The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
adm.
BUS.
library
'
b
•.
Tinman Again Assails
In Labor
,
Day addresses at Pitts-
burgh and Des Moines, President j
calls for adoption of his "Fair
Deal"
policy. Says he will fight
for repeal of Taft-Hartley Act,
and urges adoption of Brannan
Plan of farm price support. Re¬
news
attack on Eightieth Con-'
.
workers
have
interest.
common
Labor
bonds and
,
the
•
an
It
be
may
comme r c
i
a
1
banks and the
at
Federal
Banks
hold
reserves
these
but
de¬
in
ent
are
differ¬
quite
form.
voted his re¬
In our discus¬
marks
largely
sion
to
an
*
on
the
attack
when
"self¬
Deal"
general be
referring to
;;i
:
;;
■
A,
^of■; ■ industrial
.■
c o
on
in
We Se
§§§ps
British-American Relations ?!•
on
"the
I notice that this is called
largest' county fair."
I
have attended county fairs for 60
world's
and I'm glad to be a guest
the biggest one of all.
years,
at
I
am
particularly impressed by
it is both a farm
this fair, because
•
(Continued
22)
on page
of gold certificates
held in their vaults.
V;
' •
For more than a century,
been
an
it has
accepted feature of the
nation's banking system
that com¬
mercial banks should be required
(Continued on page 20)
that
countries at this critical time.
of
"difficult,"
and
expect the rank and file to
The subject matter is complex
and
course,
$250,000
sity of Wisconsin, Madison,
Canadian National
no
September
acquire a mastery of it all over¬
points of controversy and
as
Price
105
%%
Funds,
Members New York
Stock Exchange
Philadelphia
Chicago
London
Providence
to
the
Government
UTILITIES FUND
London, E. C.
Colcny, Kericho, Kenya,
and
Paid-up
Reserve
The
Bank
,,
and Aden
Zanzibar
Capital
Capital
Fund
",
FRANKLIN DISTRIBUTORS, Inc.
New York 5
Bond Dept. Teletype:
,nd exchange
£4,000,000
£2,000,000
Trusteeships and Executorships
Canada
(Continued on page 37)
*An address by Dr.
Irwin at the
Confer¬
Tennessee,
Knoxville, Tenn., Sept. 7, 1949. ^
Sixth Tennessee Bankers
University
ence.
1
of
Bonds
Bond Department
Y THE CHASE
NATIONAL BANK
Head Office: Toronto
Agency: 20 Exchange
New York
Portland. Ore. San Francisco
OF
THE CITY OF
NEW YORK
PL
Los Angeles
CANADIAN
bonds & stocks
Underwriters and
Wisconsin Power
.
SECURITIES.
&
Light Co.
COMMON
Distributors of Municipal
and
Corporate Securities
Dean Witter & Co.,
Memoera
San
OTIS & CO.
Established
1899
(Incorporated)
business
far
COAST
£2,500,000
also undertaken
NY 1-708
PACIFIC
conducts every description of
banking
generally ; speaking,
and away beyond
profits,
still
Municipal
OF COMMERCE
OF NEW YORK
Prospectus on request
India, Burma, Ceylon, Kenya
Subscribed
that
are
of the major
CANADIAN BANK
THE NATIONAL CITY BANK
in
Head Office: 26, Bishopsgate,
in
production—in volume, mark
though not in dollar value—•
has averaged about 177% of pre¬
war-volume*
thatr employment
still hovers close to 59,000,000; and
trial
you,
THE
Seattle
Kenya Colony and Uganda
Branches
For it
that indus¬
"
of INDIA. LIMITED
Bankers
months.
remembered
Monthly Commercial Letter
;
- upon request
BONDS
INCOME (BALANCED) FUND
NATIONAL BANK
^
across
BONDFUND
64 Wall Street,
Amsterdam
•
be
State and
PREFERRED STOCK FUND
Wall Street, New York 5
Boston
MUNICIPAL
and
COMMON STOCK FUND
made subject to
appropriate rules of N.Y.S.E.
40
STATE
«»c.
A Mutual Fund
White,Weld&Co.
•
prosperous
must
(Continued on page 31)
yield about 1.50%
Offering is
r
been
550 Branches
to prin¬
'
V to
have
year
Wis.,
Franklin Custodian
cipal and interest by the Government of Dominion of Canada.
:•
Irwin
A.
confusion should not give a great
Bonds
Guaranteed unconditionally
William
Aug. 31, 1949.
1951
1,
could reasonably
one
It seems to us, however, that some
Railway Company
Due
eight
months of the
the rank and file of both
much nonsense is being fed
so
large,
and
the first
leaders in negotia¬
infrequently, at least, some of the
But,
year.
by
.
by Mr. Szymczak at
at the School of Banking, Univer¬
Guaranteed 4!/2%
have'
Farmers
night.
♦Lecture
j
of
Popular understanding of subjects, such as are under not received
discussion between British and American officials is, of quitethe
course,
never perfect.
The technicians closely associated enormous in¬
come they got
with the work that is going on are, naturally, not free to
last
surprising. But whatever the causes, it appears to us to be
with
correspondent banks.
Re¬
serves
of
the
Federal Reserve unfortunate that so much misunderstanding prevails, and
Banks consist
lines
business.
therefore, not
Y
cf
profits
some
about the
\
decline
employ-
men
t,* some
decline in the
his deposit with the Federal Reserve tions of this sort have good reason to keep the real issues
remarks largely to support of the Banks, of which a part are legally
beclouded.
•>; iV- >
?-■*■ vtY/L'vy k.-y new
"Brannan Plan" for support required reserves and a part may
The public confusion which exists today
of farm income.
be excess reserves.
Nonmember
The
text
of
the
President's bank reserves take several forms
"dollar shortage" and the related questions which are ac¬
Pittsburgh address follows:
in accordance with various state
I
am
very
happy to be here laws, but the bulk of them are tively under study in the national capital is,
today at the Allegheny County held in vault cash and on deposit
Free Fair.
mmodities,
some
devoted
v
,
financial burden
good as in 1948, of course, but good by almost any other annual stand¬
ard of comparison. There has be^n some decline in the production
Not
reserves
and (2) the British crisis.
uncertainty.
economic
EDITORIAL
Some Observations
1
outlook: (1)
1949 has up to now been a year of very considerable
True, business has been good; not quite so
The year
have several mean¬
may
speak out, and the politicians may or may not have any¬
thing approaching a full and fundamental understanding of
the forces and the problems with which they are dealing.
the
Szymczak
.
predicts lower farm commodity prices.
banks hold
S.
Des Moines he
Truman
President
urges
that member
pro¬
while at
re¬
shall
in
M.
gram,
refer
I
serves
oppose
"Fair
his
I
bank;
to
interests"
which
today,
•
favors higher wages and more inflabankers fight this policy. Holds agricultural sur¬
Re¬
serve
County Free
ish
that
•
.
Association
pluses under farm price support program is serious
and
Both V
serves.
at the
•Allegheny
and
tions, and
which
for meeting legal requirements of commercial banks or it
used to include quick assets that banks hold as secondary re¬
.,
Fair
one
■
Says Administration apparently
be used to refer to the total amount of reserves
may
Pittsburgh,
Pa
reserves" is
The term "bank
ings.
_
k
principal uncertainties in economic
as
sees
threat of fourth round of wage increases,
liberal policy has helped
influence in making current economic situation more
morning
he spoke
Dr. Irwin
reserve
favorable.
delivered two major
addresses.
In
Day
l
more
market and
availability of credit by expanding banks' liquid holdings
by about $2,600 million. Sees in recent decline of government bond
yields an impetus for larger investment in corporate and municipal
qualify
Harry S. Truman on
President
contends
■
■
.
Economist, American Bankers
<
promote
and contends farmers and
gress
Federal Reserve System
Federal Reserve Governor reviews recent open
-requirement changes, and
\Y
By WILLIAM A. IRWIN*
S. SZYMCZAK*
By E
Member, Board of Governors,
'
Economic and Inflation Outlook
The Function of Bank Reserves
"Selfish Interests"
Copy
Price 30 Cents a
York, N. Y., Thursday, September 8, 1949
New
Number 4836
Volume 170
ESTABLISHED 1S39
CLEVELAND
Chicago
Denver
Columbus Toledo Buffalo
New York
Cincinnati
New
York
Stock
Lot
14
,
:
Angeles Stock Exchange
WALL
BArclay
San
Dominion Securities
6rporaxio71
Exchange
Francisco Stock Exchange
Stock Exchange
Honolulu
STREET,
Teletype NY 1-579
1-4300
Francisco
NEW YORK
i
Y
„
Seattle
Direct
Wires
Los Angeles
Honolulu
■
■
■./'
*
■■
.
•
.
....
IRA
and
'■
40 Exchange Place, New York 5,N. Y.
HAUPT&CO.
111
other
Broadway, N. Y.
WOrth 4-6000
Teletype NY 1 -702-3
WHitehall 4-8161
York Stock Exchange
Principal Exchanges ,
Members New
Boston
6
Teletype NY 1-2708
Telephone: Enterprise
18?0
2
(938)
THE
TRADING
MARKETS
An
By
Pipe Line Corp.
1
CHRONICLE
Thursday, September 8, 1949
*
-
Alabama &
ELISHA M. FRIEDMAN
■""77
Consulting Economist
Chairman, Econometric Institute, Inc.
Louisiana Securities
Mr. Friedman contends that the union's rebuttal arguments do not
justify a wage increase because
wage increases exceeded rise in living costs, profits declined relative to wages and are
falling rapidly
1951
.
Bought—Sold—Quoted
•
and
productivity rose less than wages. Holds increasing wages of steel workers will not check
business decline. Exposes Mr. Nathan's gravest error of
over-estimating profits and under-estimating
net worth during inflation, also in shifting base
years and disregarding down-trend of living costs and
in profits. Charges stockholder is ignored/ Holds union
wage policy is menace to free enterprise and
now
New York Hanseatic
Corporation
120 Broadway, New York 5
BArclay 7-5660
FINANCIAL
Analysis and Appraisal of the Arguments
6% Interim Notes
Due
&
Union's Rebuttal In Steel Wage Case
IN
Transcontinental
Gas
COMMERCIAL
Teletype NY 1-583
free
Steiner,Rouse&Co.
Members
Advocates union rescind strike threat while judges deliberate.
government.
The decision in the steel wage case, due soon, will set the
pattern for other
industries,
automobiles, rubber, electrical industries, shipbuilding and coal mining.
These union
leaders are waiting and the country is tense. Whether we shall have a
series of strikes
involving
f—
i 11 i
m
Rights & Scrip
upon
Board's
frjc pONNELL & Co.
Members
■
Stock
Exchange
New
York
Curb
Exchange
REctor
how
2-7815
tion
has
long
the
basic statistics
the
'H;
competence
form
for
an
The
Stock
glass heating
There
ground
system.
are
ly
Bought—Sold—Quoted
72 Wall Street, New York 5, N. Y.
Telephone DIgby 4-5700.
Teletype NY 1-2813
be
may
even
some
insurance now, and
on
in
six
months,
on pen¬
when
the
contracts expire.
The differences
concern the
wage increases.
No
increase
wage
is
justified
as
an
analysis of the union data proves.
But these
price
Black Star Coal
Corp.j
less
and
But
.
A wage
Common
steel
the BLS
than
wages
other
the
are
increase
will have
now
the
following ,■ consequences—
higher costs, higher selling prices,
Kentucky Stone Co.
5%
index
metals.
less than
rose
highest in history and close to the
highest for any industry.
Common
lower consumption and lower
Preferred
em¬
ployment.
Or if prices are not
raised, then lower profits, fear of
a
™
BANKERS BOND E
1st
and
lessr
Bell Tele. LS 186
were
earnings and substantial unem¬
ployment. -Again, the prosperous
Zllllllllllllllllllllllllllllllllllllllllllll^
£
Trading Markets
':'''!'£
E
American Furniture Co.
=
E
Moore-Handley Hdwe. Co.
E
decade
E
the
1920s
due
was
and full employment.
each
steel
declined
he
Lynchburg, Va.
the
could
under
the
keep
or
be
corporate
a wage
but
Tele. LY 83
LD
33
We
are
ex¬
political
,
exploited
Today labor
industry,
makes
higher and harms the
(2)
1939.
1948
has
consumer.
rates per hour and in
wage
wages per
week far
the rise in the cost of
been
costs
Cost of Living—The rise in
steel
This
outstripped
living since
favorable
has
spread
increasing since September,
because the cost of living
been declining.
The union
demand that weekly wages be in¬
creased to match the peak of war¬
time overtime is too preposterous
for consideration.
(3)
Company
corporate
Profits
profits
—
reached
Total
a
peak
in the fourth quarter of 1948 and
have been declining since. In the
industry
;
profits
cline
is
of
the
decline
quite marked.
profits from
The
the
in
de¬
first to
the second quarter of 1949
ranged
from about 12% for U. S.
Steel,
olive
■
he
September 6, 1949
York
New
and
810%
for
Commodity
f
Chicago
,
declining prices of inventory and
for higher
depreciation charges
needed
to
N.
Y.
unversed
in
profits.
But
W.
A.
Paton,
Pro¬
fessor
at
Accounting and Economics
the
University of Michigan,
shows
that
Mr.
Nathan
announce
that
overesti-
the
function
of
the
Trade
'
Exchanges
Cotton
CHICAGO
7
Exchange B1 d g.
YORK 4,
DETROIT
GENEVA,
N. Y.
PITTSBURGH
SWITZERLAND
Con¬
and "repeals" the wartime
amortization law. This was a con¬
tract between the government and
the companies to induce them to
increase war production by means
of
incentive of peacetime
an
Columbia University to make
counting
in
prerequisite for
a
Royal Bank of Scotland
Incorporated by Royal Charter 1727
HEAD
Branches throughout Scotland
LONDON OFFICES:
ac¬
PhD
a
3
Bishopsgate, E. C. 2
economics.
Mr.
Nathan
profits
tries
8 West Smithfield, E. C. 1
7
to
that
prove
49
faster than wages. To
rose
OFFICE—Edinburgh
use.
Little wonder that George O. May
and the late Leon Fraser induced
Charing Cross, S. W. 1
base,
Burlington Gardens, W. 1
when steel wage rates were
prac¬
64 New Bond Street, W. 1
do
he
so
tically
1939
uses
his
as
the
at
highest in history
and steel profits were one-half of
1937
one-fifth
and
even
on
this
per
,
ton
wages
ly than profits
in
ton
per
of
rose
per
£155,175,898
rapid¬
Associated
ton and profits
depreciated
less
in
years
TOTAL ASSETS
But
base,
more
substantially
were
prewar
1929.
defective
dollars
than
in
•
i
7
Banks:
Glyn Mills & Co.
Williams
Deacon's
Bank, Ltd.
undepreciated
dollars. But comparing two years
of similar operations (72%) like
1937
rose
and
1946, .weekly earnings
substantially but profits de¬
|35
Mr. Nathan in his gravest error
in
rebuttal
the
grossly
return
on
statement
the
investment.
figures the former
and
the
latter
about 2.3 times
rose
rose
as
to
114%
265%
or
much. But Mr.
14%
a
full
and
year's
subscription to the Monday
On his
to
Nathan says that the hourly earn¬
ings increased
INVESTED in
concerning
the
and
Thursday issues of the
"Chronicle"
will
give
ideas galore and pay
you
liberal
re¬
dividends.
165%, or
12 times—a tricky
way
of ex¬
aggerating an untruth.
7;-7'''v;r'■
But his comparison is full of
faulty assumptions, fallacies of
reasoning and errors of method. Commercial & Financial Chronicle
A
"New York 8, N. Y.
simple comparison of wages 25 Park Place
REctor 2-9570
per ton and profits per ton shows
turn
on
the investment
(Continued
on
page
36)
Specialists In
Over-the-Counter
Quotation Services
for 36 Years
Externals—Internals
v'
—★—
National Quotation Bureau
N. BROADWAY
St. Louis 2
of
gress
organization
314
;
Inc.
Then he
misleading
seems
Exchange,
-
Board
NEW
replace machinery
at present higher prices.
"real" hourly earnings and "real"
Nathan
Exchange
New Orleans Cotton Exchange
cancels reserves for
Midvale, the last two having in¬
accounting and makes fan¬
tastic charges about the size of
Exchange
Cotton
er¬
curred sizable deficits.
cost
Curb
York
'
estimating profits. First
usurps
the function of the
repeats
Steel
Exchange
in
manager and
Stifel, Nicolaus & Co., Inc.
Chicago 3
New
"
Stock
And other
SECURITIES
W. ADAMS ST.
York
•
7
-
FOREIGN
105
11, 1948.
Mr. Nathan commits several
rors
St. Louis 1,Mo#
Members St. Louis Stock Exchange
striking, as shown by
Kennedy in "The Accoun¬
tant" of Dec.
Founded 1890
,
more
John
SECURITIES
street
Members
New
;V
French franc made this distortion
even
1856
H. Hentz & Co.
high "real" earnings but
paying dividends out of cap¬
The sharp depreciation of the
Stix & Go.
