the
to
is
hazardous
judgment,
an
ceeds in
securing a far better re¬
than the company
which, in
effect, "buries its gold," receive
wise what incentive
be
other
than
to
would
there
-;
fire
insurance business is
That is the business of
separate.
business,
entitled: to
because
it
is
is:
Close
to
850
fire
1953
insurance
Cullough Report.
earn
should
of
be
both
in
'In
today will
is
suggested
the combined
the
earnings
investment
ends.
surance
tion
stocks
than
more
"
and
investment
and
under¬
writing earnings combined
able
It
books
gin a disintegration in the fire
insurance
business jiitself
since
some
companies might elect to
abandon the insurance side and
pursue the investment side alone
five
the
various
hampering
have
definite
merit
well appeal to
who after all
officials
nary
and
might
boards of directors
not
are
but
eleemosy¬
have
responsi¬
bilities toward their stockholders.
I am sure it is furthest
from the
thought of the author
to
port
turn
the
of this Re¬
fire
insurance
business into the investment trust
business
but
very
conceivably
might happen.
As a former
treasurer, of an investment trust,
sponsored by some of the Du Pont
that
interests, in
unfamiliar
in
all
and
Wilmington, I
with
this
seriousness:
field.
if
underwriting
am
I
not
say
investment
earnings
are
considered together for rate mak¬
"it could happen
ing purposes,
here."* -Y;
This
letter is
already long and
I have covered my two most seri¬
objections to the Report, rec¬
as to a 4% dividend
limitation and to a 6%
earning
ous
ommendations
limitation
from
combined
on
underwriting
ments.
If either
or
income
and
invest¬
both
of these
recommendations were to be ac¬
cepted by the National Associa¬
tion
not
of
Insurance
only would—,
(a) little
into
thus
Commissioners
the
or no new
fire
favorable to
a
-
"
.
chpital flow
insurance
■'
an
how
will
years
hence.
in
the
These figures
include, for
One thing is certain—whatever
this country had as
rest
of the world and therefore
has much less of its
original
now
This
than
country
60%
other
any
country.
supplied more
has
of
world
"the last few years.
un¬
pre¬
the
on
three
or
unearned
premium reserve, in other
words,
like that famous
pie in which
:Jack
Horner
put in his
Little
thumb—except
be
certain
that
consumption
what
;
v
Engines of Future
-w,':
Before considering what other
liquid fuel sources are possible of
serve.
It
run
For
the
cn
example,
ideal
cycle
mistake
a
premium
iuels.
saving
by
the
is
ap¬
7.75
C.R.
over
6.5 C.R. but
the actual
saving in the vehicle as
operated is much higher—twice as
much.
The reason is that subsid¬
iary savings can be accomplished.
The rise in C.R. increases
I.M.E.P.,
but the
breathing and other en¬
gine losses do not increase, so
that engine mechanical
efficiency
in
by
my
more
conservative
statutory • method.
Conservatism in finance should be
guiding policy of financial in¬
the
stitutions.
the
to 92
the
for
proximately 9%
the reduction
be
present J35
octane
bhp., the engine is smaller and so
are
these engine losses,
Further,
judgment to alter the present
Similarly
will
Research
will "pull"
premium re¬
i /
would
compression ratio. These
engines,
rather carefully
designed for bet¬
ter cooling than has been
usual,
never
one
out of the unearned
so-called
in the unearned
premium
is an "ace in the hole"
equity
reserve
which not
of
exhaust dilution
More than most provisions in
the Insurance Statute does this
100% reserve requirement safe¬
guard
solvency.
It
thus helps
carry out the duties of supervis¬
ory authority whose responsibility
above all is to maintain
solvency.
In-r these times of stress 1 and
strain within the
surely
industry it would
be unwise to
of the bulwarks of
remove
one
solvency which
has served the fire insurance
com¬
panies and the commissioners well
for many years.
Abandoning stat¬
utory methods of computing
a
now,
National
and
simi¬
lar to that Biblical character who
suming would
the
present
Another
Underwriters
its
Statement
a
of
add
about
10% to
automotive total.
and
June 3,
a
long enough time to allow
more
or
less comfortable
The
1948.
present trend toward rail¬
Diesel
engines instead of
built
10
years
charged
to
2.25
was
C.R.
ratio
13.5.
The
C.R., not available yet. and not
likely to be, in large volume. The
operating gain for this ratio is
to 40%
over
6.5
35
C.R., worth trying
dual
fuel
forms.
hol
idea
offered
in
several
One form, the use of alco¬
and
water, is presently pre¬
paring for full-scale commercial
trial, chiefly for trucks.
Com¬
pression ratios of 8:1
or
higher
which is
say
power
only
were
If
(17 p.s.i.
6, overall
for
needed,
uct
of
the
boost
ratio
times
cylinder
about
the
the
octane
value
as
is
But since the compres¬
two-stage, with
a
super¬
complete
and
coal
44%
mean
oil
ulti¬
of
anybody
that
war;
can
other
would
the
can
have
that
■
take
now
possible
supply.
detonation.
It* is
total
more
look at the
a
of
sources
an
energy
astonishing fact
fuel
is
used
for
heating than for
neces-
more
power, exclusive
and shipping. An-
,0f automotive
gas energy,
than that required
The set must
Without
.
there is
so
'v
omy.;.
It is
unit
.:y,'
gain in
no
7 :Y"'
v1
:
estimates,
our
could
be
built
!
■
777; 7.;
a
cheaper than
into
we
details
take
can
Y
look at
a
of
sources
heat.
r7Y,
Years Reserve at 1947
Total Consumption
Maximum
Minimum
>
(
or
authority of
present consumable
;\7y'y
econ¬
quite possible that such
going
any discussion of the
effect,
7 Y
1700
Petroleum
16
Natural Gas._
Oil Shale
12
170
•...'
5
7
5
32
8
1760
188
___
the
same
capacity unit without
supercharger. The blower
unit
ought obviously to be cheaper per
cubic
inch
the
of
much
displacement
more
than
complicated
structure of the engine. -;
Another method of
raising C.R.
without
raising octane demand
has
been
proposed,
but
only de¬
veloped so far in an experimental
single cylinder unit.
The
pro¬
posal uses the Diesel method of
injection,
adding
controlled
a
swirl in the cylinder so that
no
unburned mixture is ahead of the
flame front, and detonation is not
possible.
tractive
This method has its at¬
features,
■
but
it
is
likely to give higher brake
pressure
than
not
mean
present
Diesels,
and
will
therefore
be
fairly high weight per ; horse¬
0.55 bhp. per cu.
in., unsupercharged aviation engines 0.70, su¬
percharged aviation engines a lit¬
tle
over
i/':7/7/^y,
This table is
prepared on the basis
each of the1 fuels
of
for
the
heat
1.0;
the
racing engine
mentioned above, 1.5.
This shows
what is in the wood if
we
want to
get it.
Obviously reduction of
weight per horsepower, which ac¬
companies increase of horsepower
per cubic inch
(or BMEP, same
thing, nearly), is valuable in per¬
mitting a reduction of weight in
the whole chassis
carrying the en¬
gine.
There are more miles per
gallon in lugging 2,500 lbs. dead
weight around than 3,000.
whole
Economies
in
Oil
Consumption
Other economies of
when
and
quite dis¬
nature are likely to be
by the economic situation
petroleum becomes
more
ing oil
expensive.
scarcer
There
has
been any reason for burn¬
or
station
oil; about 10.3% by natural gas;
25% by water power; and 61% by
"coal. The elmination of the power
generation
from
petroleum
con¬
be
added
to
arrive
at
energy
supply.
The huge
difference between the maximum
and
minimum
estimates is due
principally
- to
two factors: first,
have in many cases
greatly re¬
duced the estimated reserves in
we
coal
by
the
recent
surveys;
second,
minimum
estimates take into
account recovery of these
reserves,
which js never 100%.
Coal used
to
be
70%
in
50%, is
now
nearer
has
not
know
was
70%
nearer
cases
do
now
improve; oil
may
20%,
some
We
>
about
and
10 to
reached
the
and
85%.
ultimate
in
oil, natural gas or oil
shale because
they have not been
all discovered
yet. In the case of
011 shale, we do not
know the ef¬
ficiency of
recovery.
Maintaining Balance Between
Solid
One
and
Liquid
Fuels
thing is certain; the safest
estimate
of
resources
will
be
down toward the
minimum, and
in any case
petroleum, natural gas
and oil shale are
relatively small
in both estimates.
It is therefore
quite plain that if we are to main¬
tain a balance between the
liquid
and solid fuels, efforts should
be
directed to accomplish the follow¬
ing-'
:Y:.
the
Designers
transfer
.
should
of
consider
all
energy
solid
fuel,
from
liquid; reserving liquid and
gase¬
possible
a
being used
supply for
for 1947, so the
energy
power
can
total
a
(1)
Other
whole
and
reserves
The best of the present
engines
for road-vehicles does not exceed
natural gas in a central
except that these were
^cheaper than coal at the locality.
the
About 3.8% of the electric power
cylinder compression alone at
12.5 C.R.
sion
same
We
Coal
never
super¬
another*
only,
more
charging as at present will get that
easily; the real C.R. is the prod¬
a
for
users of fuel oils, to
nothing of the supply needed
the Army and
Navy if we have
power and
similar
idea.
The
; on the other
two-staging the expansion
can
is to extend the
oil
might
fuel
which is needed to get the econ¬
omy; in supercharging only, the
C.R. Is raised but the
expansion
ratio remains that of the
cylinder
forced
path
an
supply of
purposes.
that
so
of
what effect
see
super-
be geared to the
engine. In
this is
readily be handled with this sup¬
plementary fuel, using 4 or 5%
Another
total
to drive the blower.
for peak octa.ne
demand, y
turbo-supercharger
the
sary to increase expansion ratio
'other astonishing fact, little disequally, possible by extending the
cussed> ls that the use 0f electric
turbo-supercharger idea and putp0wer is increasing faster than the
ting on a gas wheel big enough to
use of petroleum
products.
use
all the exhaust
power.
mental
have
can
on
other
fields,
mately
aftercooler
without
for
substitution
ASTM octane gasoline
(of low
fuel becomes available.
Experi¬
engines so far built need
about 100 octane Research at 12.5
as
leum
dropped temperature at engine in¬
let 60 deg. and the unit ran on an
82
oil
effect
railroads now use 24% of the coal
produced and 8.5% of the petro¬
racing engine
ago
cylinder
gage),
therefore
effective
C.R.
fuel
charger, it is possible to apply an
aftercooler between supercharger
and engine, greatly
reducing the
octane demand of the
engine by
cooling
the
charge.
We
have
proof this is so; a
steam
enormous
16)
page
adjust¬
ment.
contained
as
of
over
on
Board
C.R., and unless some¬
of the country is generated by fuel
because thing else is done, would require
un¬
temporary advantage, would
shortsighted indeed
Fire
in
the
of
improves partthrottle efficiency. The purpose
is,
if possible, to move
up to 12.5 C.R.
higher
infrequently has meant the dif¬ for.
ference between solvency and fi¬
However the increased octane
nancial
embarrassment
for! fire
value is only required if we in¬
insurance companies.
Admittedly crease
compression
ratio
in
a
it is a rigid
requirement— to set
single stage, present cylinder, and
up
100% of the premiums as a
do nothing else.
There are sev¬
liability.
But it is certainly a
eral ways in which the need for
requirement in the best interests
higher
octane
gasoline
can
be
not only of the
companies them¬
avoided.
One is to employ the
selves but of
supervisory author¬
ity.
have
catas¬
findings of the Committee
Laws
;Y;;Yy' Y ;/ ;yy,/" sensitivity)
increases quite
noticeably. In ad¬
dition, if designed for the same
.one can
farreaching and
To get economy it would be
ratios
is
be
those
both
or
;
on
common
off
The
state-controlled in¬
to
Either
v'j
the
put
run
of
similar
in
per
business
now
situation
a
the
6% limitation on
investment and under¬
a
ex¬
overstatement
$0.73
or
derwriting earnings
about
an
77^7
industry,
bringing
dustry
y
me
s'mply is not possible to
dict
without
increase
meant
$146,000
share.
capital into the fire insurance
It might well also be¬
restrictions of regulatory author¬
ity.
From
a
purely
financial
standpoint such a course would
'
an
business.
new
to
foundation
by $681,000 so
overstatement of earnings
an
obstacle
I
the
maximum, consideration of
increased efficiency in use of
pe¬
troleum fuel in engines.
than
or
increased
by 21.5%
of
would
almost insuper¬
toward
attracting
seems
60%
premium
reserve
when
the business as it
matured in 1946
had an equity of
only 13.5%. Dur7i
ihg 1946, the unearned premium
reserve
profit limita¬
a
clear,
(Continued from
closer.
ma¬
of
most
would
"forgotten
earnings.
saying that business supply
loss ratio
limitations
coal-fired
risk
1948—will
these
The Question of Oil Reserves
in
earned
that
opinion
on
the
original oil,
statutory it has developed its resources at
(for fire) or 35% a
very much higher rate than the
slender
the
"
my
not onlv erect
in¬
trophic results for the industry;
(4) Against taking into consid¬
-
.
common
to
'
effect, would allow no profit to
the insurance end of the business
at
-all
for
capital
invested
in
sound
order
(and conversely, in the
equities in ^development^ 4t would be well to
unearned premium
reserves) consider the possible engines of
have taken place.