509
Established
no
Follansbee
our
branch offices
underesti¬
January, 1949,
that owing to
depreciating
dollars, these companies not only
Mr. Donald B. Sherwood
INVESTMENT
and
clined.
pleased to
joined
our
assets.
of steel companies in the "Journal
of Accountancy,"
19%
for
Bethlehem,
25%
for
Youngstown and National, 33%
for
Republic, 82% for Sharon,
86% for Crucible Steel, 144% for
iuiiiiimiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiir
has
net
usurps
,
industry
|
=
the
our
E
E
high
pressure
with
|
E
selling
working at lower earnings
But
his
stability
exploits
Mr.
had
form, fher employees .want
Scott, Horner &
Mason, Inc.
\
labor to get costs lower and bene¬
fited the consumer.
\
worker
then V when
shop,
own
idle.
|
I
to
wage rales,
gradual but
continual price declines, and thus
increase in "real" wages for all
prices
Dan River Mills
of
stable
If
E
and
coupled
Formerly
employmenCfsteel
In 1937, wage
increased in March by
19%, on the last day of the stock
market boom.
Business declined
and the results were deficits in
rates
Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
t
Long Distance 238-9
deficit
Look at the record.
-Incorporated
"
membership,
freedom.
common
(1) Selling Prices—Mr. Nathan
charges that steel prices are high.
American Air Filter Co.
1
;of i political ; pressure is
threatening not merely our eco¬
The companies
now.
willing to bargain individual¬
sions
MERCER HICKS CORPORATION
'1
fees
monopoly
rests.
Direct wires to
Similarly, Pro¬
Jones, of Yale, quoted
by Prof. Pa ton, analyzing a group
ital.
so
closed shop, etc. This labor
a
nomic
electrical radiant
new
only
ercise
case
Birmingham, Ala.
Mobile, Ala.
were
costs?
work
earnings
mated
had
stockholders to
are
on
initiation
to
NY 1-1557
New Orleans, La. -
shows
selling
monopolistic
there
limitation
the union's
Common
and
as
opinion. Therefore, it is necessary
to analyze the statistics and
ap¬
praise the conclusions on which
Glass Heating Corp.
selling
declin¬
and
Labor's monopoly was built up
out of restriction of
immigration,
Elisha M. Friedman
pro-
fessional
wishes
\ competitive
be exploited.
neither the
nor
under
•
prices
public to
judge, having
Continental Radiant
Nathan
This condition will
But
is
Mr.
ing, but wages to be rigid and ris¬
ing. How can any economy func¬
news
value.
plants,
earnings would have to de¬
cline.
of
sides
case :
some
BROADWAY, NEW YORK 5
Tel.
both
the':
the
prices to be flexible
of
summary
owned
then when selling prices
declined,
a
Exchange
fessor R. C.
their
r
:
The presentio n in
t
120
deci¬
mated
themselves
the Steel
sion.
York
increase, when selling prices are
declining. But if the
workers
workers hangs
Since 1917
New
of
o n s
Stock
St., New York 4, N. Y.
HAnover 2-0700
as
Specialists in
York
New
25 Broad
Incorporated
zippin & company
208
Tele.
South La Salle
RAndolph 6-4696
St., Chicago 4
Tel. CG 451
Established
46 Front Street
CHICAGO
1913
NewYork4,N.Y.
8AN
FRANCISCO
COMMERCIAL
THE
Number 4836
170
Volume
INDE X
CHRONICLE
(939)
Near-Term Market Probabilities
Articles and News
Page
]
3
licrasitip
"
By EDMUND W. TABELL
Partner, Walston, Hoffman & Goodwin
Cover
Outlook—William A. Irwin
Economic and Inflation
FINANCIAL
&
AND COMPANY
Members of the New York Stock Exchange
Reserves—M. S.
The Function of Bank
Union's Rebuttal
Cover
Szymczak
praisal of the Arguments)—Elisha M. Friedman
month is
2
:_
Near-Term Market Probabilities—Edmund W. Tabell
A
171.
W.
4
The
6
22
groups
Monetary Management—No Substitute for Sound Fiscal Polioy!
A
8 /
Odlin_.
study
the*
9
___
Statism—A Disease to Be
Chapel
j
13
or
of reaction
so
next and more
Edmund
the
that
W.
Tabell
\
.
,
the leaders of the first
*
Co. (See under "Illinois
Brevities," page 10).
5
v
>
National City Bank Holds Sterling Devaluation Alone
<
Will Not
...j.
British Crisis
Solve
(Boxed)__
:
American
Economy
'____
1.
...
latter
the
up
However,
work
the
of
most
if
24
SEC Puts Into.Effect Revised Special Offering PIan__________ 30
Regular Features
dicated.
_____Cover
I
Bank and Insurance
Stocks..
16
—
Businessman's Bookshelf
Coming Ev^rtts in.Investment
Field
8
14
i
175-174 level
the
the News—Carlisle Bargeron__._
7
of Business Activity
Indications
32
usual
?
move
1
NSTA Notes
,__!
—
Wilfred
Observations—A.
16
;_
I
on
for the market to cro-s
25
be
Offerings
35
procedure will
followed in the present case.
that
this
Security
Utility
Public
Securities
Salesman's
Corner
The State of Trade and Industry
40
*
Published
Twice
Weekly
*
I
.
Drapers'
and,
and
COMMERCIAL
The
Edwards
c/o
London,
&
E.
C.,
WILLIAM B.
Patent Office
S.
DANA COMPANY, Publishers
Park Place, New York 8, N.
REctor
2-9570
to
i
WILLIAM
WILLIAM
President
SEIBERT,
DANA
D.
RIGGS,
Business Manager
Thursday, Sept. 8,. 1949
Possessions,
*
-•tate
and
Other
"Cblcago
city news,
Offices:
Union
Canada,
.
3.
HI
etc.).
8.
La
<TdleDbnow
Salle
State
of
of
U.
year:
St.,
0613i:
and
per
Monthly
$25.00
per
"Note—On
Record—Monthly
year.
(Foreign postage extra.)
Earnings Record —Monthly
(Foreign
account "of
the
made
tjj
York
fund*
§
for selling securities read
clever, helpful hints E
regular 5
E man's Corner," a
of
issue
£
Thurs-
E feature in every
5 day's
S
Sales- £
"Securities:
E the
the =
E "Chronicle."
^immmiimiiiimimiiimmimiiiiir
to sus-.
more
160-170
again
a
final shake-out and
probabilities
buying
be
YOU PROFIT
of 160 was in
170 range to a low
are
wiil
range
not
much
before
entered
from their interest
that my
higher prices are seen.
/Because
they want all the news,
community leaders in
cities, towns
-
•"
**
\
11,000
and villages turn
New York Times. That
/
.
.
.
•
•'■
•*
'
means
-•
advertising is read by an
"interested
all'over the
audience
U. S. with money to
PREFERRED STOCKS
1
invest. And
airplane delivery of The Times
Members
New
York Stock Exchange
25 Broad Street, New
HAnover
postage extra.)
fluctuations
Selling |
For
the
Spencer Trask & Co.
-
2-4300
1 Members N<ko York Curb Exchange
i 50
York 4
'
»
•;
i
Congress Street, Boston 8
■
Hubbard
2-8200
Albany
Chicago
Glens Falls
puts
it
on
cation in
'
*
sale the day of publi¬
more
■
Schenectady
"
-
Worcester
than
ioo
'
key cities.
i
'
*
Sljc iNrto Hfork
"All the News
Teletype—NY l-£
in
the rate of
exchange, remittances for for¬
eign subscriptions and advertisements must
be
that
year
Quotation
year.
becoming
dent
in
per
per year.
on
=
weakened
a
High Grade Public Utility and Industrial
S.
per
| Pointers
your
of
$38.00
«E
and more evi¬
sharp May-June
downside break-out of the 183-
is
interested, in offerings of
.
March
Members
Other Publications
»
of
,1
States,
and
$35.00
Countries, $42.00
$25.00
every
135
Act
United
Territories
Dominion
Other
signs
New
Rates
,
regularly and confidently to The
are
Febru¬
at
.»
Monday (com¬
plete statistical issue — market quotation
records, corporation news, bank clearings,
and
the
Pan-American
..
Every; Thursday (general news and adissue)
in
broad enough potential
We
j.
Bank
'rertising
office
post
Subscription
Subscriptions
Publisher
the
i
1879.
'
9576-
»HERBERT D. SEIBERT, Editor St
■"/
Y.
1942, at the
N. ,Y.,- under
York,
8,
25
25,
ary
ad-
not
Smith.
Reentered as second-class matter
U.
Reg.
a
Eng-
-
-
technical condition in no way ap-
that the
strong base patterns,
there
are
a
great many other
issues that have not yet built up
Copyright 1949 by William B. Dana
Company
CHRONICLE
FINANCIAL
Gardens,
v
It must be stressed at this point
that
the nature of
ready built
Not available this week.
.
given.
ably. While many issues have al¬
30
Washington and You
nominal
a
Would
weeks.
few
next
reaction, or rather broad consoli¬
dation, would improve the longerterm technical pattern consider¬
5
(Walter Whyte Says)
Tomorrow's Market
or
rupted by sporadic rally attempts
to
the lower 180 level. Such a
34
•__
than
.
Creasing indications of a very con¬
structive technical formation. It
may
middle
11
j.
Securities Now in Registration.
groups
carry down through
late September, inter¬
bit
phase
15
—
more
.MHiiiiiiiiiHiiiiiiniiiiiHiiimiiiniini^
fck.
phes to 41hei^lbnger-term /pattern.
The pattern of the market since
November, 1948, is showing in-
a
17
Securities
Securities
Railroad
of the past few
has been followed,
rally has carried to a high of,
more
than
seven
points
above
the
line.
The
declining
The
Prospective
advice
If. the
moving aver-; will have
believe
Governments
Reporter
j
4-2727
DIgby
'/".'•
•.
on
was
chance
Our
/
weeks
major advance to new highs.
that there is a good
the
*
May.
Reporter's Report
Exports—Imports—Futures
average
36
Our
''
stronger pattern. *
line and then rally vise repurchases until the indus¬
six or seven points above it and trial average declines to the 175then to react. back to the line; 174 revel or until a clearer indica¬
again prior to the resumption of tion of the extent of the decline is
the
15
News About Banks and Bankers
Liquid
—
even
an
up
the upside, that the: correction even in the event of a
sequence' of a broad up- decline into the lower 170's in the
line
age
12;
Funds
Mutual
build
would
ber
a
days
crossed the 200-day
From Washington Ahead of
as
right
the
of
is ^approximately and issues marked as showing
175. It will most likely remain at; relatively unfavorable action have
sold on strength into the
about that point for the next three, been
or
four weeks. You may recall; 180-183 area, Retention of issues
that I mentioned early in July,
showing favorable action has been
prior to the time that the market! advised as I doubt these issues
training
Einzig—"Will the Washington Conference Result in Universal
Devaluation"?
extension
shoulder into October or Novem¬
price on the Dow-Jones In-;
age
14.
—
Dealer-Broker—Investment Recommendations
Refined
-
formations. A
technical
further
than now in¬
dustrial Averages for the last 200
14
_'_
:
possible
' * ';•'>.
•
favor
of
decline
a
stopping point because the aver¬
^
;r
1
Securities
Canadian
indicate
and
greater magnitude
!
It (Editorial)
See
six
in 170-
182-174 trading months' duration built up
rather than around the top.; 182 range between December and
The latter action might possibly
May. Nevertheless, such action
build up a broader distribution would form one of the strongest
area
As We
SUGAR
Raw
range
40
.
NEW YORK 5, N. Y.
of
shoulder
left
than/ the
STREET
WALL
89
right
potential
a
contemplated
38
Salesmanship Course to Start September 15
LAMBORN & CO., Inc.
shoulder would be much narrower
con¬
were
COrtJandt 7-6814
the right shoulder of a poten¬
shoulders
Such
2
N. Y. Phone
i,'
.
PH 375
ago.
a
bottom.
centrated in the lower area of the
Analyzes Experience of Competitive Bidding
Teletype
Exchange
Stock
Philadelphia
BIdg.,
tial 170-160-? head and
it
would be better technical action
CCNY Offers Credit and Finance Courses
PhiJa.-Balt.
Packard
fully corrected and in a position
to rally substantially. Also a de¬
cline of such scope-would build
rallies.
occasional
month
a
30 with the
favoring
Pfd.
K.
place the indicator below normal
Obviously, this slight down
trend
will
be
interrupted
by
;
almost
the
From
timing
expect
15 and
Sept.
probabilities
First National Bank of Boston Sees Tax Structure Strangling"
Issues
John B. Stetson Common &
overbought
sometime be¬
would
I
a
date.
18
Purchasing Agents Report Uptrend in Business
Transportation Co.
which
indicator
of ,an
timing - viewpoint, this
would be perfect action and would
From
171.
lows to be reached
17
•
as
viewpoint,
17
Phila.
inter¬
the
correct
warning
condition
outside possibility of a decline
low
would
mediate ? trend
a
as
tween
Hear! Hear!
is
month
next
to
;
Earnings of Natural Gas and Electric Utilities
on
the
over
decline to about 175-174 with only: gave
17
FPC.Reports
tember
likely pat¬
an
Preston Delano Reports Assets of .National .Banks Moderately
Higher
,.
Also, a decline to about 175-174
or moderately lower, by late Sep¬
tern
13
T
Phila. Suburban Water Com.,
Members
phase will be more in the nature
of a consolidation than a reaction.
Trust
Juniper Common
Phila. Warwick Common
phase.
1 believe that the most
Crisis Approaching in U. S. World Trade, Says Northern
Cambridge BIdg. 3s 1953
dynamic phase of the advance and
•take the place of the more defen¬
sive type of issues that have been
correctional
,
for
off
STREET, NEW YORK
N. E. Walnut &
consolidation
or
the leaders of the
points
to the conclu¬
Cover
your
the past few
over
the steels and the
these
issues
most
complete the formation. If this
happens, these issues should be
watched closely as they may be
breadth
sion
President Truman Again Assails "Selfish Interests"
into
as
of the market
.....
bought
you
coins
are
studies
R.
tinkle
Telephone: WHitehall 4-6551
in the
that have shown most un¬
type
may
volume
and
Millions of Michigan School Bonds Taken by Investors
—Harold
of
vari-
the
aus
11
Conquered—Young B. Smith
stack
that
doesn't
.likely reached their lows in June,
their potential accumulation pat¬
terns appear incomplete. A month
technical
and
—Roger W. Babson__,
this
months, such
rails.
While
form ations
Unions Should Be Subject to Anti-Trust Laws
of
favorable action
back
175-171
to the
7
_•■>
bring
industrial
average
area.
—Reno P.
■if
strong upward move. Most
a
issues
would
6
Twin Evils—William Green
Toryism:
tain
point
advance
:he
The Living Wage for Steel Investment—Thomas D. Harry
TONES
mar-
99 WALL
che
5
Challenge to Labor—Philip Murray
SORROWFUL
one-half of
co
4
Weinwurm
and
next,
over
the June
we've got music
low—a rise of approximately 22 points from 160.62 to 182.67 in two pocket,
We'll take it
months—has been completed.
Just how far a declining phase will your ears.
your hands!
carry is problematical.; A normal technical correction of one-third
How to Make the "Point IV" Program Work-^Milo Perkins.-.
Communism
likely pattern of stock market
It would appear that the first phase of the advance from
Constructive Approach to the Gold Problem Possible?
a
—Ernest
most
decline in Dow-Jones average ranging between 175 to /:
a
Says this action would improve longer-term pattern of
ket, which has strong technical foundation.
3
Stabilization Program Needed
New Farm
—Hon. Charles F. Brannan
Is
Mr.TabellhoIds
(An Analysis and Ap-
Steel Wage Case
in
That's_Fit to Print"
„
4
THE
(940)
A New Farm Stabilization
COMMERCIAL
&
FINANCIAL
CHRONICLE
Is
Program Needed
Constructive Approach
To the Gold Problem Possible?
a
By HON. CHARLES F. BRANNAN*
Secretary of Agriculture
Secretary Brannan, pointing out problems arising from recent abundant crops, contends nation needs
new farm stabilization
program.
Says neither farmer nor worker can long expect to sell dear and
buy cheap at the expense of one another and defends his plan to replace farm price support by a
method of allowing prices to reach natural level and compensate farmers for loss of income. Holds
taxpayers are justifiably alarmed at high cost of taking perishables off market.
Thursday, September 8, 1949
By ERNEST H. WEINWURM
a
No
Mr, Weinwurm, asserting status quo policies of the International
Monetary Fund are sterile, maintains proposals to use gold
price
appreciation for short-term assistance are dangerous. Holds
appreciation should be part of a
long-term currency stabilization pro¬
gram to be administered by a reinvigorated International
Monetary
travel back and forth
through the cities and the farm lands of this Nation
being impressed with two outstanding facts. First, that the people are more
interested in good government now than ever before. And, second, that when Americans
one
can
without
Fund.
Claims
this
should
facilitate
life get to¬
gether
facts
of mind
face
—
domestic
together
«—a n
together
can do
just about
anything they
mies
set
shadow
their
to
do.
That's
old
their
that
had to
the
F. Brannan
Charles
?
fight
war
:
global
war.
as
over,
a
they
they
fender
was
made
up their minds that
had to feed hungry people at op¬
posite ends of the earth to pre¬
serve
global peace.
They suc¬
ceeded
they
are
Nation,
our own
and
leader
democratic
of
de¬
freedom.
us
to
it
lead
out
the dark
of
of enveloping insecurity
into the bright day of peace.
night
These comparisons warn us that
supplies of farm commodities, in
the
absence of unforeseeable cir¬
cumstances, will
of
The reasons for this
evident.
great deal from their own
lution
ex¬
one
major national problems.
our
The farmers of New York know
a
become
soon
plainly
are
The
agricultural revo¬
not yet run
its full
has
they perience about the speed of events. course.
Our farms will become
An Aug. 10, I signed the latest even more mechanized.
We will
i
I conceive it to be part of my
general crop report of the Depart¬ develop more productive plants
job to show the need to improve ment of Agriculture. Tt was a re¬ and animals.
We already have
saw
need,
;
foremost
the
to
endeavor, and
succeeding in the second.
the
tremendous storage problem and
a
Everywhere the free spirit looks
in the first
1' They
Note how rapidly the scene has
changed.
In 1947 we had a short
paper
After American farmers, it is estimated,
World War One, we refused the will produce for use in 1950 two
mantle of world leadership.
But hogs for every family in the
today we stand before the world United States.
Look at
people
minds
When
ation.
'
Austrian
nation at all.
years
made up
they
the
Today Hitler is dead. His corn crop. The result of that was
armies are crushed.
Germany is a meat shortage accompanied by
divided and occupied, hardly a high meat prices.
Today we have
the Amer¬
ican
of
rope.
custom.
ago
within the time limit of the situ¬
the
and
hanger darkened the whole of Eu¬
an
American
j'!> A few
storage capacity, if it can be made
at the right price and
actly ten years since Hitler's ar¬
Poland
buy, if neces¬
million bushels of
available
just two days it will be ex¬
invaded
will
sary, up to 500
past decade.
In
to increase storage
An on top of that the
can
Government
transformation of the world in the
;—they
minds
moment about the
a
they
capacity.
economy.
for
Think
work
d
what
today with respect to our
and
acted accordingly,
farm
our
remote
ceive
in
programs—not
future—but
the
I
now.
a dramatic story
productive abundance.
It re¬
ported that the tremendous farm
production of recent years was
again assured—the second largest
farm output of all time. We esti¬
port which told
con¬
of
it to
be part of my job to
show that need not only to farm¬
ers, but to
all segments of our
economy—to labor, to business, to
all taxpayers, and consumers,
t
There's
that
tendency
a
national
and
to
mate that
believe
world
this
events
tomorrow.
!'/"
Have
car
'a
traveled
ever
70 miles
or
an
smooth, straight
after
in
a
hour along
port, and I do.
highway, and
But
my
pride was
mingled with caution,
t.f.
h
'Effects of Abundance
We have
traveler
knows that this frame of mind is
conducive to crackups.
I believe
crop
that there is
over
danger that
turning back from
ostriches
the
problem will
To
turn
back
of
our
the biggest feed
now
supplies in history.
we may
The
new corn
top of last year's carry¬
will give us a tremendous
on
develop something like that frame supply of four billion bushels. We
have had to ask
*An address by Secretary BranJian at the Farm-Labor Confer¬
build
ence, Syracuse, N.Y., Aug. 30,1949.
have
they
corn
growers
to
bins and store all that
new
can on
asked
their
own
elevator
farms.
men
to
We
do
low
The farmer?
his
Shall he al¬
tractors, combines, corn-
and the other
new
insecticides and
killers?
weed
Shall
he
what he has
learned about lime and fertilizer,
cover crops, rotations, and erosion
to such
questions?
1
What about the consumer? Does
he
long-term market trends,
in
a
review and
rating of industry
road
consumption
the
than
more
back?
United
per per¬
States
was
tenth higher than in
a
the five years just
a
before the war,
period many people like to call
It
was
nutritious
more
a
diet, richer in meat, dairy prod¬
ucts, poultry products, fruits and
vegetables.
But
last
The
end.
and specific individual selections.
groups
the
take
Last year
normal.
covering both short and
to
want
son
EDMUND W. TABELL
year's
diet is not the
Department of Agricul¬
ture has estimated that the people
in the decade from 1955 to
1965,
assuming high level employment,
For
i.i
sample
copy
write
on your
letterhead
will
to
consume
10%
capita than in
increases
W<iIston.IIoffman & Goodwin,
New York Stock
New York Curb Exchange
San Francitco Stock Exchange
(Associate)
lot Angeles Stock
H
35 WALL
STREET, NEW YORK 5, N.Y.
Telephone Dlgby 4-4141
SAN
Bakersfield
Sacramento
•
San
Diego
•
'
FRANCISCO
Beverly Hills • Eureka
.
Exchange'
•
Fresno
San Jose
•
•
J
*
■
Teletype NY 1-481V
LOS ANGELES
•
Long Beach • Modesto • Oakland
Sania Ana
•
Stockton
.
Vallejo
•
Pasadena
•
•
Riverside
East Orange, N.J.
1948.
come
food per
The
settlement
of
able
existing
gold price and
i b
But
in
both
Ernest H. Weinwurm
are
struction.
in
the
15 pounds
fresh
fruits, 20 pounds
fresh vegetables, 135 pounds
milk.
These
not
are
more
more
estimates
of
an ideal
diet, but only of what our
people would eat if consumption
trends of recent years continue.
The American people do not in¬
to ratrcnt from cV-ir.d
tend
We
way
want
to
use
abundance
the
it should be used—to improve
on page
24)
only
if
the
coun¬
club"
in such
a
way as to make profit¬
expanding gold production.
Increasing
world
production
currency
recon-
an
<
and world trade
required a larger
gold were a product like volume
of money.
But this vol¬
others, there would not be any
ume was tied to the visible
gold
specific problem of price-market
stocks
relations in
tem.
free economic sys¬
a
Those
product
wishing
would
buy
a
offer
a
to
have
to
price based on the costs of mar¬
ginal producers whose output is
needed for the
satisfaction of ef¬
The
price would reflect those
cost-demand relations.
However, the gold price was
hardly ever a truly free price;
certainly it is not a free price to¬
day when it is dependent
decisions
of
the
upon
United
the
States
Government. It is rigidly tied to
the
dollar
and
fluctuations
power.
the
reflects
of
fully the
purchasing
its
market
price
for
their
Moreover, those demands have
been given
although only
fraction
a
of
the
gold production is traded there.
Efforts to take advantage of those
premium
prices
and
have
could
been
never
nu¬
be
com¬
When the United States in 1933
policy of increasing the
price and finally in 1934
gold
a
it
at
costs
by
two-thirds
changed little
The results
gold
were
production
while
or
their
at all.
not
not unexpected:
increased
sub¬
stantially when it became profit¬
able
to work
lower
the threat of
grade mines.
During the last ten
production
greatly with rising
labor
and
how¬
increased
expenses
materials.
for
The
gains
made in 1933-34 have been
wiped
help
out and production could not
falling in
measures
to
of
various
support
the
relief
mining
companies.
Thus
the
has
only
rubber
whose
become
almost
product (with crude
another
notable
case)
raw
price
has
remained
always
deflationary
pres¬
No similar machinery is in ex¬
level
and
production
to
the
ex¬
igencies of the "automatic" gold
standard.
tween
eign
There
national
is
tie-in be¬
no
price
levels, for¬
rates
and
gold
exchange
prices such as existed under Hie
gold standard.
The Decisive Issue of Gold
Policies
Policies
practiced during the-
as
last few years have led to a de¬
crease of gold
production on the
one hand and to
many attempts to
circumvent the official gold price
the other.
on
tion is
now
should
be
The
principal
ques¬
whether these policies
modified in order to
bring about
increase
an
in
gold
production.
This
leads
to
the
fundamental question whether the
world needs gold production in
the first place.
Answering the question in the
affirmative would
mean that poli¬
cies should be adopted that would
lead to an expansion of gold
pro¬
duction.
If it
is
decided,
the
hand, that there is no need
large scale gold mining be¬
yond the limited requirements of
on
other
the arts and industry, then the
declining rate of production might
be looked upon with
equanimity.
World
sive
gold production
of
the
amounted
million in
was
in
a
decline
un¬
of
comparison
costs
level.
than
1941
close to
Almost
production
of South
more
with
still
were
war
(exclu¬
Soviet
Union>
to approximately $800
the last few years. This
comes
50%
when
the
half
of
pre¬
the
from the Union
Africa; this explains the
peculiar interest
of that
country
in the gold price issue.
flows
bulk of
into
which holds
of
the
newly mined gold
the
United
States,
already three-fourths
visible
gold
stocks, to be
exchanged for dollar balances and
used
for the
can
pal
purpose
the
purchase of Ameri¬
products.
Yet
spite
pro¬
expand¬
was
istence today, No
country is will¬
ing to adjust its domestic price
The
years,
costs
a
gold
was
with all its dreaded results
of crisis and recession.
Gold Production
ever,
it
sure
the
purely arbi¬
trary level of $35 for an ounce of
fine gold, producers made
very
large windfall profits.
Their re¬
ceipts were increased automati¬
cally
current
for
pletely stopped.
stabilized
the
Unless
ing constantly, there
additional support by
the premium prices quoted on the
"free" gold markets of the world
adopted
and
duction.
,
,
true
"
(Continued
feasible
If
more
30 pounds
is
another and to the gold
price
one
able
of
r,
as
adhering to the "gold stand¬
would be adjusted to
ard
as a
preliminary
this
tries
gold. Changes
advocated
the
on
domestic price levels in all
dis-
tion of
u
gold
rested
expressed in the various national
currencies would remain stable.
of the interna-
r
practi¬
a
assumption that the gold price
that of the
t
preliminary of
sensible future
policy.
classical
(pre-1914)
(Sterling) standard
princi¬
pal problem is
e
national
a
The
troubles.
Th
as
cal and
economic
biggest
meat per person,
more
Exchange
will
more
nutritious foods—10 to
more
MEMBERS
gold price.
Clarification of the
principal aspects seems indispens¬
bution toward
a
merous
especially designed for
Prepared weekly by
contri¬
product.
forget
What farmer would answer, yes,
AND DEALERS
useful
.
control?
INSTITUTIONS
pre-war. There is a
great deal of confusion about the
really make
pickers, and other modern ma¬
The gold producers have been
chinery to rust while he goes back
to horse and mule power?
There strongly affected by the dollar's
loss of purchasing, power during
no longer are enough horses and'
the(last decade,;
mules to supply his needs.
j not surprising that Therefore, it is
they have been
Shall he breed out of his plants
clamoring for a higher gold price.
and animals the productive char¬
Indeed, they have a point in as¬
acteristics it has taken so many
serting that they have been sub¬
years to acquire?
ject to a part-confise a tion of
Shall he stop using DDT, 2, 4-D, their
properties in being denied
,
>
V
changed since
market
go away.
the clock
could
fective Oonsumers' demand.
heads buried in the sands, hoping
sterling
—
cies
our
with
the
The eternal gold problem, once
again, is making the headlines.
European and particularly British experts are
strongly recommending
appreciation of the gold price as a
remedy for the continuing "dollar
shortage." Thus it may be timely to ask the question whether
changes
in gold poli-
We
revolution.
average.
time
;
be
not
must
million
Any Secretary of Agriculture
could take pride in that crop re¬
had the feeling .that
jyou were' ndt moving rapidly, at
all?
'* Any experienced
a
no
agricultural
clock?
:
you
at -30
year
fix it up
can
three
be
There is
the
larger than the recent tenagricultural revolution is almost
We have forecast
as impossible as turning back time
the fourth largest wheat crop and
itself.
But even if we could, who
the second largest corn crop in
would
want
to
turn
back
the
our history.
slowly. We are a confident
people.
We believe that there is
plenty of time—that if we make
blunder today we
production of cotton
will
coming.
more
bales
move
a
our
year
better insect and weed killers, and
of
problems.
area
from all walks
of
solution
a
;
Thus procurement
of dollars has become the princi¬
way
ine
of
dollars
represent
funds
States for
gold
production.
acquired in this
but a fraction of
allotted by: the United
the support of nations
(Continued
on page
18)
170
Volume
Number 4836
THE
COMMERCIAL! &
Electric
CHRONICLE
Output
Retail
Woik
By MILO PERKINS*
Carloadings
Stave of Trade
5>
(941)
How to Make the "Point IV" Program
Steel Production
The
FINANCIAL
Trade
'■"T'7.;<;
Foreign Trade Consultant
,J-Former Director, Bureau of Markets, Department of Agriculture
Commodity ft-ice Index
Food Price Index
Asserting U. S.
cannot buy world recovery with check book, former government economist sees more
remedy for world economic problems.
Supports President Truman's Point IV Pro¬
gram, and urges private American investment abroad in place of government-to-government credits.
Says so-called "dollar shortage" is "phony" in terms of semantics, and what is needed is more
Auto Production
and
Industry
Business Failures
production
J
goods produced abroad at lower costs.
7 In keeping with the upward trend of recent weeks, total indus¬
trial output in the past week continued to show some slight progress,
but remained somewhat under the high point of 1948.
of competitive system;
bold program
During the week the steel industry attained its highest level in
11 weeks, being the fourth successive rise in steel production. Auto¬
motive output and carloadings were moderately higher, while electric
consumption registered a modest decline.
Civil
with
engineering construction
1949
1948
cumulative
by 19%.
ended
level.
orders
total
rose
such
of
The disposition everywhere
today is to back
surpassing that of
billion
Lumber production increased almost 5% in the week
We
Aug. 20 and was nearly 3% below that of the comparable 1948
Shipments of lumber were 7% below production and new
were approximately
equal to production.
is
substantial.
for
became
wear
more
to
'
ago.
have
numer¬
but
•
ing
with
the previous
in the cotton gray goods market, offerings were some¬
7
The
Milo Perkins
AND
HIGHER
REVENUES
police state impe¬
The
:
utility
gas
at the end
*
from
revenues
of
sales
industry
of June,
1949,
an
gas
by
22,909,000
serving
was
must
very
Further
costly.
*An
delay
Mr. Perkins at
America
of
White
Sulphur
Va.,
W.
sible—by free men—is worth ex¬
peoples who want
living stand¬
ards.
We have accomplished all
this at home by being ourselves—
by counting primarily on com¬
petitive enterprises and by using
the powers of government to but¬
tress our economy rather than to
the
infinite
Aug. 29, 1949.
their
raise
to
own
control it.
■
■
•■
By contrast, our efforts to pror
mote
recovery
world
rave
in the rest of the
been based largely on
government
roughly half of its manufacturing
capacity and a highly mechanized
agriculture.
It is growing at
faster relative rate than any other
Convention,
Springs,
through
P
.
amination by all
world, per¬
complexity in this poswar world
of 1949, two economic facts stand
out like lanterns in a dark night.
The United States, with only 7%
of
the
world's
population, has
the Tea Association of the United
States
the
As
people.
Cutting
Problems there and
address by
.
suggest, in all humility, that
climate
within
which
an
achievement of this sort is pos¬
I
we
American
billion a
into industrial moderniza¬
programs during the decade
the
own
for half the
to
be
can
our
shall
we
of the'fifties.
solemn time of decision for the
a
challenges
soon come
grips is what to do about south¬
east Asia.
utilities for the second
quarter of 1949 were $391,000,000,--an increase of 9.2% over the like
quarter of 1948, the American Gas Association reported today. Rev¬
enues
from commercial sales represented the highest percentage
gain, rising 18.5% while residential gas revenues advanced 7.7%
and industrial gas revenues gained 8.3% over a year earlier.
In the 12 month period ending June 30, 1949, total revenues
from utility sales of gas were $1,620,000,000 an increase of 9.8% over
revenues of
$1,476,000,000 in the previous 12-raonth^ period.
Total
,
we
year
tion
We must
openly before
opinion.
that
believe
put less than another $15
for
world
of
to
reason
can't be loved. Maybe
all we can hope for is a reputa¬
tion of trying to be fair. This is
haps
to have been rolled
seems
but it is
rolling southward and forward in
OF 1949
*
were
job that it is.
frankly to our
ashamed to state
court
back In Western Europe,
QUARTER
SECOND
IN
peacetime use. As though this
not enough, we
have in¬
vested another $60 billion in plant
and equipment5 since
1945—and
are still going strong. There is no
for
as
money.
to the job
up
speak
other lands.
self-interests
is not yet in
Asia. One of the great
SALES
in
bankers
of
with which
must
not be
,
'
tide
rialism
what less than in recent weeks.