For example, the
future, some of which will be
although - the s 10-year - average in our
laps by 1949.
!
equity in the unearned premium
The obvious move for
improve¬
reserve ; for
a
casualty company ment in any engine
efficiency is
was 37.9% and
thus slightly above to improve the
cycle on which it
the traditional
35% used for cas- operates, that
is, raise compres¬
ualty, in 1946 the equity was
only sion (and expansion) ratio. The
13.5%,, How illusory were the
move, as you are aware, is already
earnings reported in
1945
and under way, and 1949
probably Will
1946, based upon an equity of see engines of
somewhat higher
35% of
the: Mc~
The report,
This
of
the
America is America—the
profit incentive to a great indus¬
try will have to be far greater
in
a
of
road
pre¬
account
which to base
earnings.
Wide fluctuations in loss
as
recommended
unearned
into
now—in
with
better.
Certainly as long as reward is
in accordance with risk and
effort
in- America—which is to
say, as
than
one is
ceedingly
^companies have retired from busi¬
ness during the
past 25 years, v:
long
tne
by 40%
written
May I repeat just how hazardous
it
writing
ture, assuming five-year
term, in
ample re¬
hazardous.
so.
in
position
For
dividends;
(3) Against
briefly
the very
considerable
takes in
adjusting
effect,
insurance. • That is the effort to¬
ward which the
companies are or¬
ganized.
It too
is a
hazardous
ward
want to discuss
in
and
(1351)7 43
pot
a
the
combined
(for casualty) of the
increase in
the unearned
premium reserve. In
.
Similarly, the underwriting end
the
Soviet
n
reserve
results
•
of
states
and
-
reveal
assets
;vv77:-7y yy
controlled
,
evaluating stockholders' equity, V
However, a little reflection will
one
hold.all
the
Germany
equity
mium
reward for its effort? Other¬
in cash?
bring¬
taken
suc¬
turn
more
also
prepaid expenses. The
author of
the Report stresses
the fact that
many of the recent
prospectuses
issued in connection
with the of¬
ferings to stockholders by the fire
insurance companies have
business. Should not the
company
which, through intelligent invest¬
ment research and
in
Nazi
Finally, I
*
a
would
Prepaid Expenses
its capital needs.
The investment end of the fire
insurance
business
is
separate
It also is
those
Russia.:-
studying
unto itself.
The capa¬
be
industry
situation favorable to
a
for
CHRONICLE
appalling thought
am—
to the home-owner is
that fuel
men," eration for rate-making purposes oil and natural
gas are likely to
the
patient
insurance
company the alleged earnings on the un¬ get
tight enough in the future to
stockholders—endowments, insti¬ earned premium reserve, which force a return to coal for
house
tutions and
individuals, who need in my opinion, are largely illusory
Seating; fortunately we have auto¬
encouragement (rather than dis¬ if not
matic stokers available
negative;,
now that
couragement)
for
higher
divi¬
(5) For the present conservative are as efficient as oil
burners,
dends, to say nothing of these
and
the
method, without change, of com¬
only additional trouble is
higher dividends themselves;
that of
puting
statutory
removing ashes. If such a
underwriting
(2) Against a 4% limitation on earnings and in general endorse change did take
place it would be
state-controlled industry similar
of
*
considera¬
industry
the
birthright
my
(1)
of insurance
thereby decreased thus
a
tions of the first
importance par¬
ticularly at a time such as the
present
of
ing about
a
under
company
such provisions. '■
in
make
abandon its
underwriting
thus becoming invest¬
regulatory authorities.
city
FINANCIAL
Summarizing,
function,
leading
invest
or
his
&
porridge.
.
date
more
investment
trusts
neither
of
which bear any of the hazards of
the insurance business—I can
not
for the life of me see
why any¬
one
sold
(b). existing fire insurance
cap¬
ital might decide
either to liqui¬
a
earnings
COMMERCIAL
Germany
Soviet Russia;
or
5.85%
blue chip
American indus¬
of
and
6%
investment
dividends
be received
can
THE
ous
to
the
use
fuels for those operations that
cannot do without them.
RaJe
(2)
heat
and
tne
power
efficiency of all
transformations;
the automobile has 5%
efficiency;
utilities power generation is now
20%;
pretty
can
they
be
steam
bad,
locomotive
but
raised
are
we
and
know
in many
being raised
5%—
these
cases
now.
(3) Determine the best
methods
for supplementary
supply of liquid
fuels, at the nearest to reasonable
(Continued
on
page
47)
44
COMMERCIAL
THE
(1352)
Securities
C;
•
Air
Inc., White Plains, N. Y.
Commuting,
routes which the company is presently
fly or in limited helicopter commercial
Postponed indefinitely.
to
American
•
Policyholders' Insurance Co.,
Sills, Mintort & Co., Inc.
—To retire
Price—$8
per
share.
Light Co.
''.rj/rA
($100 par) cumulative pre¬
Underwriters—Lehman Brothers; Glore, Forgan
&
Co.; Dewar, Robertson & Pancoast negotiated a pur¬
April, 1948, but the SEC on July 27,
1948, concluded that financing by the proposed preferred
chase contract in
Proceeds
Armstrong Rubber Co., West Haven, Conn.
August 23 (letter of notification) 25,000 shares ($10 par)
common stock.
Offering—Common stockholders of rec¬
ord
2,000 shares of class A common stock. To be sold at $44
$11.75; respectively. This stock is being sold by
James A. Walsh, President of the Company. Underwriter
—F. Eberstadt & Co., Inc., New York.
Barton-Mansfield Co., Jonesboro, Ark.
Sept. 7 will be given right to subscribe on or before
29
Oct.
and
Sept. 23 (letter of notification) 1,000 shares ($100 par)
first cumulative preferred
stock. Price, par.
Under¬
writer
Hill, Crawford & Lanford, Inc., and Southern
Securities Corp., Little Rock, Ark.
Stock being sold by
E. C, Barton, President.
held
...
on
at
basis
$12
of
each
share for
new
one
No
share.
per
underwriter.
shares
21
Brooklyn
?
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 IV2 warrants) at $2.75 per unit, the balance
of 15,000 shares being reserved for exercise of 15,000
warrants, 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.,
New York.
Clarostat
Mfg. Co., Inc., Brooklyn, N. Y.
of notification) 37,400 shares of 500
stock. Underwriter—
Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc.
\
;
Aug.
(letter
26
cumulative convertible preferred
Cobalt Mines Corp.,
July 26 (letter of notification) 290,000 shares of common
stock.
Price—$1 per share. Underwriter—Charles W.
ditions.
—P. E. Frechette.
Warshoff & Co., Newark, N. J.
To meet obligations.
Proceeds—For drilling operations.
Colonial
*
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
—$4.25 per share.?;.
new
Brockton
Sept.
trust
(Mass.)
Edison Co.
Probable bidders: Hal-
Peabody,'& Co.;; Equitable, Securities Corp. .Proceeds—
pa^( $2,623,000 o£ promissory notes, and to finance
To
were
expected
to be received Oct. 5 but may be delayed.
California Water & Telephone Co.
Sept. 9 (letter of notification) 12,800 shares ($25 par)
common stock.
Price—$23 per share.
No underwriter.
For construction.
•
■■
..
,
Central Arizona Light & Power Co.
Sept.
28 filed
300,000 shares
(no par)
stock.
construction
loans
of
$3,000,000
Central
obtained
& Trust Co.
during 1948
Pittsburgh.
of
Electric & Gas Co.
(10/6-8)
Sept. 9 filed 30,000 shares of $2.50 cumulative convertible
preferred stock (stated value $50 per share).
Under¬
writers — Paine, Webber, Jackson & Curtis and Stone
& Webster Securities Corp.
Proceeds—May be used in
making additional investments in common stock equities
of its telephone subsidiaries and may be
applied in part
for its
own
construction
program or
for other general
corporate purposes.
Central
Wo*.
one
new
share for each 10 shares held.
Price, by amendment.
Underwriting, none.
Proceeds
—For general funds to be used for construction.
Columbia
(Pa.) Telephone Co.
(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
Nov. 1.
Three of the officers have agreed with com¬
pany to purchase ^rd each of unsubscribed shares at
$40, per share. Conversion to dial telephones, expan¬
sion, etc.
•
Consolidated Eureka Mining Co., Salt Lake
^
City, Utah
Sept. 20 (letter of notification) 1,339,544 shares of com¬
Sept. 21
»
stock.
($10 par) common. Under¬
writing—Company called for competitive bids Dec. 8,
Offering—To be offered stockholders at 90
share, in the ratio of one share for each two shares
held on Sept. 25.
No underwriting. For development
and exploration work of mining properties.
per
Consolidated Molybdenum, Inc., Seattle, Wash,
Sept. 10 (letter of notification) 1,470;000 shares of com¬
mon stock
(par 100). Price, par. No underwriter. For
the expenses of mining operations.
Consumers
Missouri
No
underwriting.
Offering—Offered only to
and plant facilities.
^v.,
(i'\
i,
COMMON STOCK
900 CONVERTIBLE PREFERRED STOCK
Bought
<>
Chicago
</: *"
AND
120
•
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Private Wfaj
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t
ta
Offices iit other Principal ChUt
'*
3 f
(en t t
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•
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k
irniFR
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:
— •
Quoted
Rev no Ids & Coo
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Pittsburgh.yv
Sold
—
fell '-MEMSFRS NEW York
Boston
rj r
A
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P
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Portland,
h:
U
■"
-M
-
i
0 ;v
$100,000 of 5-year 5%
Dynacycle Manufacturing Co., St. Louis, Mo,
Sept. 3 filed 100,000 shares (80c par) common stock.
Underwriter—White Sr Co., St. Louis.
Price—$5 per
share.
Proceeds, plus an additional amount which may
be obtained from the sale of franchises (estimated at
$100,000), will be added to company's general funds.
About $230,000 would be used to purchase equipment
and $185,000 for working capital.
Ekco
Products
Co.,
Chicago
Sept. 24 (letter of notification) 12,000 shares ($2.50 par),
common stock.
Price—$25.
For general treasury funds
and additional
•
No underwriting.
working capital.
Electric Steam Sterilizing Co.,
Inc., New York
(letter of notification) 150,000 shares of com¬
(par 10c).
Price—50c per share.
Finance
manufacture of toilet seats.
Underwriting—None.
Sept. 23
stock
mon
Electrical Products Securities Corp.,
Houston,
Texas
Sept. 13 (letter of notification) 400 shares of preferred
9-yeaF cumulative 8% bonds, $50,000 10year 8% convertible bonds and 500 shares of common
stock. $100,000
chase
Underwriter
—
Trustee
chattel mortgage notes,
Securities Co.
To pur¬
conditional sales con¬
tracts, secured by a first chattel mortgage on electrical
equipment of various kinds,
or
•
Employees Credit Corp., New York
Sept. 24 filed 20,000 shares of $1.50 prior convertible
preferred stock, series A (no par) and 20,000 shares of
Class A common stock ($2 par).
Underwriter—E. H.
Rollins & Sons, Inc.
Proceeds—To retire 2Vz% term ;
loan, amounting to $225,000, held by Marine Midland
Trust Co., New York, and balance for general funds,
r
Eureka Williams Corp., Bloomington, III.
Aug. 9 (letter of notification) 4,700 shares ($5 par) com¬
mon
stock.
Price—$6.25 per share. * No underwriter.
For working capital.
Family Finance Corp.
Sep. 2 filed 25,000 shares of 4Y2% cumulative preference
stock, series A (par $50) (convertible to and including
Aug. 1, 1956) and 97,580 shares ($1 par) common stock
to be reserved for conversion of the preferred stock.
Underwriter—E. H. Rollins & Son, Inc.
Proceeds—To
reduce outstanding bank loans and commercial paper.
Temporarily postponed.
,
V
Ferro Enamel Corp., Cleveland, Ohio
*
Sept. 17 filed 79,080 common shares ($1 par).
Offering
—To be offered for subscription
by stockholders of
Oct. 5
record
UNIVERSAL WINDING COMPANY
-
Inc.,
($1 par) common stock reserved for exercise of warrants.
Underwriter—Minot, Kendall & Co. For working capitaL
four shares held.
v,
.New York;
Co.,
(letter of notification)
Cooperative Assoc., Kansas City,
stockholders and patrons and members.