GAS
us
on
our
as
century-long
We
of the world
sight.
must
friends
in
basis
most
face
well
We
sustain¬
-
as
the
cost,
economic
self
«
,
slowly dawning
ourselves
recovery on a
placed during the week was slightly
week.
Although the buyer interest re¬
in
We
averted
catastrophes
The volume of textile orders
than
non-
world.
aggregate unit volume slightly above the corresponding 1948 level.
less
sequence
the
coinmunist
during the week, but continued to be moderately below those of
The buyer demand for food rose slightly in the past week
is
It
people here in the United States
that we are not going to be able
to buy world-wide recovery with
a
check book. If recovery is to
be had at all, we must give of
a
goods for back-to-school promotions
Commitments for men's
spent tens of billions of dollars
on plant and equipment for war¬
time purposes.
Most of these fa¬
cilities are now turning out goods
say
the hardiest souls.
vital
at terrific
re-order volume
mained high
of
con
week last year.
year
our
military
effort, which
apparel continued to increase last week.
Many merchants who had placed small initial orders encountered dif¬
ficulty in obtaining additional goods. The total unit volume of re¬
orders for women's apparel was slightly above that of the similar
a
bil¬
to
'forties we
country. In the early
its dark
nothing of those
in the rest of the world, are of
a
magnitude to depress all but
hatreds,
own
Wholesale purchasing of
was
$50
into
up and review the efforts which we
world recovery. We have put some $25 bil¬
the end of the war and are committed for
East with
the Middle
in
put
lion
unemployment insurance dipped 1% in the week
ended Aug. 20, but continued to be noticeably above the low level of
a year ago.
In the same week initial claims fell about 21%.
ous
more.
have
over
Total claims for
The
Lists among key elements in Point IV Program: (1) support
(2) treaties of fair treatment of U. S. capital; (3) technical assistance; (4)
of obtaining foreign materials; and (5) foreign investment insurance.
have made in the last four
years to promote
lion into various
foreign aid programs since
nearly $10
5% last week to $155,000,000
construction
as
-
to
government
-
credits. These have averted catas¬
trophes in
many
areas,
but they
(Continued on page 25)
customers
increase of 4.6% over 1948.' Resi-
.'
dential customers totaled 21,100,000, an increase of
the
~
i
20,400,000 served in the previous year. Commercial and industrial: customers gained 16.2% and 6.8%^respectively* / —
v
;
*.
Total revenues from natural gas
3.8%
over
$246,000,000, a "rise of 11.4% over the comparable
: For the 12 months ending June 30, 1949, revenues
gas sales were $1,044,000,000, an increase of
13.5%
over 1948 when natural gas revenues were $920,000,000.
Revenues from manufactured gas sales in the second quarter
of 1949 totaled about $120,000,000, an increase of 6.1% over $113,000,-
of
1949
were
quarter of 1948.
from
natural
For 12 months ending June 30, 1949,
$477,000,000, a gain of 7.4% over
000, in the like period in 1948.
manufactured
a
revenues
gas
earlier.
-
.
,
of 4.0% 7over the comparable
quarter in 1948. For the 12 months ending June 30, 1949, mixed gas
revenues totaled $98,000,000, a drop of 11.5%- under a year earlier. 7
77 vi-: 777; 77;;
;v/v-,7v .•
7|7?7^77777: M. v 7 7(7 75: •,-;7 7,77';:f 777
about
were
On
$24,000,000, an
Monday,
<
increase
Labor Day of
the current week, Philip Murray,
President of the CIO and of the United Steelworkers
in
given in Pittsburgh, Pa., stated that the quickest and
replenish the buying power of our people is through
of wage increases and promised that the CIO intends
continued increases in our standard of living in the
to
an
address
easiest way
the medium
to fight fori
1
address at Boston on the
future.
day, Secretary Tobin of,
the U. S. Department of Labor gave some endorsement to Mr. Mur¬
In
an
same
ray's aims by saying: "I am pleased to report that I find it commonly
accepted that, as tne status of wage earners is improved, our economic and social institutions are strengthened.
government's insistence that the nation has a stake in good
wages.
."
..
'
" • •
.
.
,
Meanwhile
board
will
no
one
propose
controversy
knows
what
the
Presidential
fact-finding
about a settlement in the. steel wage
management and labor, but according to a
to bring
between
report, experts In Washington who have followed the board's hear¬
ings offer this forecast:
•
•
-
J
ure
7 Is the batting
"The board will recommend some pay boost, but it won't meas¬
up to the 12j/2 cents an hour Mr. Murray is demanding. He ma,y
ahead
"THE
its
and
Election
■
most-successful
year.
Day in 1948!
SUBSCRIBE
7
The
SCHEDULED
DAY
AT
LOWEST
read
steelmaking
vf
.
;
DOW
THEORY
scrap
market
has turned
hectic.
Although
•
(Continued on page 29)
r
Financial
BAROMETER"
is
by Gaylord. Wood, an economist who
makes his home in Fort Lauderdale, Florida.
directed
He
can-
say
that, his clients have
caught holding stocks in a bear-
truthfully
NEVER been
market panic
decline. But he is by
chronic bear—he
was
bullish
no means a
for about 85% of
the 1942-1946 bull market.
a
weekly stock
market advisory service, now
"Sell Stocks 100%" BEFORE
/77''-7.'7
our
ideas
on
the possible approach in stock prices of the best
the
De¬
business and stocks. 3) A reprint of "Market and Busi¬
buying-spot for two decades. To all who subscribe, we wijll send without charge:— 1) "A Turn in
Tide" containing ten safety measures to apply to your business. 2) "America Faces Its Worst
pression"—a forecast for 1949 and after, on
ness
Panic Ahead!" 4)
which will
not
count
MAIL YOUR
A bonus of three recent past issues of
on
your
CHECK
subscription.
■
•
AT ONCE!
One Year
P
"THE DOW THEORY BAROMETER"
77.7;7-7:V;y:-7:;: 5.v7::7. 7
(52 issues) «••••#••••••.«••$45.00■ I I
Six months
(26 issues) ....••.••....#.$25.00 I 1
month
(13 issues)•....»»••«..$12.50 I I
(4 issues) •..•••*••.«••«.$ 5.00 I I
GAYLORD WOOD
market for big tonnages the
disorganized this week than it has been since 1948,
recent
Current Stock Mar¬
DUE TO
according to "The Iron Age," national metal working weekly, in its
current survey of the steel trade. Mills are reaching out of their own
*
in
HOLIDAY
most mills have not come into the open
market is more
RATE
"THE
veritable
This is the service that said
:.77;7;/7''
NOW—and
a
WOODV: most
ket," appeared in The Commercial &
Chronicle dated August 25, 1949.' .
BAROMETER" is
THEORY
DOW
twelfth
This article created
GAYLORD
article, 'The Weakness
panic? Stock market forecasts,
and business predictions are made each week
in
■
you
sensation!
Or
Recession?
Boom?
for (business?
One
OUTPUT
The
business
Three months
LABOR
ness
then? What lies
was
get little or none of the other benefits—insurance and pensions—
estimated to cost about another 17^ cents an hour. Chances are these
STEEL
big dividends to
story!
' 777 '
read the article "Market and BusiPanic Ahead!*' by GAYLORD WOOD in
Commercial & Financial Chronicle dated
Did
of the highest officials
average
better today than it
any
99%
thinking
March 24, 1949?
findings won't please either the union or the companies much."
;
of the
January 1930 the Secretary of the Treasury
-said;—"I see nothing ?in the situation which
-✓warrants vpessimism."
(The business Panic of
.*1932-Was just starting!) In June 1930 the Secre¬
tary of Labor said:—"We can look for reasonable
((prosperity within the next year." (He should
have said "five years from now"!)
"Higher wages make for greater purchasing power ... it was
President Truman's awareness of this fact which is at the bottom of
our
crowd
pay you
Tn
severe
!
When
BAROMETER."
one-way, it may ',
listen to the other side
DOW THEORY
"THE
it*
Have
any
of: thfe recent Washington "no t
«'depression ahead" utterances made you think of 7
: the
statements issued in 1930? In March 1930
7 the President said:—"The worst effects of the
crash upon unemployment will have passed in
60 days." > (There were then 3 million unem¬
ployed—fitter there were 12 million out of work!).
.
were
' \
V
"
!
'
7 *
^Revenues from mixed gas sales in the second quarter of 1949
year
ALL OVER AGAIN?
1932
sales during the second quarter
212-F North Andrews Avenue
Fort Lauderdale, Florida
7
"
.
5
THE
(942)
COMMERCIAL
The Challenge to
FINANCIAL
CHRONICLE
The
Labor
For Steel Investment
Organizations
Industrial
President, Congress of
Thursday, September 8, 1949
Living Wage
MURRAY*
PHILIP
By
&
CIO head, in radio
Labor Day address, calls for fu ther wage increases to block the "man-made, cor¬
poration-made recession." Says current business re:ession is work of group of greedy men, who direct
our
industrial machine, and renews attack on Taft-Hartley Act.
Accuses big business of lack of
interest in reaching agreements with workers on economic policies to help country.
Explains steel
workers*-demands.
/
I
bring
you,
..-i"■.■ '■
By THOMAS D. HARRY
v'S"*-5s
capital could not be obtained. Formulates
dividing line
between adequate and
inadequate profits, and stresses difficulties
in
estimating long-range net earnings in steel
industry. Criticizes
Nathan Report on steel
companies' profits.
the
Congress of Industrial Organizations. Ths members of the CIO, with their wives and
children, form a big segment of the American people. In every city, in every state, they
are
employed
the
in
^
basic
cago,
industries that
have
cession,
our
made
with
powerful.
intend
Banded
late.
to¬
gether in their
labor
seek
improve
living
ards
to
stand¬
are
the
'.\aYYY':v
goals.
But
victories
our
It
America,
have
of every working
In New England, in Ohio,
Board—to find out the true situa¬
struggle for
better life.
a
minds*
cities, unemploy¬
mounting. Thousands
ment is still
of families
almost at the end
of their economic rope. Soon their
are
.
—
ficient handouts
nation.
During the past 14 years, the
members of the CIO have won sub¬
.;
stantial advances
in
their
improvements
with
—
which
on
no
.
Thousands
other
families,
have
thousands
upon
-
ill
to
grace,
before
appear
I wish that every
*
American,
the
worker, every
have attended
could
hearings of the Fact-Finding
Board
held
House
in
Federal
continuous stream
a
absurdities,
in
almost
of
malicious defiance of the govern¬
ment of the.United States.
every
pro-, industrial
steel
industry,
center, wonder whether Y The
living for workers
today's job will still be available profits hover close to one
who once were exploited and com-,
dollars a year after taxes,
tomorrow, or next week, or next
plqtely insecure. Workers gained! month.
have you believe that it
'vided
vided
with
food
more
and
better
clothing.
Through the advances
of labor, millions of families were
permitted to share
more
equitably
living.
in the American standard of
Nevertheless, there still remains
an
urgent
1
for
need
in
provement
<
further
im¬
standards
our
of
living.
Far too many millions of
our citizens are
ill-housed, ill-fed,
ill-clothed.
'
:The gains won by
past 'have; been
| throughout
will be
labor in the
well
distributed
community.
every
in the future
so
past.;
It
in the
as
1
the
corner
and
dentist,
movie house manager—all of
them know from long experience
that high wage standards
fountainhead
of
their
the
are
busi-
own
! ness prosperity.
This country has
grown and prospered on a
high-
i
philosophy.
wage
We
in
the
CIO
intend
to
fight
for continued increases in our
; standard of living in the future.
;
We want full production, we want'
employment,
.envelopes.
>
want full pay
the dollars in
we
When
the pay envelope are
cut, produc¬
tion falls and jobs decline. Like¬
wise, when the buying power of
wages, is sliced, the effects
are
soon
felt
on
jobs.
on
J
t
■
"
both
production and
"
1
-
v
•» -
,
-
(
'
-
■
Y
• •
•
Feeling Blight of Recession
On this Labor
ing the blight
man-made
Day,
we are
of recession.
recession,
a
tion-made recession.
our
who
It is
a
corpora¬
It has been
the
has
American
o.
*
direct
b.
the
destinies
industrial machine.
vast
recession
f.
our
land.
way is
been
The
delivered
people
f.
o.
of
to
b.
Pittsburgh, Detroit, Chi-
ered
over
American
the
network
of
the
Broadcasting Company,
Sept. 5, 1949.
and
banished
in¬
from
The quickest and easiest
through wage increases to
of
power
our
*
We
had
full
employment
full production in time of
can
have
and
And I
serve
no¬
profit-gorged industrial¬
ists, and
complacent or re¬
politicians:
organized
upon
actionary
labor
will
not
sit/idly
watch this nation drift
depression
and
by; and
slowly into
despair.
take
can
-
- -
many
to
>
steps
improve our economic well-be¬
ing.
If we act now with resolu¬
tion, we- shall be spared more
drastic actions.
.
We
sion
can
YY 7.77777-7 _y
halt the trend of
reces¬
through good-faith collective
and through thought¬
bargaining,
ful legislation.
the
at
Both
some
are
necessary
remote
day in
future.
iY-
industry,
OPA
the
difference of ideas
point of economics
12-year running battle between
America and the steel
companies.
toe
war,
the
smce
dispute
lead
to
Sept.
anothei
14
steel
strike
on
unless
derlying conflict, however, is al¬
most
certain
to
crop out
for it seems to be
later,
again
receiving
almost
no
recognition or direci
consideration.
That basic issue is the rate of
Attacks Steel Industry
The
dent
Roosevelt's
President
employees
on
help,
with
country..
our
New
Truman's
Deal
Fair
their
economic policies to
-In
industry
and
Deal
—
Neither
side
'
and
capital
The
union
higher
over
wages.
is
putting its main
seeing that the de¬
on
manded increases
are
paid out of
company profits and not by pass¬
ing the higher costs on to con¬
but it has stood with outstretched
hands to get every possible aid to
business
from
our
government.
round
Yet today the steel
a
form
that
of
industrial
of
payment
would
somehow
revolution;
decent
wages
annual
for wage: and
constitute
loss
a
of" liberty to the owners of that
rich industry; that $70,000 pen¬
sions
are
a
for corporation executives
right and just; but that $125
month
pensions
for
decent
working
people
are
unnecessary
will
a
non¬
distortion of social
a
what
dislay of mis¬
guided enmity to the institutions
of
honest
a
trade
reducing profits to
unreasonable
hearings
level.
before
Late
the
in
an
that
industry,
union—the
Steel workers, of
tried to
steel
United
America
—
has
bargain in good faith with
industry.
;
pay
envelopes of a million mem¬
bers of my union. We
buttressed
our requests
with a solid wall of
economic facts.
We
said
But
the
steel
in¬
"no."
asked
for
creation
of
a
health and welfare
fund, to help
the employees of those
great cor¬
porations when
they
are
the
CIO,
tion
of
their
unionism
disabled
sizable loss.
a
net return of
a
5%, including
preservation of the original prin¬
cipal for the investors. But such
a
rate of' earnings turns out in
fact to be a heavy net loss for
them.
*■
.
If investors have
savings
mon
the
share
per
put $190
into
the
of
com¬
stock of a steel
company and
union allows it to earn only
markets for $100.
best
stock
Even under the
market
conditions
it
seeking to
the
in prices
or
even
lower
They want their wage in¬
creases
to
are
not
seeking
to
eco¬
fix
we
and
to
shall not at¬
clarify the steel dis¬
hasten
question:
Is
.workable
a
lasting solution if
we
answer
and
the
there
anything for
fair-minded investors to object to
the
idea
ClO-Steel
of
Workers
Union
demanding higher
wages
other benefits when the indus¬
automatic wage pattern on all in¬
or
dustry. Collective bargaining ne¬
gotiations have been based on the
try's earnings exceed 5%?
particular abilities and the pecul¬
iar problems of each separate in¬
dustry. Indeed, if
any
patterns are
being set, they are being made by
big business itself. Industry set
a
pattern of raising prices and
encouraging
inflation.
(Continued
on
page
sold
ever
need
of
at
20
prosperous
not
insist
on
than a living wage for
vestment in the steel industry.
is
too
low
for
at
least
in¬
It
three
reasons:
First,
5% ceiling on success¬
companies in good years
a
Industry
ful
12)
makes too little allowance for the
But the record of good
the stock market points
rate of
a
probably
10
the
times earnings as
highest that one
should
expect until the
itself proves otherwise.
Unfortunately,
of
in
market
Y
measurement
a
how savers make
investments
the
out on
their
of
industry cannot avoid
getting slightly into the mysteries
ownership
American
machinations
and
market.
To
of
to
analysis
stock
whom
Wall
sufficient damnation
practical
the
of
those
touch
mere
a
The first major
conclusion of
this article is that such a rate is
less
in
years
to
set
the
question
of
investors' earnings into its proper
place in determining wage rates.
in
an
One
years.
earnings.
Should the Investor Object to
YY'Z';7 Lower Return?
pute
carry
stocks
earnings
stocks have been selling at six to
less than two times their
1948
the
.
beset
similarly determined to
on
their own
struggle for
nomic justice.
steel
com¬
a
mendously inflated profits of the
industry.".: •
r 7i'
that
are
have
knows,
using the low times-earnings rates
prevailing in 1946-49, when steel
But it should
industries,
familiar with
anyone
stocks
tre¬
of
out
come
solu¬
problems
As
mon
times
increases
attain
respective
49, it would sell nearer $25, and
in some cases even less than $10,
wages
with
higher prices, but
they want higher wages with no
and
defiance of entrenched
own
We
We asked for
wage increases, to
restore the
buying power of the
Very possibly the net
Industry Board, Mr. Philip
Murray said, "The workers in the
steel industry do not want
higher
tempt
the
industry
steel com¬
pany stock with peak earnings of
$5 will not sell at $100 or any7
where near it, because at no time
corporate wealth. Other unions of
a
industry.
the
President's
Steel
prices.
display of arrogant
sense—what
justice—
"incur¬
them without raising steel prices
and without
power and
arrogance of
for my own
cross-
increases, the union has would probably not sell for more
you to believe that the appoint¬ rested virtually its entire case on than
$50 or so.
In the very dis¬
ment of a Fact-Finding Board is the ability of the
industry to pay couraged stock markets of 1946*
the
saying "no." I
little something about the
and
good
fair
a
American
or
$5 a share,, that stock
would, not sell in the securities
Y
fourth
present,
of demands
has
in
over
fi¬
earnings
other
industry wants
In' the
.
mate
economic demands
of
unions.
The; steel industry
lead
of
of
of
would work out too low to moti¬
vate investors to risk their
savings
in
supplying equity capital for
through higher prices of 5%,
sumers
Y In this artitle
taken the
sample
and
years
section
also
must
average
fair
a
bad
savings
The
nance.
over
of
one
important difference from the tra¬
ditional tug-ofrwar between labor
•not intend to knuckle down to the
management
investors'
seems
This goal involves at least
has
industry,
.•
its
the last 12 years.
arrogantly said '.'no" to the legiti¬
after
■
•
democratic government.
The steelworkers of the CIO do
-
■
bad years and also
for the other,
less successful
companies which
Second, at best, an earnings
assumptions ceiling of 5%
would generally
about what a living
wage for permit a rate of cash
dividends
owners' investment
is, but both little or no higher than the inter¬
arer
maneuvering around positions est;rate bn- hmbc^
of.
based on sharply
differing ideas investment.- It would not com¬
regarding it.
pensate for the greater risks of
The CIO and the Steel Workers
common
stocks5
in
comparisoil
union in particular seem to
have with good
bonds, mortgages, in¬
a
fairly definite goal to "redis¬ sured
building and loan shares,
tribute the income of the steel
some forms of
insurance, etc.
industry" through higher wage
Third, and extremely important,
rates
and
other
labor
benefits such a rate of
earnings makes it
whenever the rate of
earnings gets a virtual certainty that the in¬
above 5%.
This figure and this vestors as a
group will suffer a
long-run objective can be dis¬
major loss of principal—probably
cerned in a number of the articles more
than half—whenever they
and' speeches, by CIO and Steel
individually have to sell some op
Worker officials which have criti¬ all of their
stocks to recover their
cized business profits in
general savings in cash.
The union is
and steel profits in particular over
apparently thinking in good faith
willing to state
steel products.
What
agreement
industry has con¬
lobbied against Presi¬
United Steel Workers of
erupting for the fourth time
American industries such, result
would be
steel.
as
stress
steel
tinuously
only encourage
able spend-thrifts."
.Unfortunately, big business has
shown little interest in
reaching
ment in
Now
about an obscure
be the basic issue"
to
seems
the
wili.^>
some last-minute
compromise is reached.
The un¬
and
price control and price
stabilization, would have you be¬
lieve that, today it is fighting in¬
flation! Y 7-
and
Big Business at Fault
good-faith
or a welfare
pension plan. The steel
which
fought
against
or a
We
war.
worker,
high American-standard wages,
at
affqrd wage increases
fund
jobs for every
in time of peace.
tice upon
dustry
Address by Mr.
Murray deliv¬
be
replenish the buying
people.:
know
feel¬
delivered to the American
people
by the small but greedy group of
men
unemployment
must
now—not
i
full
say
American
storekeeper,
druggist, the doctor
the
J
I
security
would
cannot
'
t;
'
The
t
whose
billion
decent
fro^i these wage advances; jtheir•'wives, their children were pro¬
Court
City of New York.
all my experience have
I heard such
of
the
at
the
Never in
of
ill-founded
t\' charges, of vicious allegations and
American family can be
expected
to live.
t
wages.
They consented, though
the
Fact-Finding Board of the
President of the United States.
hard-hit
many
scanty unemployment insurance
good for ail benefits will be
exhausted.
What
the people.
It is likewise true, then?
Relief
miserable, insuf¬
that what hurts labor hurts our
These
the
President
of
the
States, anxious to avoid
industrial conflict, suggested the
appointment of <a Fact-Fin?ding
hangs
for labor is
good
jobs.
said "no."
Then,
;>
Dayton, Ohio, and Lawrence, f
Massachusetts, to name a few of
received
benefits of labor's
is clear and evident that what
.is
their
United
In
Every community,
the wholesome
constant
retirement from
the steel industry
un¬
has passed the 4-million mark.
have not been victories for union
members alone.
all
after
But
acknowledges that unemployment' of the steel industry changed their
the achievement
progress towards
and
unemployment
few dollars in their pockets
a
..
,
put vitally important
in
and Illinois, along the tion in the steel; industry. Again
the industry, with the exception
Coast, in my own State of
Pennsylvania, fear and insecurity of a few companies, said "no." earnings which can be considered
are rising.
Today the government But, on second thought, the barons adequate on the owners' invest¬
Philip Murray
our
of
who
—
West
CIO have made very considerable
of
have
A.b*dly defined but wide
»
steelworkers
the
fund,
given the best years of the;r
lives to back-breaking toil—might
1949 should
relaxation,
pension
a
in Indiana
em¬
in
of
for
have
the home
family.
ployed.
■j1"-' We
'/-J;/.Z'-V
that
so
-
I
asked
We
of
stop it—before it is too
:and
over
un-
which
e r
they
to
day
a
"no,"
distress, must
We in labor
7* ■'
sion
the
and
and
sick. But the steel industry said
or
troubled rest, for every American
worker. But the shadow of reces¬
their
'conditions
d
be
Wall
end-product
This Labor Day of
unions,
they
its
speedily be halted,
and
7" 77 ,7
and
—
This corporation-made re¬
human misery
country
great
I
T
Francisco
~~
San
Street.
'
therefore addi¬
tional
this Labor Day, the neighborly greetings of the men and women of
on
Independent Economist
v
Stating objective of Steel Workers' wage demands
is to lower
H profits of industry, writer
points out rate of return on investment
below 5% would not be
living wage to investor and
Street
the
is
of
anything,
of the eco¬
nomic dividing line between ade¬
quate and inadequate earnings on
owners'
investment in the steel
industry
There
be
will
seems
no
unconvincing.
alternative, how¬
ever, since common stocks of big
companies are sold through secur¬
ity
markets
typified
(Continued
on
by
page
30)
Wall
THE
Number 4836
170
Volume
COMMERCIAL
&
FINANCIAL
CHRONICLE
(943)
7
*
Evils
From
Washington
^
By WILLIAM GREEN*
V
_
Ahead
of the News
Staters
are
getting ready to
the Fair Dealers or the Welfare
their stock question to the "com¬
Great had
the
It
election time, of getting
every
way
the radio and suavely putting this question.
effective, a complete denial of Republi¬
on
^
a
of America, to pay tribute to
consideration to their hopes
have sung the
was
claims
can
that
The "common"
allow that
no
we
man
nonest
Cossacks were running him down;
publicans were giving him the bunk.
The current crop of New Dealers have re¬
vived the theme.
Senator Clinton Anderson of
There
Ohio.
is
no
.labor
builds.
and within the Iron Curtain.
look
we
in
invasion
modern
our
reduction
great
0 u r
the
trol
Green
William
-
,
It strikes
much "freedom" as we do.
work
But there
the guise of getting handouts
he has lost considerable of his freedom,
mind, more important than that of
to shoot off his mouth in a saloon.
and
to
my
still being permitted
greed
throughout
and
which
seize
has lost the knowledge of what his gov¬
First and foremost, he
are
which
lorces
.
! Vv
destructive forces
ating.
> ~
though, that - the Republicans with a little hard
operating
the "common" man in this country that under
me,
show
could
'
are
all
for
and
trying to
power,
constantly
benefit
the
world
by
the
animated
are
lust
down all the
Europe.
the threatened
China
of
the growth and extension of Com- ;
munism in the starving nations of.
The
Com¬
to
Com¬
a
Communism and Communist
if you were nuts. If
mental results
/
;
they stay out of politics they are permitted to go about as they please,
of
the
labor
of human
hands,
just as is the "common" man in this country. You would certainly
have difficulty in convincing the "common" man of Russia that he building, producing1 growing, cre¬
\ :
byl the
~
to
or
tear
good that labor cre¬
the
throughout
Policy
con¬
world.
As
the
picture^ unfolds on interna¬
tional affairs, it becomes increas¬
ingly clear that the people of the
in most of the
United States and
free
democratic nations
out
Europe,
through¬
concentrated
their
thoughts and efforts following the
conclusion
of
World
II
War
to
bringing about the realization of
international peace and security.
This
is
fact
in
reflected
the
}
.
Administration's Foreign!
Upholds
icy of Soviet Russia to establish
see
we
m o n u
Asia
and, in addition, to block and stop '
under
munist'State, make clear the pol¬
and
thriving
farms,
of
munist forces and
civilization, in
cities
been brought
to prevent immediate war;
served
democratic
free
of
Everywhere
they would look at you as
doesn't enjoy as
number
A
nations have
It is difficult to ex¬
plain to people that they have lost any freedom
when they can still sound off in a saloon, when
they go about referring to the President as Harry
after the fashion of the headline writers. By the
same token if you tell the people of the Eastern
European countries that they have no freedom
Carlisle Bargeron
con¬
struct ive.
to the Republicans.
poser
is
It
truly
New Mexico uttered it a
in
democratic
nation, Soviet Russia, has con¬ ment in the free
sistently blocked all efforts to¬ nations of Europe and the preven¬
ward the negotiation of an inter¬ tion of the extension and growth f
»
national
agreement which pro¬ of Communism.
vides for international peace and
This action taken by the free '
democratic nations of the world r
security.
one
reason—
for
gathered here to salute the workers
we are
.
with
good
right and the Re¬
couple of weeks ago out
doubt that it presents a
■
toilers
—and
would scratch his head and
it must be that Roosevelt was
seeking to enslave labor,
as
their magnificent accomplishments and to give sympathetic
and aspirations for the future. Throughout the ages, poets
of
praises
moving: into-statism
were
In the time-honored tradition of Labor Day,
j
mon" man—What freedom has been taken away from you?
Roosevelt
world Communism
scores
upholds President Truman's foreign policy. Extols trade union help in fighting cold war against
Russia, and attacks "Toryism" as twin evil, opposing interests of labor. Defends "Welfare State" as
S°al of democracy, but denounces "Statism." Will fight for Taft-Hartley repeal.
,
;
or
pump
Day address,
and
By CARLISLE BARGERON
/>, .y Once again the New Dealers
President, American Federation of Labor
.-Prominent labor leader, in Labor
or¬
of the United States,
peace conferences which
ganization
;Great credit must be extended*
to' President Truman
of
leaders
courageous
up
and
to
the
>
whose 1
foreign policy, backed *
country
our
by.,bi-partisan
from ]
support
Congress, helped to stiffen world j
resistance
from
Recovery Program and now
pean
the
against
intimidation]
First, the Euro¬
Moscow.
Atlantic
strated
demon-1
have
Pact
the
to
and to the»
people
of Europe that;
free governments
Our
>
insistence that peace and freedom
s
America
what it says.
means
■
must be preserved, our willingness>
whether it is getting ates.
in the
to pay vast sums to help preserve,;
ready to plunge him into another war. The Senators and Congress¬
It is time that the: wbrking men have been held and in the valu¬
them and our pledge to fight if
men whom* he elects to keep a ■ watch on the executive branch of
and women of the nation should able
contributions
which
have
the government know very little more what is going on than he. be able to
recognize these evil been made by free nations to¬ necessary to defend other free andf
This "common" man, and he has gotten plenty commoner in recent
forces, at home and abroad, for ward the development of under¬ peaceful peoples from aggression, )
have been proven in a decisive*
years, takes his little handout without the slightest conception of what
they are and to checkmate standing, goodwill and peaceful
and convincing way.
whether he is getting a fair shake. The largess is not being dis¬ once
and for all their destructive cooperation; between all nations
: While
tributed evenly but the "common" man has no way of knowing this. influences.
extending full credit to
throughout the world.
the leaders of our government and .?
He lives from hand to mouth with a promise of an unemployment
First and foremost among the
Now, we clearly see and under¬ to those of the nations of Europe/,
and social security pittance while the Bureaucrats ride in Cadillacs
hateful, corroding and inhuman stand that while we were
engaged who have collaborated faithfully
and on private yachts and planes. He has lost the freedom to deal influences
of
our
age,
I place
He has no way of knowing
is doing.
ernment
.
,
'
in
this.
with
-
,
'
■
*
~
.
World
<
the money he earns as he sefes
fit. A third of it is taken for the support of the Bureaucracy which
has convinced him it is doing something for him. He is told that
only the rich pay the taxes and he has lost the intellectual freedom
to challenge this.
Yet he gives up his earnings in < every loaf of
bread he buys, every can of peas.
He has lost the freedom to use
It is
not
being done at present but at' the
government's whim,
savings can be taken from him just because the
think he may spend us into inflation. "Siphoning off"
was the term used when this was being done.
Similarly,
his
Bureaucrats
his savings
he can now
by paying 25% dovyn,
from requiring a third
down payment a relatively short while ago.
But maybe tomorrow
or next week it may decide this "common" man is getting too lenient
get certain household necessities or luxuries
the government, in its wisdom having relented
1
Communism.
I accuse
•
of
seeking power at any price, of
keeping alive the threat of war,:
at a timev when the human ra(cfe
recognized that
est
and
curse
war
is the great¬
destroyer
of man¬
kind, and of exterminating human
freedom
and
liberty over vast
by the most
cruel1 and forceful methods imag¬
the
of
areas
earth
inable.
I accuse World Com¬
munism of reviving slave labor on
Finally,
a
basis, thereby; destroying
.mass
the
dignity of the individual and
There was a time when this "common" man who owned his own reducing him to the status of a
prisoner of the State, without a
home was looked upon as sitting pretty, nobody could throw him
soul, without a mind of his own,
and his wife in their declining years, into the streets. He finds now
credit terms.
perpetual rental on this home in the
increasing local taxes. And if he doesn't pay them
be thrown into the streets.
that he has a
The
greatest tragedy of the
"common" man, I think, is that he
and cease being a "com¬
blocs and a bdss placed
has lost the freedom to get out of the groove
mon" man. He is now assigned to various
over him.
He is a statistic. It isn't a case
,
form of steadily
he can certainly
of his having- a right to
bargain collectively with his employer. He has to do this. He has
been classified as a "common" man and for purposes of adminis¬
tration on the part of an all wise government, he must be grouped
with the other "common" men.
'
An unusually
■
good mechanic cannot catch
the eye of his foreman
without
a
These
reason
for existence.
charges are fully borne
by the
disgraceful record
which has been made—a record
out
shameful,
so
sinister
so
this
work
commendable
that
was
capi¬
the Soviet Government
World Communism
and
so
on
human
result
of
the
establish Communism and the to¬
American
talitarian form of government.
munists.
The purpose of the Soviet Gov¬
ernment
World War II
raise in pay or a promotion. The union prescribes his rate throughout the world, constitutes
and his only outlook for betterment is through the union. If a
challenge to those who are de¬
he has unusual talents for" leadership he may develop in the union
voted to the preservation of indi¬
to be a leader but the chances are he will get his skull cracked or
vidual and collective freedom and
lose his job in the process.
liberty.
They are united in their
If he becomes dissatisfied with his job he can't quit and go to
opposition to the substitution of
Work for the employe£ across-the street. The vunioh^seldoTn permits the totalitarian form of govern¬
this because he then becomes a member of another local, his old ment for democracy and govern¬
and get a
,
.
campaign it carried on in
Italy, France, Greece and other
European countries in Asia and
elsewhere, makes it clear that its
objective was the establishment
Communism: and
\he
a
peace
would
peace
provide
free
of
*
occupation authorities of
country to help and en-
<
our
Com¬
own
courage
the prompt revival of free ■
We sent *
some
ocean
of
our
ablest
the
done
men across
to see that the job was
ing of the free trade union move¬
ments of Italy and
France and
other
nations.