Price—At face
amount.
Proceeds—For acquisition of additional office
V"*v
16
''vVv;
Oct. 16 filed $3,000,000 non-dividend common stock ($25
par); $6,000,000 of 3V2% five-year and 4Y2% 10-year
cumulative certificates of indebtedness; and $2,000,000 of
1%% demand and 2V2% 6 months cumulative loan cer¬
tificates.
Maine Power Co.
10 filed 160,000 shares
Aug.
stock.
Inc., New York
Sept. 16 filed 1,223,000 shares (no par) common jrtock.
Offering—To be offered for subscription by holders of
12,229,874 outstanding shares of common stock of record
mon
common
Underwriters—The First Boston Corp. and Blyth & Co.,
Inc. Proceeds—To be applied on
currently outstanding
from Mellon National Bank
"K
.
System,
>
sey.t Stuart & Co. Inc.; .The Fjr$t Boston Corp.; Kidder,
additiohal, costs and corporate needs. Bids
'
\
Gas
Oct. 5 in ratio of
'1/
3 filed $4,000,000 first mortgage and collateral;
bonds, due 1978. Underwriters—Names to be deter¬
mined by competitive bidding.
equipment.
Columbia
Borderminster
Manufacturing
convertible debentures, with non-detachable stock pur¬
chase warrants; 10,000 shares of common stock ($1 par)
reserved for conversion of debentures, and 10,000 shares
..
Holdings Corp., New York
Sept. 7 (letter of notification) 15,000 shares of common
stock (par $1).
Underwriter—The First California Co.,
San Francisco.
Stock being sold by Dardi & Co.
Price
•
Douglass
•
Newark, N. J.
Coleraine Asbestos Co. Ltd., Montreal, Canada
Aug. 16 filed 200,000 shares of capital stock.
Price—
50 cents per share in Canadian Currency.
Underwriter
Exploration Co. Ltd., Ottawa
June 2 filed 500,000 common shares ($1 par).
Under¬
writer—Mark Daniels & Co. Price—40c per share Cana¬
dian funds. Proceeds—For exploration of properties.
Sept. 13 (letter of notification) 750 shares of preferred
1,250 shares of common.
To be offered in units of
three shares of preferred and five shares of common
at $400 per unit.
Underwriter—Laird & Co.
To retire
outstanding bank loans and to provide working capital.
Maine
Chieftain Products, Inc.,
V
Fabricating Corp., Wilmington,
and
increase
To
Bigelow-Sanford Carpet Co., Inc.
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. Issue to be withdrawn due to market con¬
Blair
Delaware Steel
working capital.
—
Berry Motors Inc., Corinth, Miss.
Sept. 20 (letter of notification) 25,000 shares ($10 par)
5% cumulative class B preferred stock.
Underwriter—
Gordon Meeks. & Co.
For working capital.
/
;A'/;
Crosbie Co. of Washington, Inc.
Sept. 7 (letter of notification) 50,000 shares of class A
common stock ($1 par), 25,000 shares of class B common
stock (100 par).
Underwriter — James T. DeWitt Co.,
New York and Washington.
To* be offered in units of
two shares of class A and one share of class B at $5 per
unit.
To reduce or pay in full present borrowings from
the Manufacturers Credit Corp., to reduce the present
current liability position and to provide additional work¬
ing capital.
Delaware
Century Electric Co., St. Louis, Mo.
•
Armstrong Rubber Co., West Haven, Conn.
July 8 (letter of notification), 1,000 shares of 4%% cumu¬
lative convertible preferred stock ($50 par). To be sold
at $44 each for Frederick Machlin, Executive Vice-Presi¬
dent and Secretary qi the company.
Underwriter—
F. Eberstadt & Co., Inc., New York.
capital.
stock issue is not necessary.
indebtedness and for working capital.
June 30 (letter of notification) 1,000 shares of 43/4%
cumulative convertible preferred stock, ($50 par) and
•
Sept. 20 (letter of notification) 6,965 common shares (no
par). Price—$13.50 per share.
Underwriters—Prescott
& Co.; Cunningham & Co.; The First Cleveland Corp.;
and T, H. Jones & Co. Proceeds—To increase working
ferred.
(10/14)
Cleveland, Ohio
•
Kidder,
by the
writing
through
Central Power &
Sept. 21 filed 200,000 shares ($2 par) convertible class A
stock. Underwriters—Herrick, Waddell & Reed, Inc. and
Cowies Chemical Co.,
1947 and
Nov. 21 filed 40,000 shares
'
Pump Corp.
ISSUE
by amendment.
Proceeds—For construction and
repyament of bank loans.
:
Sept. 22 (letter of notification) 10,000 shares ($20 par)
capital stock. Price—$30 per share. No underwriter. To
be added to capital account arid surplus.
&
Registration
SINCE PREVIOUS
Price
Boston, Mass.
American Steel
ADDITIONS
INDICATES
.
ter operation over
work.
in
Now
Thursday, September 30,-1948
CHRONICLE
only one bid, that of Blyth & Co., Inc. and
Peabody & Co. was submitted and was rejected
company.
They bid $13.75, less $1.75 Under¬
commission; Now* expected on negotiated basis
Blyth & Co., Inc. and Kidder, Peabody & Co.
Offering—To be offered to 6% preferred and common
stockholders for subscription on the basis of one-half
share of new common for, each preferred share and onetenth share of new common for each common share held.
*
(letter of notification) 1,060 shares of capital
Stock (no par value), of which 600 shares will be sold
publicly at $100 per share.
Underwriter — Burnham
Co.
Proceeds—To be used to engage in limited helicop¬
June 17
certificated
FINANCIAL
&
in ratio of
one
additional share for each
Rights expire Oct. 21. Underwriter—
Merrill Lynch, Pierce, Fenner & Beane.
ProceedsCompany and subsidiaries will use the funds for general
corporate purposes.
:
/
First Guardian Securities Corp., New York City
June 4 filed 36,000 shares of 5% cumulative convertible
preferred stock ($25 par) and 172,000 shares ($1 par)^
(72,000 shares of common to be reserved
common stock.
t
(1353)
Interstate Power Co., Dubuque, Iowa
Sept. 10 filed $5,000,000 first mortgage bonds, due 1978.
NEW ISSUE CALENDAR
October 4,
Illinois Central RR
<
*
-
1948
/-t/X
6, 1948
Y
Central Electric & Gas Co.___-__.._____.iXPreferred
Chicago & North Western Ry.,
Noon
(CST)
Equip. Trust Ctfs.
^
"
Pennsylvania RR., Noon »(EST) _.Equip. Trust Ctfs.
V
•
-
Films,
will
Probable
bidders:
& Common
+
y
sixth of
a
will be no
*4' 1948
American
/
Steel
& Pump
Old
June
owner
record
Nov.
4 at
rate
of
one-
.poses,
of
i._^-.Bonds
v
.
••
■
for
4
conversion
Price—$25
a
of
the
preferred.)
Underwriter—None
share for the preferred and $10 for the
YXyXxXXxV'
mon.
:
com¬
Fund.
'
*
Kold-Hold
.
Aug.
•
First Investors Corp., New York
Sept. 27 filed $7,500,000 of securities to be offered under
three plans.
Operators of periodic payment and fully
paid plans for the acquisition of shares of Wellington
Underwriter—Kenneth
For additional working capital.
Van
Sickle,
O'Suilivan
be
Inc.
filed
Proceeds—For general biisiness pvir- ~
y
6
(letter
Manufacturing Co., Lansing, Mich.
of
notification)
36,666
shares
(SI
325,000
and
Buckley Securities Corp.
'
:yX
Corp., Birmingham, Ala.
Fission Mines Ltd., Toronto, Canada
Aug. 23 (letter of notification) -25,000 shares ($5 par)
April 16 filed 200,000 shares of treasury stock." Under¬
X 6% preferred and 25,000 shares (100 par) common.
To
writer—Mark Daniels & Co., Toronto. Price—$1 a share
be sold in units of one share of common and one share
shares
Winchester^. Va. r\/j
X^ar^comnwa ;;std£lc
($1
eaeh>bne:4i^4n ^ct.1:7. Price, by amendment.
of
cost
new
•
working capital and provide
par)
stock.
Shares will be issued to H. B. Johnson
J. J. McQuaid on conversion of $55,000 of 5% con¬
vertible
debenture
bonds, due 1955.
Underwriter—
common
-Y.. X/'X"',VX
Rubber Corp.,:
offered torate, of two
poyr-
shares for
'
Lamex Chemical
.
;
'-X;X-^
:
Proceed^—1To defray
Xy xXXY.--/:;.X.XXYXX' V* XXY.
V/
ferred* stock.
Co.
Underwriters—There are no underwriters but C: F, Cas¬
sell & Co.; Inc.,- Charlottesville, Va;,~and Gearhart &
Co^
Inc., New York/will solicit subscriptions from ^common
stockholders. ;Y Offeripg--TTGf 4he :total 278,31& shares will
,
Kansas Soya Products Co., Inc. %
/Aug. 2 (letter of notification) 78,000 shares (25c par)
common
stock and 1,925 shares'of v$5 cumulative
pre-
5
ij.
Carolina.
x_
Sept. ,27
■
X
Insurance
be 'publicly
North
share for each share held./Price of .stock
less than $15, Sioux City Gas & Electric Co.,
•
State
100,000
private offerings; and the remaining 40,000 shares
offered on a "best efforts basis" on
completion of the subscription of the first 40,000 shares
and the company's receipt of a license to do, business in
will
new
Proceeds—For construction program.
filed
lic or
'
61.2% 6f the stock, will purchase its pro rata X •
share of the new stock and take all unsubscribed
shares,
Corp._'j-.-__-J_ __t_Cla§s A
Virginian Ry.
of
North
24
shares of capital stock (par $5).
Price—$15 per
share,
Underwriter—First
Securitlea
Corp., Durham, N. C.
Offering—26,667 shares will be
initially offered on a "when, as and if issued" basis;
13,333 shares will be purchased by underwriter for pub¬
be
stockholders
common
Inc.^-^-a-Preferred
will receive the'proUnderwriters—The First Boston Corp. and Merrill
Lynch, Pierce, Fenner & Beane. Offering postponed due
Otis & Co, protesting exemption from
competitive
bidding.
•
Iowa Public Service Co., Sioux City, Iowa
Sept. 24 filed $3,000,000 first mortgage bonds, due 1978,
and 109,866 shares ($15 par.) common stock. Underwriters
—Bonds
shares of company's common
,ceeds.
to
Offering—The stock will be offered for subscription by
October 11, 1948
Official
000
,
indenture, available
offered
under
competitive bidding.
Glore, Forgan & Co.; Halsey, Stuart
& Co. Inc.; Kidder, Peabody &
Co.; White, Weld & Co.;
A. C. Allyn & Co ; Harriman Ripley &
Co.; Salomon
Bros. & Hutzler; Otis & Co.; The First Boston
Corp.
^
•
under bond
Securities
13 filed 400,000 shares ($20 par) common stock.
Offering—Standard Gas & Electric Co. which owns 750,-
for withdrawal against property additions.
Pacific Gas & Electric Co., 8:30 a.m. (PDT)__Bonds
October
corporate trustee
Aetna
Oklahoma Gas & Electric Co.
$2,400,000 is to be applied to pre¬
payment of promissory notes, $1,400,000 will pay in full
the $724,446 balance on a lease and purchase agreement
and for property additions; and $1,200,000 will
deposited
with
Underwriter
Sept.
ceeds—Of the proceeds,
1948
.^^-^..-Equip Trust Ctfs. /
October 5,
corporate purposes.
Corp., New York.
Underwriters—Names will be determined through com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Smith, Barney & Co. Pro¬
45
;
new
plastic plant, restore
working capital, y
X
Otter Tail Power Co., Fergus Falls, Minn. X
filed .141,490 shares ($5 par) common stock.
Underwriting—Names by amendment.
Proceeds—For
•
,
X Sept. ,27
retirement of $2,500,000 of loans owing to the First Na¬
tion Bank of Minneapolis and for betterment of facilities.
X»X. Ozonaire Corp. of America, Menomonee Falls,
Wisconsin
Sept.
(letter of notification) 65,000 shares ($1 par)
common
stock.
Hartford, Conn.
:'j of preferred at $5 per unit.
Price, par.
For working capital.
Underwriter—Mallory Se¬
No
curities Corp., Birmingham, Ala.
July 12 (letter of notification) 3,000 shares of ($100 par)
underwriting.
For working capital
/.X"'
YX
/'. X'
preferred stock.
•
Y 4
Price—par. To raise working capital Y and the payment of bills.
X •
'YvYvX'Y. Pacific Gas & Electric Co. (10/5)
and retire existing indebtedness.
No underwriting.
Michigan Bell Telephone Co., Detroit X
Sept. 10 filed $75,000,000 first and refunding mcr.^ctge
'
Sept.