Against fearful'
odds,
at-r
work-
Soviet
combatted
we
tempts to enlist European
(Continued on page 15)
govern¬
union loses
comes
This
member^ Perhaps;- a member of his family
dues paying
"common"
gO.
man
all.
people and by the
the
...
.
;
'
*•
Very probably
*
:
.
finds that when he gets a raise it has been
freedom-loving people, feelings of
A'
,
-Events which have
grave
"common" men so there is really no raise They
and apprehension.
for the realization of
concern
yearn
international
peace
security.
and
the middle aged "common" man, having never They
life's buffetings, is content with this "stability"
a
We have been talking
•
about just the "common" man.
There can
community
leaders, have lost their freedom of independence in leading.
All too
many of them, seeing the handwriting on the wall, are afraid to do
no
question
that men
anything but play ball.
in higher walks of life, our
-
_
are
for/ these
has
not
have.
press
of
over the
agreement providing
and blessings
disappointed
fact that an
benefits
yet been reached.
They
carefully
through
noted
reports and an
examination
the record made thus
far that
selection
new
posted
to
*An
address
by
Mr.
Green
Day celebration, San
Cal., Sept. 5,
1949.
at
Diego,
twice
'/V.v.-'.'.'f.'.
vV
-
V AND
—
of your
First mailing in a handy binder.
twice monthly from New York over
: ,
monthly.
:
"SPECIAL OPPORTUNITIES"
-r.r.. :
A group of up to
technical
date charts with
K. Taylor's BUY and SELL Recommendations —
Suggestions, Support Levels,, Resistance Levels,
Trend Objectives.
Kept
up to date until closed out.
Ideal for short and long term positions and as
study helps for technicians.
Mailed twice monthly from New York..1 .
analyses
—
and
Botfi
—
Owen
services
$50. quarterly
together
"Special Opportunities" alone
,
;
,
,
$50. semi-annually
Offer F-l: Send $5. for samples—any three Trend Charts, posted up to date
of mailing, and sample of current "Special Opportunity" ready to
move.
Please mention offer F-l.
,
Consultations
Labor
date
f.
•
SERVICE—Any 50 NYSE issues
to date set of charts mailed
up
week-ends.
of the
METHOD, offers his
FIGURE
POINT AND FIGURE TREND CHART
guaranteed pittance. But he has lost that freedom by which
he used to entertain greater hopes for his offspring.
In permitting
•himself to be frozen he has frozen them.
be
OWEN K. TAYLOR, author
V
taken place
have aroused within the hearts of
7 ' '
gotten anywhere in
and
:
POINT and
'
-
TECHNICIANS
which he wants
general raise for all the
at
for
'
This "common" man
a
ment
health and a change of climate is desirable. people.
*w
cannot change to another, community without
down with poor
approval of the union he leaves and the one to
the
tO
a
INVESTORS
AIDS
FOR
37
Wall
Street
New York 5, N. Y.
if"
tavi no
VwwtW it.
,*i
IAILUK
nu/cu
*
right. We gave money, equipment"
and moral support to the rebuild- I
Of pay
NEW
.
trade unions in Germany.
international
form
*
-
able to
We, therefore, begged and pleaded
and security, but the United
democratic
capture con-
organized labor in Europe.
with the
treaty among the
for
did happen in >
the
Soviets
if
were
trol of
world rather than the consumma¬
tion of
—
forces
throughout the
munist philosophy
We
*'
Czechoslovakia
the
of
of ■; Labor
of the Com- anticipated
what
Federation
would happen—and
in the Balkan States, in
cold war carried quickly grasped the facts and as a
result took action having for its
Russia following
purpose the preservation of the
among the nations
Soviet
the
foresaw the strategy
The aggressive
by
to win
,
States, Great Britain and other
free democratic nations in Europe
on
,
remarkable.
efforts
and
groups
philosophy have now be¬
thoroughly disillusioned.
its
£mong"/ the cold war.
"
*
others
who
•This story has not been em-:
were
moved by feelings of dis¬
blazoned in the headlines by the 1
content, influenced them to pro¬ radio commentators—so it must be
mote revolution, overthrow their
news to most Americans.
J
free democratic governments and
'When the last war ended, the '
labor
allied nations of the world which
munist
the
of
infiltration!
through
inexcusable, and even those who
manifested a tolerant and sympa¬
thetic attitued toward the Com¬
come
be accorded
also
for
recognition
success
movement
,
should
America
and
war
union
trade
the
suffering which was the
inevitable
in all fairness.
of;
with us, I feel that
hunger, discontent and
talizing
author Point & Figure Technique
-
.Communications
40 Monroe Street
New York 2, N.Y.
8
(944)
v
■
>
•
x
,
of
Monetary Management—No
Substitute For Sound Fiscal Policy!
By
RENO P. ODLIN *
Pacific Northwest banker
origin and development of Federal Reserve System, and analyzes recent
Federal Reserve Board. Points out original purpose of Federal Reserve
System has been neglected, and contends additional monetary or credit powers of Board
Stresses importance of sane fiscal policy, with sonnd
taxation, debt management and
J'
;-v
<■
reserves,
inflationary trend. This, however,
would
1
of the Federal
.is
Sys¬
tem".!
It
as
--fv-V-.
Federal
in
primary
h1e t
Reserve
regard
by
the
Banks
to
the
with
general
business and credit situation. The
form from the
policy
of
American
maintaining
conditions
Bankers Asso¬
orderly
security
ciation.
who
you
inter¬
are
ested
in
the
government
market and the confi¬
dence of investors in government
bonds will be continued. Under
I sug¬
that
gest
in i
present
a
nance
conditions, the
of
mainte¬
relatively fixed
a
pat¬
ILL'
:
:
securities
government
is
available
pa m p
.
dreamed
never
in
reserves
'
.
flow of capital and
a
gold from Europe into this coun¬
try on a tremendous scale.' The
gold, it
will
be
recalled
valued at $35.00 an ounce in
parison
with
the
standing rate of $20:67
Reserves
mounted
an
tern
undesirable
rates
effect of absorbing reserves from
the market at a time when the
until
tually
a
availability of
States
Treasury bills.
of the Federal
Reserve
tem
Sys¬
send
for
Reno P.
increased."
Odlin
a copy of the
pamphlet. : «;
Dr.
There
in
his
lecture
of
the
you,
the
dis¬
critical
relation
of
the
System to the Treasury, the bal¬
ance
and
of power within the
System,
the trend toward control of
banking
by
conclusion
the
he
System.
As
his
of
the drift
toward concentration of
power in
warns
Washington
able
through
additions
power
of
of
unjustifi¬
controls
regulation in the
eral Reserve.
and
Fed¬
,::yl'ytv:;l!
He believes that the traditional
powers
of the Federal Reserve
System to influence the
volume
of
credit
are
cost
and
sufficiently
powerful instruments for moder¬
ating business' fluctuations! and
provide an adequate degree of
he
that
warns
everyone
should recognize that the Reserve
System is only one of many in¬
fluences
on
He says:.
■
this
business fluctuations.
y
,
ii
"The final result reflects
many
causes:
the wisaom or unwisdom
of
businessmen in
example, the July 27 issue
"Guaranty Survey" of the
Guaranty Trust Company of New
York has this to say:
"The committee's statement in¬
dicated that its primary endeavor
henceforth
would
rates
on
securities,
effect
international
of
stimulates
spending
or
ways
is
in
activity; the
saving habits of the
or
no
the
government
retards
individual, etc.
tem
policies
situation;
The Reserve Sys¬
for sound
substitute
all
these
areas,
nor
it wholly offset
unsound pol¬
icies. In the long
run, the economic
trend
reflects the
stresses and
the strains from all
these fields."
can
I commend
this lecture to your
attention.
.
I
my
.
New Central Bank
Policy
thought it proper to devote
attention
so-called
tonight first
to
the
new
phase of central
bank policy which
was
inaugu¬
rated on June 28 when
the Open
Market Committee issued
the fol¬
lowing statement:
r"The
Federal
Open
Committee,
after
Treasury,
with the
day
to
(June 28)
Market
consultation
announced
that
with
a
to¬
view
increasing the supply of funds
available
the
and
icy
in
needs
the
market
to
meet
of
commerce, business
agriculture it will be the
pol¬
of the committee to direct
purchases, sales
and
exchanges of
of
withdrawing
*An address
by Mr. Odlin
the Pacific Coast
Banking
.
at
University of Washington, Seat¬
tle, Wash., Aug. 22, 1949.
such
the
.
The
.
policy,
especially in its longer-term
aspects, hal been., a subject of
considerable discussion in finan¬
cial
circles
since
issued.
For
the
statement
immediate
the
future, the change
c 1 e a r
ly
in
the
was
Even
in
the
Govern¬
financing did not
contraction
or
ac¬
United
on
of
excess
firming of interest
quirements
the
became
the
a
to point
direction; of
seems
of
the
brief
system
In
November, 1941, bank
to
were
left
the
at
period
2V2%
war
fol¬
when
the
eco¬
swings
again
toward the
infaltionary side.
"On its face, the
committee's
%%
on
the
Treasury
long-term
ference
be
that
room
such
attempted
restraint
in
—
that the wartime
for the in¬
other
will
words,
policy of main¬
taining rigid stability in the
gov¬
ernment bond market will be
laxed in favor of a
re¬
policy aimed
stability in commodity
at greater
prices and business in general. If
this
is
the
case,
periment
proves
significant step
economic
been
and
if
the
ex¬
successful,
toward
conditions
a
have
V
"The wording of the statement
has been criticized in some
quar¬
ters as
ferent
ambiguous. Certainly dif¬
implications can be read
into different
parts, and the com¬
mittee has left itself (as it
prob¬
ably intended to do) considerable
latitude in the choice of
specific
courses
of action under varying
conditions. Read as a
whole, how¬
the announcement
fairness be interpreted
ever,
cating at
perhaps
emphasis
least
a
bility and
a
as
and
shift
was
a
the
'
statement- of
would
policy,
of
it
perhaps be advisable to re¬
view the
monetary circumstances
of the last few
years and to bear
developments in that
field since, say 1935.
In 1935 the
banking system of
the United States
began piling up
excess
reserves
to
an
extent
rate
banks
from
had
around
two
se¬
billion
dollars at the start to some
$24
billion at the end of the war; and
on this reserve base the
banking
system
absorbed
In
July,
on
1947, the repurchase
Treasury bills, which
had the effect of
making them al¬
most the equivalent of
cash,
was
terminated by the Federal and the
on bills rose
sharply and con¬
rate
tinued
rise
to
The rate
to
around
certificates
on
parallel "pattern."
lVs%.
rose
Late
in
in
a
1947
the
longer-term government se¬
curities began to show the effect
of increasing demand for credit
and were bought by the Federal
Reserve
in
in
order
term
considerable
to
maintain
2M> % rate.
On
Dec.
24,
1947,
prices
on
for
some
long-
'
Committee
buying
yields
amounts
the
I,".;'
Market
the
the
Open
reduced
its
bonds,
maturities
rose
Reserve
System
was
bonds. The holdings of bonds
over
of
one
11
1948.
clined
billion
billion
in
in
late
rose
1947
to
the latter part
Short-term
in
down
gone
substan¬
tially
during
the
past
seven
months, not because of lack of
Every thinking
recognized
Reserve
faced
with
lemma
the
that
bond
Fed¬
either
price
were
difficult
very
action—abandonment
of
the
authorities
a
and
that
di¬
of
course
with it very serious risks and
po¬
tentialities.
; r
*
Around the latter part of 1948,
however, the question seemed to
solve itself to some extent. Bank
loans
turned
downward
and' the
expansion of bank credit became
contraction.
The
problem
of
let-down
;
in
There
the
have
demand for
been
in
the
history
of
the
country
many
shortages of credit, but that is a
situation
which " most
certainly
today.
s
exceptionally
does not present itself
We
or
support
level—carried
a
credit.
have
had
-
"easy money" conditions in this
country for many years past. The
addition of funds into the
market today
money
hardly be
can
ex¬
pected to have much effect other
than
psychological.
Bank
loans
will expand when the demand for
loans
and
(Continued
'
l
increases
on
lower
page
rates
33)
/■
letter
—
Monthly commercial
—
The
Canadian
Bank
of
Commerce, Toronto, Ont., Canada.
Special offer F-l—$5 for sam¬
ples any three trend charts posted
up-to-date of mailing and sample
of
Dow Theory Barometer—Week¬
ly stock market advisory service—
$45 per year; $25 for six months;
$12.50 for three months: $5 for one
month
Gaylord
Wood,
212-F
Andrews Avenue, Ft. Lau¬
—
North
derdale, Fla.
Eight Ways to Invest $10,000 in
stocks—In the September
common
issue of
current
ready
"Special Opportunity"
to
move—mention
F-l—Owen
Taylor, 37 Wall
Street, New York 5, N. Y.
■L,L♦
L'IF-V,
Central Vermont Public Service
Co.—Analysis—Ira Haupt & Co.,
Ill Broadway, New York
6, N. Y.
Commercial
Detailed
Credit
Company—
memorandum
—
"Monthly Stock Digest"—
Bros. & Boyce, 6 South
G. A. Saxton & Co.,
Inc., 70 Pine
Street, Baltimore 2, Md.
Street, New York 5, N. Y.
Also available is a circular
Iowa Southern Utilities Co,
Discussion
"Railroad
—B.
W.
Railroad
in
Consolidated Gas Light & Power
of
Baltimore
Circular —
Stocks—
current
and
Other
Pizzini
&
issue
In the
Co., 25 Broad
issue is data
same
of
Quotations"
Street, New York 4, N. Y.
—
Fahnestock
&
Co., 65 Broadway,
New York 6, N.Y.
Also
available
are
circulars
New
on
Manufacturers Trust Co., OwensIllinois
*
on
Stein
Calvert
on
Co.
Guaranteed
offer
K.
Glass-Co., and
Manufacturing Co.
Rockwell
Orleans Great Northern
Railway.
Food
New
Market
Letter—New
type
letter, prepared by Ed¬
Tabell, based on technical
of market
mund
Cohu
Fair
Stores
Circular
—
—
&
Co., 1 Wall Street, New
York 5, N.Y.
market studies and
especially de¬
Gimbel Brothers, Inc.—Analysis
signed for institutions and dealers,
—Eastman, Dillon & Co., 15 Broad
discussing short-term, inter-medi¬
ate and
long-term trend of the Street, New York 5, N. Y.
stock
market
dustry
and
groups
reviewing in¬
according to their
favorable, unfavorable or neutral
action—sample copy from
Walston, Hoffman & Goodwin, 35
Wall Street, New York 5, N.Y.
market
Hermosa Beach City School Dis¬
trict
Analysis — Wagenseller &
Durst,
Inc.,
626
South
Spring
Street, Los Angeles 14, Calif.
—
National
Over
Stock
-
the
Index
-
Counter
Industrial
Booklet
recording
10-year performance of 35 indus¬
—
stocks—National
Quotation
Bureau, Inc., 46 Front Street, New
York 4, N, Y.
Circular
Sutter
Calif.
Also
Motor
Bearing
Co.—
Elworthy & Co., Ill
Street, San Francisco 4,
—
v
available
is
a
circular
on
Philip Carey Manufacturing Co.
l
and
-
obliged to buy large quantities of
from
Commercial bank
moment.
have
shortage.
thing
such
no
of
trial
sharply; but to support this
policy
loans
certainly
availability of credit but because
worse
tremendous
a
amount of government securities.
option
at the
credit
the supposed cure would be
than the disease/
of
"pattern"
increased
holdings of government
curities
very
♦
the
reserve
their
war
But in the process
maintaining
of
greater flexi¬
broader objective of
disapeared.
slowly modified after the
had ended.
toward
Monetary Developments
analyzing the significance
new
in
indi¬
temporary
permanent
central-bank policy."
In
must
other
The war-time "pattern" of rates
healthier
will
taken.
maturities.* In
words, an arbitrary "pattern" was
adopted, and the classical rela¬
tionship between excess reserves
and money rates
is
to suggest
mean
a
dropped; others feared that a
withdrawal of the supports would
have a disastrous effect and that
the
on
There
was
near
termediate
will be
therefore,
be
there
ex¬
pansionary influence
correspondingly greater
price rises was greater than the
value of maintenance of the
pegs
and that they
should,
Canada
—
probably did not
that
but
figure
a
bonds, and a curve in between the
two reflecting the
yields for in¬
lowed by
particular question; many people
believed the cost in
inflation
government,
rat$s began to stiffen. There de¬
veloped at this point thet so-called
"pattern" of interest rates which
prevailed throughout the whole
bills,
proper
to
comment
that the Open Market Committee
that
reserve
We then entered the war and in
the light of probable
financing re¬
of
of
some¬
four billion.
quirements
sides
Credit Shortage
seems
reserve
substantially,
them
both
No
It
strong
was
problem, and this action cut"
still
*
was not will¬
were
a
substantially
attack'
reserves
the
rather
the
There
slump in 1938, and
raised
aban¬
of
inflation
became
market, which
There
on
the
support
disappeared
problem of
cushioning a deflation.
This very sketchy background
will perhaps serve to set the new
policy pronouncement in the right
scenery and clarify its meaning.
The Federal Reserve is no longer
withdrawing funds from the
money market to restrain infla¬
tion; it has turned to an affirma¬
tive policy of providing funds to
increase the availability of credit.
and
of
of
and
requirements were reduced
what from the 1937 level.
requirements
and
reserves
concern
authorities.
do.
arguments
a
excess
principal
banking
monetary
increased
were
problem
to
re¬
'easier' money. The main
question
is whether this
supposedly ex¬
in mind the
School,
in
reserves
cess
funds
from the money market.
exact nature of the new
this
1 Published
in
the
"Commercial and
Financial Chronicle" June
30, 1949 (p. 2)
under title "The Federal
Reserve System
Emasculated."
in¬
policy which had
a
statement leaves
thousands
result
to
obli¬
gations through the sale of
and
the
of
government
balance
the
increase
relatively fixed pattern
terest
nomic
down;
to
the
needs
of
business,
rather than continue to
maintain
a
yield
ment for deficit
meet
accumulating
inventories, in starting new ven¬
tures, in keeping production costs
soundness of labor union
policies;
be
supply of funds available
restraint
prices
its
to
as
of the
the
stage there
minus
rates. In 1936-37 bank reserve
credit
selling
in¬
announce¬
speculation
was
monetary' management.
And
elaborate
For
thority is well known to
cusses
be
one
ing
eral
and
money
steadily downward
demands of the Federal
been
of
whose-
intimate, ment and
knowledge of the Federal Reserve
meaning.
System and whose rank as an au¬
questions
should
•
has
terpretation
Burgess,
credit
at
the
bond
the Federal Reserve
person
ounce.
steadily
Learned
study
long¬
simultaneously short-term
drifted
was
com¬
former
very clear and
of rates has the
These
considerable part de¬
veloped from
involved
of
government
inflationary
-
before.
of
have
donment
About two months
ago, to be exact on June 24, my associate on the Federal
Advisory
Council, Dr. W. Randolph Burgess of New York, delivered a lecture to the student
body of
the Graduate School of
Banking of New Brunswick. The lecture was titled "The Future
Reserve
stop the expansion of
credit and tnerepy brake the
oank
not needed.
are
budget policy
basis for sustained economic advancement
•
permit
holdings of governments to de¬
cline in order to eliminate
excess
traces
credit policy by
on
restraining
rather strongly in
many quarters
the Reserve
System should
turn loose the
pegs and
that
its
President, Puget Sound National Bank, Tacoma, Wash.
statement
the System did not
increase
materially.
/
r
During this era it was argued
holdings de¬
somewhat
the
amount so that the total
same
holdings
Point
and
Figure
Trend
Service—Any 50 New
Chart
York Stock
Exchange issues of subscribers
lection
Oregon Portland Cement—Late
data—Lerner & Co., 10 Post Office
Square, Boston 9, Mass.
se¬
posted
to
date
twice
monthly—also Special Opportuni¬
«
ties—a group of up-to-date charts
with technical analyses and Owen
K. Taylor's Buy and Sell Recom¬
mendations
—
both
services
Rayonier, Inc.
Haven
&
—
Circular
Townsend,
—
De-
Crouter
&
Bodine, Packard Building, Phila¬
delphia 2, Pa.
to¬
gether $50 quarterly; "Special Op¬
portunities" alone, $50 semi-an¬
nually.
-Serve!,
Inc.—Memorandum—J.
Co., 115 Broadway,
N.Y.
,
R. Williston &
New York 6,
'■
■
»
II!
■
day
the
under
income
present
cannot
man
it is very difficult for any
small
businessman
to
compete
advertising
both against
operators,
taxes
big business and big
labor unions. Today the big cor¬
Subject To
porations
are
Anti-Tiust Laws
economic
CHRONICLE
&
"§
-(945)
'•
A
■
Haverhill, Massachu¬
national adver¬
tising was unknown except in the
case of patent medicines and there
were only a few national weeklies,
and they had small circulations.
The "Saturday Evening Post" then
Fifty
given
have
doubts
any
last
in
same
years ago
national
TVA Idea, The—Dean Russell—
he is obliged to pay
The Foundation for Economic Ed¬
afford
now
as
rates per page as the
i
,
.
big
What The Nation Needs "
Today
labor ; unions
have
ucation, Inc., Irvington-on-Hudson, N. Y.—paper—750 per copy
(lower rates on quantity orders),
Business
v
■
"frozen"
setts, who has made an intimate
study of this situation.
labor
organizations an upper hand in
industry and have made them a
dangerous monopoly, advocates
half-century
have
you
H. Gaunt of
political
changes
If
are
about this, write my friend Ernest
ROGER W. BABSON
By
Mr. Babson, pointing out
and
little.
the
"frozen" big; while
the little businessmen
/
•
'
■
I
Unions Should
Be
FINANCIAL
THE: COMMERCIAL
Number 4836 !
170
Volume
<
Man's
a
M. E. Htradon With
greater and more dangerous mo¬
nopoly by fixing prices and output
than management ever had. Hence,
the
Anti-Tiust
be
amended
unions
and
laws
| to
include
forbid
prices, wages
or,
should
the
Jackson & Smith
now
CHARLOTTE, N. C.—Marion E,
labor
fixing
If
output.
has
Herndon
of
Book
the
Miller
The—William
Columbia
University
Industry,
—
with
become
Jackson
&
associated
Smith
of
Gas-
tonia, N. C.
Mr. Herndon was
formerly with Louis G. Rogers tk
people, through their legal repre¬ Press, Morningside Heights, New
sentatives, want to ; "fix mini- York
Co. and prior thereto conducted
27, N. Y.—cloth—$2.75.
mums" this should be permissible,
his own investment business in
but only through proper legisla¬
Charlotte.
Anti-Trust laws be amended to
Cases in Credits and Collections
had only a 100,000.
As a result, tion. Furthermore, if there need
be any exemptions to the AntiTheodore
N.
Beckman
and
prohibit labor unions from fixing advertising rates were so low that
With Barrett Hernck Co.
in Schuyler F. Otteson — McGrawthe small businessman could af¬ Trust laws, these should be
prices, wages or output.
ST. LOUIS, Mo.—Nick K. Kirifavor of the small businessman.
ford to advertise as well as the
I am a good friend of every
Hill
Book
Company,
Inc., 330
akos, Jr. has become affiliated
Today adver¬ He today, is really in the same
wage-worker, having long been one large corporation.
West 42nd Street, New York 18, with Barrett Herrick & Co., Inc.,
unfortunate
position that labor
myself. During World War I, I tising rates are 25 times what they
418 Locust Street.
N. Y.—cloth—$4.50.
were then.
The small business- unions were 50 years ago.
was appointed by President Wilson
at the request of Samuel Gompers,
—
the then President of the Ameri¬
Labor,
of
Federation
can
be
to
Assistant Secretary of Labor.
an
I
worked close¬
with
ly
the
labor
leading
for
leaders
some
time and
fond
became
I
them.
of
;,think
they
also respected
me.
:
When
i
;
the
Clayton AntiTrust
legis¬
lation
was
enacted,
strongly
vored the ex-
,
Roger W. Baboon
emption of la_
bor
from
the Act.
was
unions
Management then
strong;
very
I
fa-
fought
it
both
collective bargaining and manipu¬
lated prices.
cases
In 80% of conflicting
the courts ruled against la¬
bor when labor
was
only honestly
improve condi¬
tions. The membership of all labor
unions was then only about 1,000,000.
Prices were being fixed; but
endeavoring:;to
and
wages
output
were
left
"J
*+
to
"supply and demand."
the situation is wholly
The labor unions num¬
Today,
reversed.
ber about
now
are
than
The courts
friendly to labor
15,000,000.
more
to
Collective
management.
bargaining is enforced by law.
The fixing of prices or output by
management is criminal;
while
the fixing of wages or
output by
the courts.
Therefore, today management in¬
stead of being top dog is the un¬
der dog.
Consumers today suffer
by fixed wages and output even
more
than
they did by fixed
is
labor
'
upheld
by
of
out
Godchaux
a
business
established
by
Political Changes
people, but were appointed by the
Governors.
Hence, most of the
Senators were either officials of
big corporations or wealthy men.
Court was then
of great lawyers most of
Supreme
whom had
has
just after the Civil War, GODCHAUX
-
It
the
is
America
management an advantage
over labor and explains why I felt
labor unions should
be exempt
250,000
largest producer of sugar cane in North
exclusive of the West Indies;
products.. The
it is also
an >
raw sugars
sugar
The
gave
acres
Inc.,
refined include not only
large amounts of foreign raw
the
the Louisiana
cultivable.
a
The company
daily grinding capacity
located at Reserve and Raceland, La.
refinery at Reserve has
a
capacity of 2,-
pounds of refined sugar per day.
a
serves
reached
VSugar Bowl," Godchaux Sugars,
territory embraced by 17 states of the
total of
a
over
Volume of business for 1949
$46,000,000.- As
a
result of
Company's long continued advertising in
of
housewives have learned
Band"
cane-growing district,
on
their sugar
sacks.
"Look
to
for the Blue
V
from the Anti-Trust law.
This is another advertisement in the series
Today the Senators are elected
workers usually voted with
of
them
directly
think
today
to what their
recommend. Labor
contrary
employers
much
have
unions
while today most
it's smart to vote
than
more
power
management had 50
than ten
years
by Equitable
stales.
economic
development of the South
porations but mostly men in hum¬
ble circumstances.
In those days
wage
more
Corporation featuring outstanding industrial and commercial concerns in the
Southern
popular
their employers;
published for
Securities
vote. The Supreme
Court consists mostly of men who
were never officials of large cor¬
by
Equitable
will
welcome
opportunities to
contribute to
the further
by supplying capital funds to sound enterprises.
>T>
NASHVILLE
NEW
YORK
DALLAS
HARTFORD
KN OX VI
CHATTANOOGA
LLE,
GREENSBORO
BIRM INGHAM
NEW
ORLEANS.
MEMPHIS
Securities
AND
Corporation
JACKSON. MISS.
years ago.
Brownlee O.
Currey, President
Small Businessmen
Those
small
were
days
when
every
businessman had ofe chance
to become a
big businessman. To¬
322 UNION STREET* NASHVILLE 3.
the
territory where Godchaux Sugars are sold, millions
Company's plantations include a total of 34,000
in
are
South and Middle West.
delivered through the port of New Orleans.
owned
acres
mills with
From the Louisiana
produced by the Company and other planters
in Louisiana, but also
previously served large
corporations. There was no income
tax in those days. All these things
13,500
cane
of 4,500 tons,
important refiner and distributor of refined sugar
sugar
two
The sugar
industry.
Fifty years ago the political sit¬
uation was vastly different. Sena¬
tors then were not elected by the
made up
of which
Leon
SUGARS, INC., is today a complete unit in the sugar
prices.
The
Growing
BOWL
SUGAR
TBE
IN
BUSINESS
BIG
TWO WALL STREET, NEW YORK
5.
'
/
10
(946)
COMMERCIAL
THE
CHRONICLE
FINANCIAL
balance of payments to more
and
Illinois Brevities
&
'normal'
at least to
prewar patterns, may involve a
Municipal bond dealers in Illinois and elsewhere throughout the considerable reduction in export
country are giving increasing attention to the highly controversial prices or in the volume of our
Housing Act of 1949 which became law on Julyl5. The interest of agricultural exports as foreign
dealers is quite understandable as the bill is expected to result in production expands and as other
the issuance of about $7 billion off>
exporting countries resume their
local
housing
authority
tax-ex¬
empt bonds during the next six
years.
This figure is approxi¬
mately 30% of the estimated total
of $19.5
the readjustments that are
re¬
quired to put international trade
firm foundation and to make
on a
continuous
unnecessary
billion of State and mu¬
nicipal bonds currently outstand¬
ing. Referring to the nature of the
proposed obligations, the August
grants in aid
bulletin
lion
in
and
$5.7
Bank
the
of
of
Federal
Chicago
Reserve
commented
as
follows:
rially
with
.from
maturities
will
—
most
maturities
"The
running
cess
those
of
with
exceed
tax-exempts,
forthcoming,
or
else
the
yields of these tax-exempted
may
yields
of
ments
is
on
tend
equate
the
held
under
20
that
years
may
terested in the tax-exemption
"'feature. Moreover, these shorter
;
issues
sell
may
considerably
at
under
net
yields
the
even
In the current issue of "Business
bulletin issued each
the
Northern
Trust
Company of Chicago, there is an
analysis of the crisis in our inter¬
national trade.
According to the
article:
"Trade and balance of payments
,'problems between the United
States and important areas of the
world
seem to be approaching a
The difficulty arises out of
crisis.
.the very large excess of
.our
ex-
]; poris over our imports—the fact
that many other countries need or
I wish to buy from us much more
than
ports and
J; by this country since
f
the
war
were intended to fill the gap until
necessary solutions were found to
t
;
'••
the balance of payments problems
-of other countries arising out of
the
markets
costs
I
The
war.
and
and
return
basic
price
of
buyers'
differences
levels
in
between
countries, together with the
dis-
position in this country to put a
our aid, have accelerated
the necessity for finding other
means
of
"In
we
•of
are
prone
the
other
narrowing the
considering
gap.
this
problem,
to think primarily
corrective
countries
measures
or
other
than
on
must
able
or
adopt
difficulties.
affair, and
Trade is
a
two-sided
the corrective
measures now
being suggested may
impact on business in this country. In an effort
to forestall this
impact, we may
do things here that
nullify the
corrective effect of foreign action.
On the other hand, this
country
could, by its own action, facilitate
have
:
;
•
'
an
nar¬
by
continuing
our
aid
to
be
that
may
in this country as a result
exports? Time, in the
form of increased populations and
pile
up
of reduced
solutions
are
in
industries
other
this
country
dependent on foreign markets
for the sale of an important part
are
of their
Certainly
production.
an
enlargement of export opportuni¬
ties, rather than a restriction of
them, is the desired outcome.
immediate
returns
for
our
adverse
and
are
national waste of ef¬
a
get
we
between exports and
imports is now being filled in part
through travel expenditures and
private investments abroad. Travel
of American citizens in foreign
ture of
involved
the
expendi¬
$600 million in 1948.
REAL
many
ESTATE
over
limiting
the
amount
that purpose.
incomes
re¬
covering prewar relationships
to our national income, partly
of
reduced
need
tween
and
exports
our
a
Chronicle)
and
the
solution
restriction of
hand,
(Special
exports on the
our
or
an
the other.
on
lem
We face
Dacey
the prob¬
by
these
&
Street.
of
affected
The
to
Financial
Chronicle)
tr
STAMFORD, CONN.—Henry C.
Olive, Jr. is now with Norman F.
increase in for¬
eign competition in our markets,
one
with
Associates,
Mr.
Olive
Trusteed
322
Funds,
Main
formerly
was
Inc.
/
develop¬
Cruttenden & Co. Adds
ments
or on the country, collec¬
tively, by higher tariffs or con¬
tinuing foreign aid."
(Special
to
The
Financial
CHICAGO,
ILL.
Chronicle)
Vincent
—
J.
Bolger is with Cruttenden & Co.,
209
Benjamin F. Musser With
Bache & Co. in
(Special
to The
CHICAGO,
Musser
Financial
Salle
Street,
of
cago
mem¬
Stock Exchanges.
the
New
York
Chi¬
and
Chronicle)
become
&
South La
bers
Chicago
ILL.—Benjamin
has
with Bache
F.
;
Two With King Merritt
associated
(Special
Co.,
135 South La
Salle Street.
He was formerly
with Union Security Co. and in
the past was with Brailsford & Co.
ST.
to The
Financial
Chronicle)
'
;
CLOUD, Minn.—Madelon L.
Matthews
Kenneth
and
E.
Reb-
stock
are
with King Merritt &
Co., Inc., 1211 First Street, North.
Aubrey G. Lanston Go. Formed in N. Y.
Aubrey G. Lanston announces that he has formed the investment
firm of Aubrey G. Lanston & Co. Inc. to deal
primarily in United
■iSTW
imports.
help fill the gap.
Abroad
for
"Our
developents — such
synthetic fibers and rubber
abroad
could
At
end
as
a
scientific
as
in place of silk and crude
rub¬
v
Private Investments
Increasing
result of
foreign materials
private
the
private
investments
increase
of
1947,
greatly.
total
our
Aubrey G. Lanston
Leonard
M.
Horton
Philip D. Holden
investments
foreign
ber—and partly because of slow
amounted
of 1 production abroad.
Chiefly, however, foreign sell¬
direct investments by American
^recovery
cannot
ers
quality
or
match
goods
our
in
"A partial solution to the
prob¬
of relative prices is the de¬
lem
valuation
that
of
appear
foreign
to
currencies
be overvalued
in
relation to the United States dol¬
lar.
Devaluation of the British
pound, for example, would make
British goods cheaper in terms of
dollars unless prices rose there.