17
filed
$75,000,000 40-year debentures.
Under¬
Gauley Mountain Coal Co., New York
bonds,, series R, due June 1, 1982. Underwriters- -inames
writers—Names
to
be
determined
by competitive bid¬
determined through competitive bidding.
Aug. 13 (letter of notification) 6,093 shares of capital
Probable bid¬
ding.
Probable bidders: Halsey, Stuart & Co. Inc.; Mor¬
stock
(par $10).
Price, par.
ders; Blyth & Co, Inc.; Halsey, Stuart & Co. Inc.; The
Stockholders of record
gan
Stanley
&
Co,
Proceeds
— To repay advances from
First
Boston Corp.
Sept. 1 will be given right to subscribe at rate of one
Proceeds—To retire $12,000,000 bank
American Telephone & Telegraph Co.
new share for each five shares
loans and pay for part of company's construction
(parent), which
held.Rights expire Oct.
pro¬
are, expected to be about $81,500,000 by Oct. 19.
These
15. Underwriting—None. General
gram.
Bids—Bids for purchase of bonds will be re¬
improvements, etc.
advances were used for general corporate purposes, in¬
ceived at company's office, 245 Market Street, San Fran¬
•
Goldsmith Bros. Smelting & Refining
Co.,
cluding construction, additions and improvements.
cisco, up to 8:30 a.m. (PST) Oct. 5.Y
X'*'
Chicago
•
YXX-.,:'f};~
Mineral Investment Corp., Midland, Tex.
•
Palmer Stendel Oil Corp., Santa Barbara, Cal.
Sept. 27 filed 1Q0,000 shares ($3.50 par) common stock,
Sept. 20 filed 302 shares (no par) common stock. Price—
of which 54,000 shares will be sold by the company and
Sept. 20 (letter of notification) 100,000 shares of non¬
$100 per share. No underwriter. To furnish capital for
assessable stock
46,000 by selling stockholders. Underwriter—A. C. Allyn
($1 par).
Price—38 cents per share.
new organization.
X: y.X,/ X. ■
& Co., Inc. Price by amendment.
Underwriters^—Morgan & Co., Los Angeles, and P. F.
Proceeds—Company's
Monarch Machine Tool Co. XxXXYXXYyiX''
Fox & Co., New York.
These securities are being sold
proceeds for working capital.
Sept. 13 filed 26,000 shares of common stock (no par).
for the benefit of certain present holders which include
Hall (C. M.) Lamp Co., Detroit
Underwriters—F. Eberstadt & Co., Inc. and Preseott,
banks and trust companies.
Effective Sept. 29.
August 2 (letter of notification) 53,770 shares of common
Hawley, Shepard & Co., Inc. Proceeds—Stock being sold
stock (par $5). Offered for subscription to stockholders
Y#
Pennsylvania Power & Light Co., Atlentown,
by certain stockholders. Offering indefinitely postponed.
of record Aug. 30 on basis of one new shale for each
Pennsylvania
•
Monterey County Security Co., Salinas, Calif.
five shares held.
Sept. 28 filed 63,000 shares ($100 par) preferred stock.
Rights expire Oct. 1,..Price—$5 per
Sept. 23 .(letter of notification) 5,000 shares (no par)
Underwriters—Drexel &'Co., Philadelphia and The First
share. For advances to a subsidiary, Indiana Die Cast¬
common stock/
Price
|— $10 each.
To increase capital.
Boston Corp.,'New York.
Price and dividend rate.will
ings, Inc.,. and to improve shipping and storing facilities.
X No underwriting.,
*
•
Y »
be filed by amendment;1/ Proceeds — To be applied to¬
No underwriting.'
' '
Xy
National Battery Co.
ward $100,000,000 construction program.
X
Heidelberg Sports Enterprises, Inc.,
July 14 filed 65,000 shares ($50 par) convertible pre¬
•
Peoples Gas Light & Coke Co.
ferred stock.' Price and dividend, by amendment.
Pittsburgh, Pa.
Un¬
Sept. 24 filed $16,400,000 3% convertible debentures, due
June 25 filed 2,041 shares of class A common stock and
derwriters—Goldman, Sachs & Co., New York; Piper,
Dec.
1, 1963.
Underwriters—Competitive bidding will
5,000 shares of class B common stock (par $100). Price
Jaffray & Hopwood,/Minneapolis. Proceeds—To retire
determine
the names of the underwriters who will pur¬
—Par ($100 per share).
Underwriter—None. Proceeds
$3,000,000 of bank loans and general corporate purposes.
chase unsubscribed debentures. Probable bidders: Hal¬
—$600,000 to be used for spectator grandstand and bal¬
Temporarily deferred.
1 ;y,/
-X;
sey, Stuart & Co. Inc.; The First Boston Corp.; Giore,
ance for related purposes.
^
•
v
National Benefit Insurance Co., Des Moines,
•
Forgan & Co. Offering—To be first offered for subscrip¬
Henderson & Ervin, Charlottesville, Va.
X'fX Iowa
tion by stockholders in ratio of $100 of debentures for
Sept. 20 (letter of notification) 5,000 shares ($10 par) Y each four shares held of record Oct. 22. Rights wiJl ex¬
Sept. 24 (letter of notification) $110,000 first mortgage
common and 15,000 shares
bonds.
Underwriter
($10 par) preferred. Price—
C. F. Cassell & Co., Inc., Char¬
pire Dec. 1. Price, par. Proceeds—For construction and
Preferred,
$30 per share and common, $10 per share. No
lottesville, Va.
To retire bank loans.
for the purchase of additional capital stock of certain
Fuller
Brush
23
Co..
K.
.
■
<
,
•
.
.
.
.
.
...
—
•.
underwriter.
Heyden Chemical
June
29
filed
59,579
preferred stock
of
shares
(no par)
holders in the ratio of
shares
Corp., New York,
common
one
stock
to
of
N.
cumulative
be offered
Y.
sessment
convertible
common
stock¬
/
bond
issue.
Underwriter—E.
Hughes & Co. For new plant construction and improveexisting plant.■
y/ /.yX/'X: XX./X,
XyX
Ice-Flo
May 17 filed 100,000 shares of 4% cumulative preferred
stock ($100 par) and 500,000 shares ($10 par) common
Mont.
—
Tom G. Taylor &
Co., Missoula,
unit, consisting of two shares of
Price—$300 per
preferred and 10 shares of
erect and
operate
200-ton per day
a
common
stock.
Proceeds—To
bleached sulphate pulp mill with
capacity.
natural gas
X
Ctub, Los Angeles, Cal.
Inc.
X/
Sept. 23 filed $10,000,000 first mortgage bonds, due 1978.
Underwriters—Names to be determined by competitive
bidding. Probable bidders; Halsey, Stuart & Co. Inc.;
Kidder, Peabody & Co.; The First Boston Corp.; Lehman
Brothers; Harriman Ripley & Co, " Proceeds—Will be
used for construction and other corporate
expenses./X
'
of class
B stock.
Price—Class A, $102.50 per ^hare and
class B $100 per share.
Underwriting—None.
Proceeds
—For sawmill machinery and equipment, purchase of
general merchandise and hardwares, etc.;.
I
a
companies.
.YY N
1
;
Petroleum
Engineers Producing
Oklahoma
-X Y.-X-
Corp.,
TuEsa,
Sept.
:.
yy.
Products Co., Denver, Colo.
16 filed 100;000 shares (SI par) common stock in
connection with the
company's offering of 100,000 shares
stock/registered in July, 1948. With
stock, subscribers will have the
right to buy one share of common.
Proceeds—For or¬
ganizational expenses.
YX
'
of $10 par preferred
each share of preferred
v,
.
Official
Films, Inc., New York (10/11)
July 16 (letter of notification) 49,000 shares 350 cumula¬
tive preferred stock (par $5) and 49,000 shares of com¬
mon
one
stock
(par
share of
100).
each.
Price—$6
per
unit,
Sept. 7 (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
(each unit to have
common
rant entitling the holder to
one
war-
buy two additional shares of
at $30
per
share).
Underwriter — Central
Royalties Company.
To purchase and develop additional
oil properties.
X" y'- X-'Y X1
• X
common
Public Service Co. of Colorado
Sept. 17, filed $10,000,000 first mortgage bonds, due 1978,
66,000 shares of cumulative convertible preferred
stock ($100 par),
Underwriters — Names to be deter-,
mined through competitive bidding.
Probable bidders:
Y and
Halsey, Stuart & Co. Inc, (bonds only); The First Boston
only); Glore, Forgan & Co. and W. C, Lang-
X Corp. (bonds
(jointly on both); Harris, Hall & Co. (Inc.)
only); Lehman Brothers (bonds only); Eastman,
Dillon & Co. (stocks onJvL
Proceeds—To provide pari
ley &
Co.
(bonds
••
Nuera
Idaho-Montana Pulp & Paper Co., Poison, Mont.
Underwriter
Kennel
New Orleans Public Service
Corp., New York
Sept. 23 (letter of notification) 80,000 shares of common
stock (par 5c).
Priee—$2 per share.
General working
capital. No underwriting.
stock.
Y
W.
ment of
•
as¬
re¬
X Northern Enterprises Co., Inc. (Philippines);
Sept. 2 filed 500 shares of class A stock and 1,500 shares
\
August 16 (letter of notification) $50,000 first mortgage
(closed)
Nevada Turf &
•
•
County, Texas.
20-year
an
legal
Sept. 20 (letter of notification) 1,000 shares of common
Price—$100 per share. No underwriters. To set
greyhound race track.
,,,
Y \ ■
X Highiower Petroleum
5%
a
up a
provement and expansion of manufacturing facilities.
;.XOffering postponed.-/XX/...:X' XyyyXX'Y /x y:- Y/X.;XX;:
Hygenic Service Co., Boulder, Colo.
to
stock.
G. Becker & Co. will acquire the un-|
subscribed shares. Proceeds—To be used in part for im¬
J
association
.....
X
share of preferred for each 20
held.
Price—By amendment.
Corp., Denver, Colo. Y
Sept. 22 (letter of notification) 3,000,000 shares (100 par)
common
stock.
Price, par.
Underwriting — James
Thomas Chiles, Denver.
To drill two oil wells in Jack
health
and
stock life insurance company.
serve
Underwriter—A.
•
To finance the transformation from
accident
consisting of
Working capital and other general
of
the
costs
Public
of
construction.
Service
Co.
i
of New
Hampshire
Sept. 9 filed $7,000,000 first mortgage bonds,
due
1978.
Underwriters
—
Names will
be
series D,
determined
through competitive bidding. Probable bidders: Halsey,
Stuart & Co. Inc.; Kidder, Peabody & Co. and Blyth. &
Co., Inc. (jointly).
Proceeds—Of the proceeds, $3,600,*000 will be applied to the reduction of outstanding shortterm bank borrowings.
$3,400,000 will be deposited with
the indenture trustee, available for withdrawal against
property additions.
(Continued on page 46)
46
THE
(1354)
(Continued from page 45)
Service Electric & Gas Co.
Public
Proceeds—For property additions and im¬
&
FINANCIAL
•
to
Sept.
Inc., Stowe, Vt.
of notification)
$100,000
(letter
27
Tide
Water
Power
beau
Douglass, Los
gypsum wallboard and lath
1,000 shares of non¬
To be sold at $27 per
Underwriters—Ralph S. Young and J. A. Hogle
For working capital.
($1 par).
the rate of
held.
of record
:■>;
Indefinite.
corporate purposes.
\
1^
Offering
Underwriting—None.
Oct.
stock of record
the
new
for
common
a
to
and
common
Bankers Trust Co.
i
or
held.
a
of
a
•
$1,800,000
a
note to
.
Associated
Southwestern
Telephone Co.
Aug. 24 filed 22,000 shares of $2.60 cumulative (no par)
preferred stock., Underwriters — Paine, Webber/Jack¬
son & Curtis; Stone & Webster Securities Corp.; Raus-V
cher, Pierce & Co.
Price by amendment.
Proceeds—
To pay; in part, bank loans used for construction pur-:
poses. Indefinite.
'
Youse
•
Standard Cable Corp.,
Westerly, R. I.
,/yy;y/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
additional machinery.
'
•
Steel City
Sept. 22 (letter of notification) 20,000 shares ($10 par)
common stock.
Price, par. For operating capital, ware¬
and
Lehman Brothers
(jointly).
certificates
series
(E. S,)
Co.* Detroit, Mich.
Pennsylvania RR.
tificates, series U,
and
in¬
accrued
terest, and the preferred stock at
$100 per share and accrued divi¬
dends.
The company at the same time
is offering the preferred stock for
subscription at $100
holders of its
common
stock
Sept. 28, 1948.
rants for the
the
at
rate
37.6923
held
share to
and class B
common
stock
share for each
common
per
of
of
shares
record
Subscription
new
will expire at 3
one
of
on
war¬
preferred stock
on Oct. 13,
r» m,
1948.
Proceeds of
the
financing will
which
$90,000,000
ing
of Sept. 22,
were
To
—
be
Armour
&
Co.
;;
of
5%
participating)
•
•
vertible
v
If
with
the
SEC
and
Upper Peninsula* Power Co*'"
,
Sept. 23
000
first
issued
outstand¬
higher costs and the necessity of
maintaining larger inventories to
provide for the
company's ex¬
panded business, its inventories,
consisting chiefly of leaf tobaccos,
short-term bank
con¬
from
Dec.
31,
Dec.
31, 1947.
the
company's
1942, to
to
ments
the
company,
105,739,170,000 cigarettes
were
of
4
*
Ship¬
$377,610,943.
be applied to the reduction of the
notes
on
1948,
totaling
in
1947
82.47% greater than in 1942.
»
*
this
by the
week
indicated
was
reported
brisk
preoffering inquiry for the $60,000,000 of
bankers
new
were
debentures which
slated
to
bring out
today for the R. J. Reynolds To¬
bacco Co.
inventories
company's
short-term
on
$400,002,999
On June 30,
amounted
by
$172,802,711
issues
Carrying
a
25-year
this issue had all
of
virtually
ment
and
the
maturity
earmarks
immediate
probable
over-subscription
place¬
substantial
even*
before
reg¬
to
/
•
authority to issue $15,948,mortgage bonds, series C. U:
notes and to*restore workings*
-
new
pre¬
,
?
before *funds from the
current fi¬
became available to the
nancing
*;' •:> ;"
' "'
company.
par) being of¬
and
class
B
common
"■.. i;
Oklahoma Gas Postponed
'
'
stockholders
in the ratio of one
share for each 37.6923 shares
held, should provide
an
interest¬
ing insight into the current think¬
ing of company shareholders.
of
record
last
time
on
Oct.
next.
unsubscribed
any
will be
13
taken
up
At
that
portion
by the under¬
Proceeds will be applied
by the
to the reduction of the
company
of
short-term
standing under
a
agreement.
the
tember
•
At
there
notes
it
was
out¬
stand-by credit
was
start
of
an
expected
that the total would
Sep¬
aggre¬
gate of $80,000,000 of such
but
tric Co. common stock
for the
count of Standard Gas &
at that
notes,
time
be increased
ac¬
Electric
Co., has been deferred, it devel¬
oped today.
;; .>>;
..
The
undertaking
technical
back
snag
when
protested
Cleveland
against
ness
to
tiated
or
aC.
so.
bankers*
the
Se-J
Exchange Commis¬
sion
go
into
ran
week
a
vigorously to
curities and
writers.
total
The
projected sale of 400,000
shares of Oklahoma Gas & Elec¬
Tuesday and
will expire at the close of busi¬
ness
f'*'
^
*
*
*
-
"Rights'/accrue to sharehold-^
Sustained popularity of tobacco
a
Invitations for bids on the
offering will go out
about Oct. 1 and the bids
will be opened Oct. 14.
Proh- **
?
Halsey, Stuart & Co. Inc.; Harriman Rip-;
ley & Co.; Shields & Co.
v
,
-
The 260,000 shares of
ferred stock ($100
ers
company
file
approval of
$9,500,000 will be issued and sold under
bidding. The/remaining $6,448,000 will be~
the sponsoring syndicate
opened /
the books to investors.
new
-^
nominally, and may thereafter be pledged, from
time to'time as collateral
securities for short-ternl notes
Proceeds from sale of the
$9,500,000 of bonds will be used
to pay off
approved, such debentures will
Reporter's
Report
*
(10/14)
company asked ICC
lien and
refunding
competitive
common
fered
soon
seek
^
Virginian Railway
capital.
;s
conversion.
for sale,"
proposal to author¬
Our
67,500
(non-
increase
shares, respectively, Of
company ($9 par) common stock. ^Invitation
for com-*'
petitive bids also will 1 covers
34,800 shares of Upper
Peninsula common stock owned
by Copper Range Co.
and so many of the
remaining 11,200 outstanding shares-as
the several individual
owners
may select to offer*
•
approximately $47,000,000 of
debentures.
to
Sept. 29 Consolidated Electric & Gas Co. and
Middle
West Corp. asked SEC
permission to sell at competitive*"*
bidding 120,000 shares and 34,000
under¬
a
voted
.
•
\
on
and
Utility Commissioners of New Jersey v
to sell $50,000,000, unsecured debentures 1
..
Detroit Edison Co.
Oct. 26 stockholders will vote
ize directors to issue
$20;
issue of
preferred
authority
through competitive bidding.
Probable bidders: Mqxgan
Stanley & Co.; Halsey, Stuart & Co.
InCT; The First Bos¬
ton Corp.;
Kuhn, Loeb & Co. and Lehman Brothers
(jointly)."
*y*y *
f~
Price—$7.62V2 each.
unsubscribed
^
Public Service Electric & Gas Co. "
for
Black Hills Power
any
convertible
stock' (par
istration statement
Board of Public
;
and
cumulative
Sept. 24 company announced that it will
Co., Inc., Reading, Pa.*
preferred
of
'
& Light Co., Rapid
City, S. D.
Sept. 23 company applied to FPC for
authority to issue
5,000 shares of cumulative preferred stock
(par $100 )
and 33,730 shares of common stock
(par $1).
Company
plans to arrange with Dillon, Read & Co. Inc. to
the
'••/''* 7-V"
•
common
to-provide preferred
Probable underwriter Paul H. Davis &
Co.
,.
write
—V
(10/6)
$9,675,000 equipment trust cer¬
July 1, 1948, and due in 15$645,000 July 1, 1949-1963-, will
received
shares
ceeds of the issue will be used to retire
bank loans.
shares.
Brothers'1
Lehman
Pressed Metals of
America, Inc.
Sept. 15 stockholders voted to create an
Sept. 27 reported company plans to raise
approximately
$50,000,000 by the sale of debentures,
Negotiations, it is
said are being carried on with
Kuhn, Loeb & Co.
Pro¬
•
and
authorized
Prospective Offerings
•
Co.
V:;*:
•
rv
Co., Inc., Philadelphia.
&
v
replace part of
nection
increased
re-,
by- company at Room 1811 Exoad Street'
Station, Philadelphia, up to noon (EST) Oct. 6.
Probable bidders:
Halsey, Stuart & Co. Inc.; The First Boston
Corp.; Harriman Ripley & Co. and Lehman Brothers
(jointly); Salomon Bros. & Hutzler;
yy
Proceedsr—From company's offering will be used to
pay
for opening a new branch store in
Lancaster, Pa.
Busi¬
ness—Merchandising in automotive parts.
1948. In con¬
with the financing, the
prospectus points out that due to
as
be
dated
annual, instalments
—
Yeatman &
The debentures are<i>-
100%
to
equipment
Bids for the purchase of
^
57,000 shares ($2 par) common stock, of
12,000 are being offered by the company and
by three stockholders.
Underwriter
Suplee,
Dillon, Read & Co. Inc. and Reynolds & Co. head a nationwide
group of
134 underwriters that is offering to the public today
(Sept. 29) a new issue of $60,000,000 R. J. Reynolds Tobacco Co. 3%
debentures, due Oct. 1, 1973, and 260,000 shares of new 4.50% pre¬
at
I
-
-
■
,
Fiber Tile Mfg.
Dillon, Rood & Go. lnc.-Reynolds & Co. Group
Offers Reynolds Tobacco Go. Securities
priced
j
,
Y.
,
ferred stock.
V
r
RR..:/(iO/4>;;;J;1,.W'Vf:;'v',.fi':.-
company has issued invitations for bids
ceived Oct. 4 for the purchase of
$3,240,000
trust
•
Supply & Equipment Co., Pueblo,
Colo.
f
cer¬
Oct: 6;at
The
,
Squankum Feed Supply Co., Inc., Farmingdalo,
New Jersey
Aug. 4 (letter of notification) $150,000 20-year 5%%
sinking fund debentures; : Price—102. » Working: capi¬
tal, etc. Underwriter—Fidelity Securities & Investment
Co., Inc., Asbury Park, N. J.
<
(10/G)
of R. L.
Williams, President, Room 1400 Daily
Building, 400 W. Madison Street, Chicago. - Bid¬
Illinois Central.
;*y:.yy/: y//y
Sept. 27 filed
which
45,000
stock of Iowa Public Service
reduce
Co.
Yankee
•
To
—
First
option of submitting pro¬
posals either for certificates maturing in l-to-10
ye^rs
or for certificates
maturing in l-to-15 years.
Probable
bidders;
Halsey, Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Harris, Hall & Co. (Inc.); Harriman
Ripley &
Skylines, Inc., Burlington, Vt. w
Sept. 24 (letter of notification) 60,000 shares ($5 par)
common stock.
Price* par.
For equipment, working
capital, and expenses of C. A. B. certification.
No un¬
derwriting.
;
;
;
;
further
believed,
ders at the sale will have the
a
Wiegand (Edwin L.)
share of ad¬
Proceeds
is
(CST)
Light Co.
Baker, Simonds & Co.
Proceeds
working capital for past expenses.
common
it
necessary.-'If offering underwritten
Chicago & North Western Ry.
office
Sept. 15 filed 100,000 shares ($1 par) common stock, of
which 20.000 will be sold by
company and 80,000 by four
stockholders.
Price — $5 per share.
Underwriter —
subscribe to
required to make
sums
in full
pay
share
each
portion of the
investment in the
Co.
Holders
shares in the ratio of one-fifth of
ditional
provide
—
be entitled to
15 will
will,
(Inc.); Harriman Ripley
(jointly). :
vyv
Yankee
Sioux City (Iowa) Gas & Electric Co.
:
Sept. 21 filed 71.362 shares of common stock (par $12.50).
and
Bids for the purchase of
$5,325,000 equipment trust
tificates will be received up to noon
News
■
=";
date
to
shares underwritten by The First Boston Corp. and JohnProceeds—For construction and other
..yV/
.
as
deter-
The certificates are dated
Aug. 1,. 1947, and will mature $180,000 on each
Aug. 1
and Feb. 1 from Feb.
1, 1949 to Aug. 1, 1957.
Probable '
bidders: Halsey, Stuart & Co.
Inc.; The First Boston
Corp.; Salomon Bros. & Hutzler; Harris, Hall & Co.
ments.
•
Sightmaster Corp., New Rochelle, N. Y.
Sept. 24 (letter of notification) 99,000 shares of common
stock (par 25c) and options for the purchase of 25,000
shares (owned by Michael Kaplan) at end of 13 months;
after public offering of 99,000 shares. ' Underwriter—};
Willis E. Burnside & Co.
Price—$3 per share.
General
be
Inc.; Dillon, Read
_
;
Co., Pittsburgh ;*
Sept. 28 filed 200,000 shares (no par) common stock.;
Underwriter—Hemphill, Noyes & Co., New York.
Price,
by amendment.
Proceeds—Will go to selling stockhold¬
ers.
Business—Manufacturer of electrical heating ele¬
<
to
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
J#
Proceeds
are
prob¬
Boston Corp.;
Halsey, Stuart. &
& Co.; Coffin & Burr, Inc., and
Spencer Trask & Co. (jointly).
T
■
*'■!
stock reserved for
common
Gas
be
bidders: The
Co.
including the repayment of $2,000,000 of bank
borrowings.'
;•
Corp. of America, Columbus, O.
June 28 filed 25,000 shares of cumulative preferred stock
(no par), with class A common share purchase warrants
Underwriter—Lee Higginson Corp.
'•/1 ■v'V./
construction
may
able
purposes,
Shoe
—For general corporate purposes.
ing
ston, Lemon & Co.
preferred share for each 37.6923 shares
Rights expire Oct. 13. Proceeds—Will be applied
warrants.
y
Washington
one
attached and 25,000 shares of
of
the rate
at
Final terms1
enable the company to finance its
$100,000,000 construc¬
tion program until the fall of 1949 when further
financ¬
Underwriter—Bour-
Angeles. For construction
plant in Phoenix, Ariz.
subscription
later.
financed
corporate
purposes. > Offering
postponed.
Possible change in under¬
writers.
Sept; 29 are
stock at
r:
shares.
common
for
15 shares of stock held.
temporarily
//J
C.
general
—Temporarily
subscribe to the preferred
to the reduction of short-term notes.
&
four
Proceeds—For
Reynolds (R. J.) Tobacco Co.
Sept. 15 filed 260,000 shares of . preferred stock (par
$100).
Underwriters—Dillon, Read & Co. Inc. and Rey¬
nolds & Co.
Offering—Holders of the common stock
stock
-
.
N.
preferred stock ($10 par). Underwriters—Herrick, Waddell & Reed, Inc., and George R. Cooley & Co.. Inc
.
common
\
,
United Utilities & Specialty Corp.
July 29 filed 41,000 shares of 5% cumulative convertible
Remington Corp., Cortland, N. Y.
Aug. 31 (letter of notification) 5,620 shares of common
stock (par $5), Price—$7.25 per share. Underwriter*—
Eastman & Co. and Grabau-Buchman, Syracuse, N. Y.,
will act as selling agents.
Development of air-condi¬
tioning units, etc.
B
5%
(850 par) common stock, issuable upon con¬
version of the preferred stock. Preferred will be offered
at $12 per share.
Each preferred share is to be con¬
assessable capital stock
class
,
Wilmington,
stockholders
Debentures will be convertible into stock
not later than two years after issue date.
Proceeds will be
used to retire interim bank loans which have
000 shares
into
new
5-year
to
interest, redemption and conversion
mined
..
vertible
and
'
Co.,
Realty Co., Denver, Colo.
Sept. 8 (letter of notification)
given the right; to
,v
/
■
■
offered
1
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.
;
•
Union Plaster Co., Los Angeles, Calif.
Sept. 22 (letter of notification) 25,000 shares of 60-cent
cumulative preferred stock, series A ($10 par) and 100,-.
Quebec Oil Development Ltd., Montreal, Can.
Aug. 4 filed 2,000,000 shares of capital stock, ($1 par
funds).
Underwriter—Hiscox, Van Meter &
Co., Inc. Price, $1 per share (United States funds). For
each 20,000 shares of stock sold, the company will de¬
liver to the underwriter stock purchase warrants en¬
titling the holder to purchase, on or before Sept. 1, 1950,
1,000 shares of capital stock of the company at $1.50 per
share. Proceeds—For drilling operations.
& Co.
be
Stowe Center,
fng capital.' '
Canadian
Thursday, September 30, 1943
of $100 for each
debentures. No underwriter. For construction and work-:
provements. Underwriting—The company rejected bids
submitted Aug. 4.
The SEC on Aug. 23 exempted the
proposed sale from the competitive bidding rule. Sale
on agency basis being discussed.
1 -
share.
CHRONICLE
house, equipment, and payment of current obligations.
No underwriting.
June 11 filed 200,000 shares ($100 par) cumulative pre-«
ferred stock.
COMMERCIAL
allowing the busi¬
through
on
a
neg©-,
basis.
The Federal
agency held a hear¬
ing
that
on
the
was
matter
not
the
yesterday, but
direct
cause
of
the decision of
prospective under¬
writers
Rather
to
delay
feeling
was
the
offering.
that
the
,cur-
Y .lume
ii'jit"
163
Number 4738
heaviness
in
the
market
"inuie such action advisable.
Two
More
THE
"Rights"
cancelled
$20,000,000
.*
Issues
after
from
it
alockholders
which
Detroit
Co.
share¬
the
such holders in the ratio of $100
of debentures for each 15 shares
Coke
&
jected
Co.,
400,0.00
held.
-
pro-
=
used
tion.
'
in
both
to finance
Public
Third
Service
Try
i
&
to
make
third
a
debentures.
;
:
Gas
Transmission
400,000 shares of
mon
stock
met
when
new
com¬
favorable
a
re¬
brought out earlier
by bankers at $30.25
a
means an
that sort of deal.
prove
noticed
crude in
since
the
next
another
was
company
while
"stock
dealers
around"
observed
was
that
moving out in
re¬
yesterday,
the
issue
satisfactory
a
'
manner..
few
world
ply completely,
to
base
this external
sure
we
economic production and permanenfce.
Much is being done on this
000,000
Even
cannot
be
power; sun,
heat and wood.
Let
./■
look
us
built
sources
;■
at
sources
All
/-/' hpj&h'' p'p
the
source,
since
it
tent
and
A of heat
We.
j
have
been
\ volve
built
.] prevents
the
or
heavy
a
economic
ber
that
cost
soundness
at
ifoh
century;
a
even Presidents
I
bitten, not to mention the
i
lie.
You
have
heard
of
we
The
and
pub-
present/
.leading
.
a
precarious
very
Y
ence.
The
:
ordinary
/ \,
exist¬
ed
out
of
about
been
can
some
built
Y.
hydro-electric
50,000,000 kw., of
10,000,000 kw. has
is
and
running.
We
build the other 40,000,000 kw.
time
any
that
the
price
of
fuel
makes the hydro competitive with
the steam station.
The
reason
no
hydro plants have been built
that, as in all the foregoing
more
is
cases
ment
:for
mentioned, the initial invest¬
is much higher than that
steam plant, enough so that
unless the load factor exceeds 65%
a
that
only
easing
not solving it.
as
/
Coming
fuels, the
all
aware
of
the
Buffalo
vious
sion
position
the
in
are
General
would
of
are
terials
built.
development in
which has been
Edison:
Southern
Company
ample. / The
is
major
hydro-power cannot
was
California
another
fact
that
our
estimates
used
ex¬
only 40 to
50%
of
ma¬
energy
to
loss
the
produce it, a tre¬
of
Up to
energy.
the present,
we
any method
of synthesis of gaso¬
line
that
ably
does
have not devised
not
cost
consider¬
than
the cost of gaso¬
line from petroleum. Two
changes
for the better can be
more
expected,
as
ordinary technological develop¬
ment; the conversion efficiency
will be improved, and the cost of
the
process
reduced,
'
process more
relatively
on
our
up,
petroleum
to
20
may
within
go
as
of
na¬
low-efficiency conversion
top of present normal demand
to
gas
and the
only
Gas is too valuable
waste
in
few
a
synthetic
this
manner,
occur
more
other
major
exceed
50,-
much
the better
quickly.
reserve,
coal,
supply for
Our
looks
syn¬
After
at
use
looking
sheet, we
Shale
coal,
oil
of
the
jacket
.worked
on
reached
a
DIVIDEND NOTICES
of
The Weatherhead
can¬
flow
a
the Board of Directors
safer
record
bet¬
around
Cleveland, Ohio
are
oil-cooled
NATIONAL DISTILLERS
rigid struc¬
more
PRODUCTS
DIVIDEND NOTICES
CORPORATION
CONSOLIDATED TEXTILE CO., INC.
v.
The
schemes
years,
which
of
Notice
Dividend No
of
a meeting held on
Septem¬
ber 15. 1948. declared 40c per
October
11/ 1948.
2,1. 1948.
the
and
sun
supply
to
power
veloped
enough
the load
off
to
to
take
and
of
expansion
portant
what
effect
have,
not
the
.
:
The
/The Board
increase
but*
fuel,
$1,25
per
ers
of record
Research.
ers
as
15,
1948 to stock¬
shown
by the books
issued in lieu thereof.
Stock and scrip
certificates will be mailed.
the close of
share upon the
Stock, payable De¬
of record
at
L. H. Lindeman
September 17, 1948
Treasurer
the close of
business November 15, 1948
The Coodyeer Tire A Rubber Ce.
can't
By W. D. Shilts, Secretary
Akron, Ohio, Sept. 27, 1948
SITUATIONS WANTED
BANKERS
Married
The
Greatest
ATTENTION!!!
Name
veteran, 29,
college grad¬
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¬
ance,
and
Town
west
ferred.
property
of
Commercial
and
River
Box
Financial
498 Seventh Avenue
NEW
SOUTHERN STATES
Corporation has declared
Iron Roofing Company
regular quarterly cash divi¬
Chron¬
"t
dend
SAVANNAH, GEORGIA
an
Dividend
and
teletype, plugboard,
handle
own
available
for
experi¬
house.
cage
work,
over-the-
Particularly
adapted for one-girl office. Box
B929, Commercial & Financial
Chronicle, 25 Park Place, New
York 8.
per
share
on
the
twenty-five
Preferred Stock and
cents
(250)
per
share
the Common Stock of this Com¬
pany
has been declared, payable
on
October 1, 1948 to stockholders of
record
at
the
close of business
on
September 15, 1948.
ROSS G. ALLEN
Secretary
and
Ass't
able
dividend of 25
share and
dividend of
quarterly dividend of thirty-one
and one-quarter cents (31.250)
per
on
correspondence,
small
cents
Common
A
acting in capa¬
principal's
assistant,
of
on
Preferred Stock
ence; capable of
city
a
of 25 cents per share,
extra cash
tal stock
Secretary
Street
18, N. Y.
pre¬
S-23,
icle, 25 Park Place, New York, 8.
Thorough Wall
YORK
The Board of Directors of this
management.
Missouri
References.
Colonial Hills, Inc.
in Rubber
desires
uate,
with
on
September 27, 1948. No fractional shares
will be issued.
Scrip certificates will be
cember 15, 1948 to stockhold¬
that
November
of the company at the close of business
the $5
payable De¬
to stockhold¬
at
on
company
each
per
Common
We
upon
business November 15, 1948.
on
$1.00
above
able
for
holders of record
share for the fourth
of 1948
Preferred Stock,
cember 15, 1948
>
•
shown
share
of Directors
quarter
single stage compression
octane
capital stock of this
today the fol¬
lowing dividends:
engines at 12.5 C.R. would require
100
COMPANY
payable in
of one (1)
forty (40) 'Shares' out¬
standing has been declared this day, pay¬
notice
has declared
im¬
this
;
TEXAS
An extra dividend
dividend
Y, lp
arises—
on
THE
Extra Dividend
of
some
then
will-
only
been
new
September
W. Gleason.
Secretary
de¬
compression
ratio.
question
Treasurer
stock¬
to
coal, for diversion to
increase
September 23, 1948.
a
the interest of economy, we
look
1948.
expect
be
synthetics. ^,,'777:
In
October 11,
on
permanent.
should
we
wind
No¬
on
worked up
program
time,
R.
,
outstanding
payable
THOS. A. CLARK
regular quarterly
the Capital Stock
of the Corporation, payable
on
has de¬
The transfer books will not close.
a
dividend
Directors
1, 1948, to stockholders
of record
at
holders of record
and
vember
The Board of Directors of
as
of
quarterly dividend of
Common Stock,
12
Consolidated Textile Co.. Inc.,
share
a
50c per share on the
September 15,1948
now
production
other)
Board
clared
paralleled by develop¬
this
MORRIS H. WRIGHT
Treasurer
"
September 15, 1948
supple¬
Synthetic
possible
make
the close of business
at
October 2, 1948.
on
espe¬
calculated lubricat¬
a
should
By
of
Company, payable October
15, 1948, to stockholders of
perfectly attainable.
lubrication,
-V;.;/"' ing system flow;
,'7\ ture to avoid
ment of synthetics from
vegetable
waste (lumber and
to
by
the
on
the
valves; better cooled ex¬
probably
sodium
pistons, and
for .25 years and have
reforestation
Company
A quarterly dividend of $1.25
valve,
state, should receive the major
development effort.
This effort
be
an
to
seems
accomplished one
thing—it showed both de¬
signers and oil producers more
nearly where the effort should be
spotted to make a design and a
lubricant team up well.
conclusion
cooling,
controlled
desirable and
For
and synthetics from
they have both been
since
It
war
good
Consequently
production
design.
that the
us
over
filled; cooler intake—all these
cost too much, may approach eco¬
nomic feasibility.
counter
complete depletion would
that
job
production
say.
up.
miracle oil to correct
inadequate
production cost will undoubtedly
come down
and petroleum prod¬
ucts
a
outstanding Preferred Stock
with other sources, not
tomorrow,
but within a moderate
space of
years—10
longer
expect
misalignment and
must
we
we
higher
cation conditions in his
design and
we
think he knows what to do.
For octane demand
(aside from
haust
re-
/:•/■/,
opinion, the oils
will handle the
now
per share has been declared
an¬
short-lived
■;
justi-
gas, it seems inadvisable to
growth.
fact,
general
more
arrive
exhaust
oil
than three times
than equal to oil; in
but
ter
original petroleum reserves
consideration of probable re¬
covery would
not justify much
more
much
cially in
not
shale
con¬
heavy-duty gasoline
but we are lubricating
supercharger aftercooling),
con¬
our
"
=From the limited
supply
and
of
reserves
more
our
compression engines of the future
because the designers no
than
severer
risk. In
have
that the engine designer has con¬
trol of the severity of the lubri¬
gradually
Y1''-''-"
a
same
do
trifle
a
give the rings
and
bearings a calculated lifeexpectancy and not an uninsured
the
the
whole trouble
not
and
conver¬
At present, gaso¬
gas
or
coal
is
pre¬
shown
natural
represent
mendous
tural
first
have
own
cost and low
the / heat
load
enlarged several times since it
our
the
the
the
efficiency, high cost. Even
optimistic
make
much
are
of
roughness—these
can
on
higher; the ring belt
oil-coolers.
ship
synthetics—low
as
version
7 It has
to synthetic liquid
from
Falls in connection with
and
fertility/
and
efficiency.
line
Huntley Station built at
country
agricul-!
might
now
research
ficulties
Electric
the largest hydro
of
to
sure
main problem,
fuels
produce gasoline from na¬
tural gas or coal.
The major dif¬
Niagara
the
use
for
war
rendering the
You
on
Amer¬
a
must
our
Shale oil is
;
lubrication?
fiable.
plant.
program
Synthetic Liquid Fuels
the hydro total costs (oper¬
and fixed charges) exceed
steam
ob¬
waste*
kind of
any
to deplete our soil
of
a
had
the
those
so,
be
this! source,
reforestation
/
ating
or
that
we can
iplant is familiar, and expansion
undoubtedly proceed here. We
ihave a total capacity in the coun¬
try
could
power
products
serve
.can
which
doubt
for
tural
power
promising at
A few such plants exist,
little
replacement of straight
lumber. v Also, it should be point¬
Passa-
wave
is
have
never
even
get
does not look
source
i
tide
more
adequate
3maquoddy—the initial investment
is
what licks such/propositions
; until fuels are much-more expen¬
sive.
re¬
products not only from lumber but
paper and agriculture. Of course
been the plaything of inventors
j
a
Wood represents
source.
tained .from
no water, no fuel; here
now, sun-collectors are just¬
Tide and wave power has
jeven
*
to. wood,
now,
There
much
a few special
The Sahara desert has lots
J of heat,
ified.
fuel
processing and tanning indus¬
tries.
present, except for
teases.
automotive
:?:p:,pyp.
(sawdust, ends, bark) in the lum¬
in-?'
proposed
initial
foregoing assist the
situation, but have
on
come
placeable
problem
storage, quite a
Such plants as
power
matter.
are
only 6% of the total energy used,
mainly as space heating, and such
power
supply as can be conve¬
niently
obtained
from
wastes
is.intermit¬
source
introduces
or
'difficult
a
the
bearing
supply, y ;.-i
ex-
perimentally developed and suc¬
cessful small plants are in opera¬
Such
of
no
as
after-
47
sel
by
water or non-existent rail or
pipe
line. The shipment of
any oil from
foreign sources can be regarded
electric power
permanent
has been
sun
discontinuous
operation
the present
stumbling blocks.
•i
tion.
/*'.
to
and
moment. ' Collection of
a
all
•••;.
...
.
get operating data and
performance.
Again, investment
air, water, earthT
*the heat of the
capacity—that's
■
wind power, one
elaborate plant is
being
fairly
,Jn addition, because there will
be more time, we must study the
permanent
South
and
engines,
both quite successfully now. Die¬
engine bearings are giving, if
anything, less trouble than heavyduty spark-ignition engines. It is
thought that this is mainly due
afford
supply
regarded
Summing
Referring to
Permanent Power Sources
of
kw.
there is.
'
•
or
ditions
most
provide from within
country.
ment
(Continued from page 43)
replaceable
12.5. and
but must be
source,
can
fuel
present Diesel engines are
running at compression ratios of
would*,
cannot
we
domestic
our
dual
—
supercharging—which
The
but
years,
war
that
present gasoline.
So we may feel
this situation is under control..
importing
Summary
The Question of Oil Reserves
/
be
volume
this high compression
run
must assume, cut off this
sup¬
we
other
-y .v;
that
shall
we
serve.
how.
methods
nothing
importing pe¬
particularly from the
look much
However,
ported
it
5
;
Issue
operation was not by any
"out-the-window" prop¬
osition, but considering its dimen¬
sions, it was not counted upon to
^
Gas
:
Stock
Co.'s
try at ob¬
July 7 the
on
be
full
the refining chemists
so
At any rate we have two
us.
cooled
greatly increased quantities of this
the
The
taining' new capital funds, this
through the medium of un¬
Back
$50,000,-
as
share.
time
secured
com¬
seek the issue.
this week
Co..(successor to the Public Serv¬
ice Corp. of, New
Jersey) has, de¬
cided
much
tell
(1355)
present
high yet,
huge supply of the Near East. Un¬
debentures, and it is indi¬
four banking groups
sponse
would
Electric
will
troleum,
cou¬
the
now
above,
liquid
of
source
has been said about
of
that
Tennessee
vY.v'VJ»
.Makes
4%
a
a
as
ica, while safer than the Near East,
construc¬
new
•
So
as
Big
shares
cases
bids
is planning to call for bids
may
':-'1
Proceeds
be
four
:
100.90 for
perhaps
cated
debentures to shareholders
in the ratio of $100 of new de-'
each
of
better
also
make
being replaceable.
It
interested.
000 of
for
the
of
not
year
bentures
pair
a
stock,
was
is
CHRONICLE
unconverted gase¬
and it has the supreme merit
ous)
exemp¬
bidding,
company
to "shop around"
apparently bankers then were
pany
Gas Lightv
Chicago, has
obtain
down
the
similar offering of $16,of 3% convertible 15-
a
wood
FINANCIAL
As mentioned
fuel (as well
but
on
held.
Peoples
stock
Subsequently the SEC permitted
approved will be offered first to
Meantime
to
&
thetic fuel.
doubtedly
convertible debentures, which if
stock
preferred
Of
pon.
holders will vote, on Oct. 26, to
authorize
$47,006,000
of
new
of
sale
competitive
turned
for
priority basis.
Edison
of
failing
tion
plfihs which will require the of¬
fering of the new securities to
a
scheduled
without opening the two tenders
received.
Again
on
Aug.
4,
-
Two more public
utility com¬
panies have decided on financing
on
its
COMMERCIAL
5%
on
stock
a
the capi¬
outstanding, all
October
28,
pay¬
1948
to
stockholders of record Octo¬
ber ] 1, 1948.
Payment of fractional shares
is to
on
be made in cash based
the
closing
price
as
of
October 11, 1948.
COLONIAL MILLS, Inc.
EDWARD A. WERNER,
Treasurer
September 24, 1948
Treasurer
48
COMMERCIAL
THE
(1356)
&
FINANCIAL
CHRONICLE
Thursday, September 30, 1948
way would put the
BUSINESS BUZZ
ernment
to
insurance
30's,
Federal gov¬
regulating the
business.
life
During the
of the bright New
boys privately eyed what
they called "these vast monopo¬
on...
many
Deal
listic
Behind-the-Scene Interpretations
aggregations
meaning
from the Nation's Capital
the
of
capital,"
insurance
nies.
However,
have
the
compa¬
did
they
great
not
hardihood
to
drive directly for controls.
Incidentally, insurance
WASHINGTON, D. C.—Should Tom Dewey make the grade next
2 for a four-year lease on the more or less white mansion at
1600 Pennsylvania Avenue, one thing seems to be pretty sure: the
position of the Presidency will revert to its more traditional role or
will
there
in
be
sweet
one
This'ris for the benefit of those
imminently retiring New Dealers
who are suspected of spreading
the
word
hear around the
now-a-days,
and
Which occasionally gets into print,
that when Mr. Dewey gets to be
you
bars
cocktail
President he will have
one tough
getting Sen. Robert Alphonso
Taft to go along with him. This
word is spread with more or less
glee, as though its retailers were
time
deriving what solace
therefrom.
In
is
Taft
rates
He
nobody's
above
far
member
average
speculation
is
the
Congress
of
old-timers here for the
among
duality of his mental integrity.
He is going to take no Presi¬
dent's
program
platter
and
on
silver
a
down
go
the
to get it shoved through
Senate—unless he has been
r
sulted
in
advance
helped shape up
,l Neither Sen. Taft
f whispered
this
with nearly all the elec¬
toral votes including those of Vir¬
ginia, North Carolina, and Texas,
he couldn't be expected to ride
hard over the Capitol boys much
three
long
as
elected
say
has
birdie
«ar,
; grope
Into print predicting fric¬
the
\Senator's make-up.
Ohio
,
| Sim. Taft, however, while the
Outstanding independent, is not
the only independent among Re¬
publican leaders. Chairman Har¬
old Knutson.of the House Ways
line
the
for
tional
and
with Congress.
at
were
get
along
,'.;v
.
has
he
And
assured
•
One
hears
them
in
lems
New
The
who
their
is
rooted
attitude
scious
tnan of. the
,
mittee.
Senate Finance
In
the
Senate
com¬
Chairman
Bridges and in the House Chair¬
Taber
man
of
the
appropriations
going to have a
to
say
how
much
spent where and for
committees,
great deal
are
money
is
what purposes.
is
Speaker Martin
dope about political affairs
no
if he is belittled by the pro¬
fessional •
"liberals."
Chairman
even
Wolcott of the Banking committee
is not
on
,
suddenly going to turn tail
his opposition to public hous¬
ing and pass a bill like the late
WET bill, whereby the govern¬
ment, through a cumbersome ac¬
counting
hocus-pocus, provides
"big cities with lovely housing
projects practically free.
' .V*
[
And
:
so on,,
of'
*
uncon¬
depending
*
'■ *
*j
i
the
in
man
White
what to do.
them
has not been the political power
late
his
of
assumed
face of
he has
predecessor,
role
the
of this
mander
the
of
that
and
de-
in the
de facto Congressional
a
opposition during his first two
and an open opposition
during his second two years.
years
Congressional GOP leaders
simply do not fit into the mold
of
the complaisant
Sen.
Barkley,
the much
respected if ineffective
(in the face of opposition) John
McCormack, .or
the
sour
but
White
House
Rayburn.
.
100
:
..
here
Few
percenter, Sam
'■
*
at
Ht
would
event
that
of
Mr.
the
politically
boss,
may
Dewey's election is
President
the
will
become
leader,
the
not
of his political party. He
be expected to consult with
Congressional leaders before
mitting himself to a line of
com¬
gen¬
eral
action—certainly before com¬
mitting himself to the details of
a legislative
program.
Republicans
shades
.
«
;
'
sion,
of
even
if these
You
get
are
own
dissen-
somewhere
with
a
tradition-
program
The
product
put
ward
necessarily
is
mise.
It
White
is
not
a
a
cials to insurance
from
somebody
from—around
Washington to the effect that it's
plated.
a
shame
predict
that
selling
governments
at
you
long-term
pegs
are
<■'
House
along with Congress and plans to
try to get along with Congress,
being
are
There is
with
it
normally
on
the
little polite grum¬
a
bling behind the
the
time
very
scenes
that
required to kick in
the
reserves,
nies
terms and
that at
banks
some
insurance
cashing
are
compa¬
their
free to
are
higher
not
go
It
is
out
only
polite
j'\-.
Mr.
South
Truman.
so-
hitched
be
long
as
or
tucked
the government is
the
may
put
it. in
U. S.
suggested,
measures
Lonsdale Co.
Seatex Oil
in
hat
M. S. WlEN & Co.
ESTABLISHED
will
commentators have
recommend
which
in
any
Finishing
5 Dorset Fabrics
Members N.
grumbling,
Jersey Gas *
low
his
Administration
as some
V
com¬
,
this
to
Belle Isle Corp.
Officials
mitted
to
maintaining
long-term interest rate.
One
price
Reiter Foster Oil
Sen. Taft and certain other
cannot
market
while is contem¬
7.,;
of
as
allocate supplies at
or
companies to
opponents of the Administration
predicted — that credit overal
long-
however, and thus far at least
a
get pref¬
government's
those small refiners.
naturally feel a little frustrated
to see how clearly it is working
not,
It" is
for
offi¬
to
field
not
drive
proceeds to expand their loans.
use
formal plea by
a
just that officials, as
they do, sympathize with the com¬
mercial banks, which got singled
out in the alleged "stop inflation"
that
are
even
easy
their
White
HAnover 2-0050
any
40
1919
|
Y. Security Dealers, Ass'n
Exchange PI., N. Y. 5
HA. 2-8780
Teletype N. Y. 1-1391
direct
ity
to
mises
Teletype—NY 1-971
House-Congressional
:
fundamental test of
political ability. It
a
greatest weakness of former
Hoover,
otherwise
a
mental giant as Presidents come.
Oregon Portland Cement
All Issues
.
Spokane Portland Cement
President
All
that
Dewey
known
is
understands
of his relationships
and
means
is
ram M«BKS 6 ro. 1KC.
that, Mr.
the problem
with Congress
to work them out.
you
are
an
insurance
LERNER & CO.
FOREIGN SECURITIES
..
SPECIALISTS
Investment Securities
SO Broad Street
■
If
r
Riverside Cement A & B
have been
the
Trading Markets:
Ralston Steel Car
V
"
FOREIGN SECURITIES
President's
may
Firm Trading Markets
.„
devise workable compro¬
with-Congress is the most
com-
New York 4, N. Y.
AFFILIATE: CARL MARKS A CO. Inc. CHICAGO
10 Post Office
,
Square, Boston 9, Mass.
Telephone Hubbard 1990
Teletype BS 69
ARGO OIL CORPORATION
BILL BROWN'S
,r
*
...
Common Stock
EMPIRE STATE OIL COMPANY
HEALTH FARM
Capital Stock
—THGUOB
,
for
—DLOS
QUOTED
GARRISONON-HUDSON, N.Y.
Under New
Management
N. Y. Office:
or
INCORPORATED
*
'
Members National Association-of SecyrititgDealers, Inc.
55 Liberty
HAnover 2-4862
Garrison 601
Hill, Thompson & Co., Inc.
Market, and Situations for Dealers
Kobbe & Company
r'
If you are a new President and
you try to ride your new white
jhorse through Congress, you can
a way
turned
for'pure conversation, unless you
are
minded enough to spare the
sensibility of the government's
monetary managers.
harmony is guaranteed^ The abil¬
*
If
get
the
commercial banks, you can take it
•
*
and also
for¬
a Department of
draft, it is not a
Treasury-written bill.
'" 1'
your
at this time when the credit
screws
compro-
draft, It is not
'6
'
party executive and you just hap¬
pen
to hear an informal crack
,
Agriculture
,
dear—that's
ring,
should
tine
without
inadequate
not at the
ally by threshing it out in ad¬
vance
by conferences of the
leaders.
;
their
and
this
with
of oil,
for
way
supplies of crude. They decided
simply to drop the premiums
the
moment
as
apparent
as
the
quarrels among the Democrats.
legislative
i
have
opinion
afford
why I charged it!" "
..
What is likely to happen in the
\
can't
you
refiners
or
a
two-year-oidi
that small, in¬
because Gov. Dewey means to get
that
«
•*
the
upon
know
see
signs of dissension, disclose how
deeply
I
course
officials
a
providing
erence
j
Dealers,
law
sources
"Of
when
administer
dependent
prob¬
advance.
in¬
was
trying to figure out
sources
spontane¬
Even though President Truman
Treasury boys—
even
Republican Treasury boys.
Same for, Gene Millikin, Chair-
.
sional leaders of this privately las
well.
premiums
to
Congres¬
ously talk about how they will
get together next year
at the
field
Somebody realized it
to the
.
the
over
consistent with the government
drive against high prices to sell
leader
of
written
the
shortage,
pay big
price to
get the oil, under the competitive
bidding arrangement.
having to
were
premiums
says
role
normal
boss, when he
country that he will
House to tell
by
immemorial,
the
selling its royalty
highest bidder, just like
was
ducted. In these times of
refiners
Dewey means to
he will take the more tradi¬
and not
of oil-bearing land.
other government business is con¬
of
sake
has
time
oil to the
Gov.
.and Means committee is not going
id let the next year's tax bill be
,
as owner
From
financial calam¬
White House and settle their
'
gets
the
,
ity, using the duress of vast new
spending programs, or kicking
into
which
above-market prices on its royalty
Gov.
Dewey
gives
sign of recognizing that his
role will not be that of.a Roose¬
velt, cowering a scared Congress
war.
❖
oil. This is the oil the government
Actually,
them
«
talking such a good fight
against inflation was, until a few
days
ago,
charging
premium
every
a
any
volume.
Administration
government
in the midst of
around
been
they will hold
.
came
It's only small potatoes, but this
big
That is
months.
as
overwhelmingly by
"
v
people.
into
tion. It is inherent in
than
about
own
addi¬
the
they observed selling in
*
their fire, normally, out of fear of
the popularity of a new President
the
program.
nor any
considerable
their
when
tional drain of taxes
winds up
the
anybody's
least,of all those who have
!
were
more
from
Only
due to Wallace and the Dixiecrats,
line
con¬
and
the
portfolios.
just about three months after in¬
auguration. Even if Mr. Dewey,
'
,
this
sense
Bob
stooge.
they could
.
one
true.
governments
bust-up
the "Dewey Administration.
company
sales of governments were said to
have made it possible for banks
to avoid a great deal of selling of
Nov.
Telephone
BArclay 7-2663
Street, New York 5, N. Y.
\ !
...
120 Broadway, New York 5
'
Tel. REctor 2-2020
Tele. NY 1 -2680
Teletvne
]\"\r 1-277
'DM
Volume
Number
168
4738
THE
COMMERCIAL
&
Bond Club of New Jersey
Hal Murphy, Commercial & Financial Chronicle; Austin Patterson, Julius A. Rippel,
Inc., Newark; Robert W. Lane, MacBride, Miller & Co., Newark; Robert M. Hinchman,
Ira Haupt & Co., New York City
',
Annual Outing
R. M. Keator, Lord, Abhett & Co., New York City; John J. O'Kane, Jr., John J. O'Kane,
Jr. & Co., New York City, President of the Security Traders Association of New York;
'
Stan Weissenborn, Parker &
Weissenborn, Newark.
President of the Bond Club of New Jersey
Bill Roos,
MacBride, Miller & Co., Newark; Bob Pyle, Hornblower & Weeks, New
Preim, R. W. Pressprich & Co., New York City; Charles H. Henninger,
Nugent & Igoe, East Orange, N. J.
Alex Seidler,
w
Jr.. National State Bank of Newark;
Newark; Joe Cantlie,
Bank & Trust Co. of
O. D. Griffin, Lord, Abbett & Co., New York City
Jim
Harry D. Miller, Nugent & Igoe, East Orange,
Chairman of Field Day Committee
York City; Carl
Arthur Robinson, Fidelity
Campbell & Co., Newark;
Union
Pictorial Insert I
CHRONICLE
FINANCIAL
Frank
Musson, B. J. Van Ingen & Co., New York City;
Russ Ergood, Strcud & Co., Philadelphia
Bartow, Bartow, Leeds & Co., New
National Bank,
N.
York City; Roy A. Hitchings, Irvington
Irvington, N. J.; Ludlow Van Deventer. Va?i Deventer
P. Scott Russell, Glore, Forgan & Co., New York
J.;
Alex Godfrey,
Seminole Oil & Gas Co.; Felix Restino at the
accordion; Harold Smith,
"The Eyes of Texas Are Upon You"
appealing for all to attend the Dallas Traders party at the NSTA Convention
Pershing & Co.,- New York City, giving with
and
Bros., Newark,
City
y.
•>'
"
November 14-18
THE
Pictorial Insert II
COMMERCIAL
At Echo Lake
Dr.
P.
A.
Cassedy.
G. M.
C. W. Smith, Smith, Barney & Co., New York
Lethbridge, guest; C. S. Moreley, New York City
Chas. W. Clark, Fidelity Union Trust Co., Newark; Raymond B.
Union Trust Co., Newark; Cliff Hemphill, Jr., Hemphill, Noyes &
Weatherby, Fidelity
Daniel E. Fitzpatrick, Phelps, Fenn & Co., New York City; Bus Browne, B. J. Van
& Co., New York City; Walter Dempsey, B. J. Van Ingen & Co., New York
Bank of New York
Jaek'Sachau/ BVyth & Co., New York City
(in BackgrOuhd); Craig Mitchell, Blyth &
Co., New York City (putting)
.
City
Co., New York City;
Brown, White, Weld & Co., New York City
W. E. Bachert
FINANCIAL
CHRONICLE
Ingen
City;
Russell
&
Williams, Public Service Corp., Newark, N. J.; J. M. Byrne, Jr., J. M. Byrne
Co.; Richard H. Monaghan. Newark; Robert Zachary, Public Service Corp., Newark
W.
T.
Fields,
G. Norman
guest; S. M. Swenson, S. M. Swenson Sons, New York City:
Scott; Estabrook & Co., New York City; Foy Porter, Estabrook & Co.
New York City
W. H. Campbell, Campbell & Co., Newark; Frank R. Cole, F. R. Cole & Co., Newark;
Felix, accordion player; Fred Baker, guest; T. A. Von Glahn, Salomon Bros. & Hutzler.
New York City; Jack Semple, guest
President of U. S. Savings Bank of Newark; Russ Adams, J. S. Rippel
Newark; Thomas Loughlin, 17. S. Savings Bank of Newark;
Ben Fairbanks,
/:
.
&
Co.,
Dr. W,
Thursday, September 30, 1948
Country Club, September 23
guest;
Frederick
&
Reiter, Mutual Benefit Life Insurance Co., Newark, N. J.
Tom
Jones,
York
Hornblower
&
Weeks, New
City; Richard D. Nelson, Equitable
Securities Corp., New York City
Volume
168
THE
Number 4738
COMMERCIAL
Attended By
R. S.
Nichols, Jr., Peoples Bank & Trust Co.,
Westfield, N. J.; Ned Byrne, Byrne &
Bros. & Hutzler, New York City;
Glahn, Salomon Bros. & Hutzler, New York
City; Jim Duffy, First Boston Corp., New York City
Chet Bardsley\ Salomon
Von
John
K.
W. Hand,
D. McLaren,
guest; Wm. A. Fiedler, H. M.
John
Westfield, N. J.;
N. J.
F. Hoffman, Shields & Co., New York City; Walton R. Dunn, Mackey, Dunn
Co., Inc., New York City; Robert C. Winfield. A. G. Becker & Co., New York City;
Harold Leaf, R. D. White & Co., New York'City
John
&
'
"
,
Goldman, Sachs & Co., New York City;
Brassier, Paterson Savings & Trust Company,
Paterson, N. J.
Byllesby & Co., New York City;
C. Sturhahn, Delanoy,
Harry Zimmer,
& Wells,
Newark
Purcell, Commercial Trust Company, Jersey City, N. J.;
^Commercial Trust Company, Jersey City, N. J.; Chick Spring, Outwater
Jersey City, N. J.; Warren K. Van Hise, Parker & Weissenborn,
Pictorial Insert III
CHRONICLE
P. Ryan,
Norman
Corporation Trust Co., New York City; H.
Kipp & Sturhahn, New York City
Ed
FINANCIAL
175 Members and Guests
Phelps, New York City; H. L. Rost, Peoples Bank & Trust Co.,
T. G. Kenyon, Cartaret Bank & Trust Co., Cartaret,
Ted
&
Harry D. Miller,
&
Co., Inc., New
Kenneth Spear, J. A. Rippel & Co., Newark, N. J.;
Albert Leek, Coffin & Burr, Inc., New York City;
Felix Restino tickling the keys
Nugent & Igoe, East Orange, N. J.j Norton Rogers, Rogers, Gordon
York City; E. M. McLaughlin, Paine, Webber, Jackson & Curtis,
Wm. C. Rommel, J. S. Rippel & Co., Newark, N. J.
New York City;
City; Dick Rand, Rand & Co., New York
York City; Jack Clark, Chase National
J. Ryan, C. J. Devine & Co., New York
Bill Burke, Bacon, Stevenson & Co., New
of New York
City;
Bank
THE
COMMERCIAL
&
Pronounced
R.
R.
Ballinger,
guest; R.
C.
Fcwler, guest; W. A. Kenny,
Igoe, East Orange, N. J.
FINANCIAL
CHRONICLE
Huge! Success
guest:
Harry D. Miller, Nugent & Igoe, Chairman of the Committee, working
J. Albert Williams, Nugent &
for
John J.
James
Deetjen
R.
Roe, Hudson City Savings Bank, Jersey City; Charles B. Schubert, Emanuel,
& Co., New York City; Albert P. Luscomhe, Peoples National Bank &
Trust Co., Belleville, N. J.; B. Thomas Aitken, Peoples National Bank & Trust Co.,
:
t:
'
1
Belleville, N. J.
.
W.
Johnston,
Pressvrich
New
York
those
up an
appetite
luscious steaks
Bramhall, Barbour & Co., -New York City; Joe Vandernoot.
Co., New York City; Court' Parker, R. W. Pressprich & Co.,
City; Paul Welzmiller. C. F. Childs & Co., New York City
&
„
Wehrheim, Philadelphia National Bank, Philadelphia
Frederick & Co., New York City
Robert A. Bivins, Chase National Bank of New York,
Glenn D, Thompson, National State Bank, Newark
Bob
Ed
Paul Frederick, Paul
A1
C. R. Sahdford, Elizabethport Banking Co:,
&
Thursday, September 30, 1948
Kezer, B. J. Van Ingen & Co., New York City;
Johnson, Federal Trust Co.,Newark; Stan Weissenborn,
Parker
-
&
Weissenborn,
Howard
Elizabeth, N. J.; Jack Comari, C. J. Devine
Co., New York City; Sam Revits, C. J. Devine & Co., New York City;
R. W. Crum, U. S. Trust
Co., Newark, N. J.
Newark; Jack
Savings Bank
Duerk,
Harry P. Schaub, Jr., Harry P. Schaub, Inc., Newark;
Wm. Conway, Hudson County National
Bank, Jersey
City. N. J.; Harry Casper, John J. O'Kane, Jr. & Co.,
New York City
George Waldmann, Mercantile Commerce Bank & Trust Co. of St. Louis, New York
City; Jerry Tripp, Tripp. & Co., New York City; Roal Morton, The Blue List, New
York City; David H.
Callaway, Firsi of Michigan Corp., New York City
@FedFRASER