The
American
wool
cloth
manufacturer'of
leather
or
which
to
$16.7
products
affected by
billion,
of
$9.4 billion consisted of-
business
in
foreign
and $5.7 billion
price.
enterprises
consisted of pri¬
vate-holdings of foreign securi¬
ties.
The
folio'
latter so-called
investments
declining
as
of
late
the
since
result
a
'port¬
have
been
1920's
unfavorable
ex¬
perience with such investments
since
then.
vestments
1948
direct
in¬
increasing.
But
are
In
our
direct
new
investments
abroad amounted to $1.3 billion,
important part of which rep¬
an
resented
the
development
V)v
of
might be adversely
cheaper British goods.
foreign oil
could average at least $2 billion
If this
country should increase tariffs on
products, or otherwise limit
imports of them, then the balance
of
payments
problem
acute
as
as
worsened
as
would
ever, and
result
a
of
a
the
disruption caused by devaluation.
Similarly, we impress upon for¬
private
in
year
abroad.-
this
that
;
country
States
the
Mr.
Foreign investment is Z
by
of
The
First
He
has
had
Boston
more
in the security busi¬
having been continuously as¬
and
terprise that would make for ef¬
ficient production.
But are we
ticipation in the development of
Corporation
since
foreign
except
leave of
willing to face, in
ket,
the
ited
an
intensified
open
mar¬
competition
that may result from such meas¬
ures
in foreign countries?
Will
we react
by increasing tariffs or
taking other steps that will 'pro¬
tect'
us
from
such
competition,
unemployment
particularly
if
increase here?
guarantee by
is the lim¬
the
of
exchange
invested
to
1934
Export-
Import Bank of the availability
-
dollars
recoup
abroad.
:
"Forthcoming
conferences
in
Washington, particularly between
British, Canadian and American
representatives, will deal with the
problems arising out of inability
of the sterling area to earn suf¬
the
ficient
reaction
of
Undoubt¬
this
country to
certain
correctivemeasures
is
holding up action, although there
are other deterrents
also.
difficult
questions
problem is the
finding
increase
of
ports
to
our
total
ing and since the;
exports.
war,
Dur¬
however,
Tel. DEarborn 2-5600
tremendously. A part of the
agricultural exports expanded
justment
of
international
exchange
the pound convertible.
arise if the gap is to be narrowed
lation
dollar
ways
reverse
to
exports,
or
of
ours—
imports,
other
excess
exports.
make
Britain's
reduce
paying for her
over
to
means
of
im¬
A part of the
with
for
when
a
The
he
was
First
Boston
March,
1929,
absence
loaned
in
the
to
Treasury to be Technical Assist¬
ant to the Secretary in connection
with the Treasury deficit financ¬
ings of that period. Mr. Lanston
is widely recognized as "an out¬
standing authority of Treasury
security and money markets.
Mr.
Lanston
disclosed
that
firm
in¬
M.
Horton, VicePresident and a
Director, John
D. C. Towne, Jr., Philip D.
Holden,;
dents.
sociated
program
administration
resources, as
years
Leonard
experience
is designed to enlarge our par¬
Truman
firm.
20
clude
ness,
ments. The Point Four
the
new
than
Other officers of the
Director
a
Corporation,
eign countries the necessity of
cutting costs by working harder
and restoring the incentives to
en¬
of
execu-^
formerly
will be President of the
foreign countries in
American invest¬
of
way
Lanston,
tive Vice-President and
by obstacles which have been
placed
Government; state and municipal securities. The company will
offices at 15 Broad Street, New York City, on Tuesday, Sept. 2(L
open
investment
hindered by political instability
or
John D. C. Towne, Jr.
Le Roy M. Piser
It has been
resources.
estimated
re¬
might
our
Financial
revalued, though the
are
could
exchange
209 S.La Salle Street'Chicago 4
Tele. CG 146-7
The
to
here,
imports have been slow in
in
tural exports of this
country have
diminished in volume and in re¬
Members of Chicago Stock Exchange
(Special
COLORADO SPRINGS, COLO.
—Joseph L, Hovland has become
sterling areas, or^ affiliated w. h Waddell &
Reed,
is to come"
Inc.,
1012 .^Baltimore
Avenue,
through expansion of trade and Kansas City, Mo.
investments.
In either event, in¬
dividual
business
enterprises in
this country may be harmed—by With Norman Dacey Assoc.
about half that
being held down by
here,
restrictions
by reducing our exports/ Over a
long period, of years the agricul¬
William A. Fuller & Co.
dollar
whether
spent
country
much
for them. In the postwar period,
useful
"Equally
SECURITIES
With Waddefl & Reed, Inc.
Foreign nationals traveling in this
edly, uncertainty with respect to
in
the)
Similarly, expanded use of for¬
eign vessels and other services
something
should
We have positions
the
net amount may remain small in
relation to the present gap be¬
fort and resources unless
during
international
trade is to be diminished by fur¬
ther restrictions on trade between
"The gap
Because of higher
the excess of our
spending on travel abroad over
foreign spending here should in¬
crease, particularly if foreign cur¬
be¬
whether,
years,
lines
but the immediate
more difficult. Many
problem,
of dollars that could be spent for
solution
few
shifts in dietary habits, may solve
is to
it would give us tangible
decide
next
this
imports and, if that
way
well
having the cost of read¬
justment fall on the individual
rencies
be
solution of these
some of
be
financed in three ways
the; preferred
and
necessary for us to take in
a
can
ex¬
could be accomplished, it would
main
such corrective measures on us or
of the steps that it
may be desir¬
contributing to
our
large scale. One
a
increase
that
only secondarily of the impact of
/
$2.6
a
is
surpluses of agri¬
the
commodities
cultural
world
the
then
those
limit to
\
imports
rowed
we are
willing or able to buy
from them; Large loans and grants
<
by
between
gap
because
V.
,
caused
was
what
exports, which subtract from the
in
U. S. World Trade
by
pe¬
of
share
But
with
done
or
supply of goods in this country
Crisis Approaches
month
same
ago.
The narrowing
in 1948 as compared
gap
"The
and
1
the
How Imports Can Be Increased
be
a
in
traditional
market.
countries
cause
Comment,"
billion
while imports have de¬
clined slightly.
pal issues."
.
$3.2
a
higher grade state and munici¬
Says
the
year ago,
ma¬
attractive to investors in-
prove
In
1949, the ex¬
billion, compared
govern¬
"offer taxes" basis.
an
commonly
turities
to
long-term
1948.
or 16% fall in our exports
$1.6 billion, or 26% rise in
imports.
Thus far in 1949,
exports have been above a
our
bonds
of
1947
our
additional
an
to
reason
in
billion,
market must
It
billion
months
year
the
and
some
be
r
a
of
merchandise
imports was $6.7 bil¬
1946, $10 billion in 1947,
$3
riod
20
our
over
was
with
of
excess
exports
believe
that
or questionable loans
Government.
our
above
—
outstanding
there is
se¬
to 40 years. Since the
one
longer
years
by
first six
"The bonds will be issued
,
large
patterns,
Thursday, September 8, 1949
Leroy
M.
Mr.
Piser,
Horton
cently resigned
in
Vice-Presi¬
recently re¬
Vice-President
as
charge of the Wall Street Di¬
vision
Trust
of
Chemical
the
Company to
present
He
post.
for many years
Bank
assume
&
his
connected
was
with the securities
activities of the bank. Mr. Towne,
a former officer of The
Guaranty
Trust
Company of New York,
recently was in charge of
the Government (securities) De¬
more
the
partment of Blair & Co., Inc. Mr.
company will have a starting cap¬
ital ;of
$1,400,000 and that the
Holden left the commercial bank¬
principal stockholders, other than
himself, will be Archibald R.
Graustein, formerly President of
Bank
the International Paper Company,
and William
Rosenwald, son of
the
was
late
Julius
President
Rosenwald,
and
ing
&
of
the
Chemical
Trust
Company to enter
the naval service during the last
war
and became Commanding
Officer of a destroyer escort unit.
After the
who Chemical
Chairman
of
department
war
as
President in
he returned
to the
assistant
Vice-
an
its Wall Street Divi¬
the board of Sears, Roebuck & Co.
He stated that the
company hopes
to transact its business on a na¬
the company's research into busi¬
requiring the purchase of larger
tionwide basis from its New York
security markets,
amounts
office,
solution may involve an accelera¬
tion
of
abroad.
our
of
stockpiling program,
rubber
and
But this is only a
read¬
and temporary solution.
trade
clusions- of
metals
partial
The
the- conference
and that although it will
specialize in handling U. S. Gov¬
ernment
and
municipal securities
sion.
ness
Mr.
who
Piser,
conditions,
Government
the
was
will
direct
and
chief of the
money
Securities
Division
of the Federal Reserve Board be¬
fore he became
con¬
it will not confine itself exclusive/-
President
may
ly to these fields.'
Corporation.
of
an
The
assistant Vice".First
Boston
;
170
Volume
THE
Number 4836
COMMERCIAL
To Be
By YOUNG
j
t
Assvling durability and desirability of a free society is being chal¬
lenged by advocates of statism, Columbia Uniyersity Law Dean
loss of their individual freedoms.
v
higher institutions. Says
in
history.
our
than
;
who
serf
or
knew
produced
nothing
rights,
privileges and
imm
which
joy
we
more
take
for
the
like
air
hot
were
the status of
..
Smith
:,: JO,
centuries: *
• ;■
There
0-.
by courageous men
women, like the settlers of
these mountains, who were deter¬
rid themselves
of
des-'
potism
and
oppression.
Kings
beheaded or dethroned, but
were
forms of oppression arose to
take their place.
1 -
lution and the rise of the machine
found
oppressed
themselves
men
much
forces
as
as
by
economic
they had been by the
political tyrants two centuries be¬
fore.
struggle during
The
the last
hundred years has been directed
largely
know it
State of the conduct of
economic affairs.
Prevention by
law of abuse -of power does not
destroy individual initiative with¬
operation
our
economic life. vIn
forces
so
as
had been wrested from the politi¬
cal tyrants... That battle has been
largely won, although adjustments
must be made, in the organization
and operation of our economic life
in order to strengthen the free
society
which,
we
benefits
to
in
its
assure
members.
-
live
all
<
and
its
of
■
,
.
,
A' Challenge $o Free Society
If the victories
be lost, the
won
to
are
struggle must
not
is
fascism
be
a
or
•.
communism.
despotism. - We must be alert to
recognize this threat to our way of
life
whenever
and
should
It
be
wherever
,/^v'J:
remembered
that
individual initiative has been the
mainspring in American life and
has
provided for
us
ih this coun¬
try the highest standards of
to- contention that
tive can no
by this new form of
it
combat it at every
appears and to
in
American Life
liv¬
individual initia¬
loqger be relied upon
go on.
large part of the world
is enslaved
Individual—Mainspring
-
get things done is completely
refuted by the almost miraculous
to
performance of the free men and
women
of America in
the last
This and
war.
formance
to
of
our
that
cialized nations
superior per¬
of so-called
so¬
during the period
readjustment following the war
should
make
abandoning
kept
us
us
a way
strong.
hesitate
before
of life that has
1
•
,
Presi¬
dent
Eisenhower,
of
Columbia
University, he pointed this out in
misery and fears. It promises se«*" eloquent words. I shall read to
curity
and happiness to those you what he said.
whom it would enslave, but iri the
"More than ever before, in our
stage.
Statism, whatever the
form, is an insidious social dis¬
ease because it thrives on human
In
a
recent
address
by
first the freedom,
then the happiness and finally the
country, this is the age of the in¬
security of its victims.
cumulated
end
-
-
destroys
meaning
uals
;
who
clever
that-
a
-
but
•
there
Unfortunately,
are
misguided
have
been
well
individ¬
fooled
by
into believing
collectivist society is the
arguments
cyily means of-solving present-day
nroblems; that due to the special¬
dividual.
own
political and
structures, with a view
.
Public! Must Be Made tq Feel"
Danger
To
combat
successfully this
enemy of human liberty and hu¬
man dignity, it is not enough that
the more fortunate members of our
of
centu¬
Aug. 25, 1949; '
-
None
re-i
unsell themselves.
salesmen
many
once
more
bought* good
obtained higher
values,
have substantial profits. The rest have dope the
again—they have missed the boat.
yields, and now
same
old thing over
J
,
'
;
.Bill Healey of Comstock & Co., Chicago, who writes" us "some
interesting views every once in a while, has done it again* Here is
what he has to say;
"
J
"Horses, Jackasses, and Mules have apparently been m supply
in the investors' field during the past two months,, or since the Dowhit their lows on June 13.
V
; : ?
"Some of the; horses were smart and, as good thorbughbred&
Jones averages
quick to realize the opportunities and get into the load.
were
The
at the
Jackasses couldn't see the opportunities and either sold out
lows,
because of their pessimism, gold short. The Mules were too
stubborn to recognize anything and continued to. stand on the side-?
lines, because they believed if they went forward, they would be
hurt-, and if they went backward, disaster would overtake them.
,
or
"I've
*
is
ours
basis.
;
never
believed, nor will I ever believe, that this nation q|
grade when even in a so-called magnified re¬
have a $256 billion national income on an annual
.
the down
on
cession
we
still
:
-
have problems which must be solved, such as the steel,
undergoing with labor, but
a casual
study of this country's history will easily convince even
the headline reader that we have always-had problems an<|, no doubt,
will continue to have more of them.!
; ,
V;
"However, at no time in the past was this nation, or its average
citizen, in the sound financial position it is today. Billions in savings,
i
"Sure,
we
automobile and coal industries are now
billions in*U. S. Government bonds* and billions in life insurance, im
addition to billions in ownership of homes,-farms, bonds, and stock?
of various
.
TOOf
threat and. appreciate the inevit-r
able consequences if some form of
statism is fastened upon them, v
it is
,
fess
a
tions qlr to decry
Our people must
our
<1
*
*
*'
not enough merely to pro-belief in American institu¬
*1
■
4
*
•
alien ideologies.
understand why
free institutions are worth pre-,
serving
and
^ideologies
are
To
snare...
why
these alien
a delusion and
a
this our
accomplish
people must
be
acquainted with
the basic facts- concerning the
The
his¬
that
they
may
This
will
few
a
advertising positions remain in the coming
SPECIAL
NSTA
ISSUE
CONVENTION
"The
of
evaluate
them.' accurately.
warning is being shouted, because only
choice
tory, the structure, the operation
and the consequences of both,, in
order
Chronicle."
nol
only immunize them against false
propaganda, but will also give
them a truer appreciation of the
meaning
are
closing
.Your firm's
soon.
playing to n large gallery "of
and greater
free institutions
our
of
performance
And
this task
this audience
doesn't
cost
Let's
much either.
loojk at the rates for the Official Organ (Convention
the teachers in the grade schools
high schools must take
an important part, because it. is in,
these schools that most of our
people obtain their formal educa¬
tion. * - - - ■■ y;
;v\~
You who are to become teachers
i
successful dealers, traders, bankers and business men.
liberty
of
confidence in
the
Forms
advertisement will be
Issue) of the NSTA.
and in the
•
j.
■ -■
■
'
.
' *'
;
.
□
2% inches
x
2
columns—$48. '
□
3V2 inches
x
2
columnsr^-$73.50.
:
-
•
in
these
schools not
only bear °
•;□
wealth
and
powrer
tively
mains today, The free individual have
the
faUen
respons*'bilities
upon
that
the*mNever
•
V
x
3
columnsr—$78.75.
□ 43/4 inches
x
3
columns—$148.50.
□
9% inches
x
1 column —$100.50.
□
Quarter Page (5J/4 inches x 3 columns)—$165.
□
Half Page (6 7/16 inches x 5 columns)—$300.
□ Full
copy you want
ment. Mail
,
.
W
*
:
'
-
-:
^
,
-
'
clip advertisement
placed in the- issue to. this announce-
today to
^
*
.
,
Page (13 inches x 5 columns)—$525.
Chech your choice above und then
-
shall he used
evil ^whether we shall
maintain this position of leader-,
ship; will depend upon the capac¬
ity; of our people to meke wise
decisions and to discharge effec¬
for good or
43/4 inches X 2 columns—$99. "
2V2 inches
□
.
have
family and his- country greater state
material comfort, ease and happi¬ VI We stand on the threshold of a
ness; greater spiritual satisfaction: most critical period
in our na¬
.eoublie's
existence.
timinished with* each year of ourj
wherein
effect
time after time these periods pass away.
Markets recover.
Markets have always recovered. Pessimism has changed to optimr
ism time and again. A few who have recently bucked the trend have
individual freedom and
wide avenues * of
expression y$o initiative and those who would
that he may win for himself, his subordinate the individual to the
-
Appalachian State
N. C.,
cumulative
a
Yet
preserve
•
1* bis participation, in government,
present social there was ground to believe .that
and
economic * organization has an allrpowerful state had to rule
each subject's life from the cradle!
i * An address by Dean Smith de*
fo the grave.; That ground1 h§s
College, Boone,
suggestion is gregt—falling markets day after day, slow business,
complaining customers, gloom peddlers in every office, all add up
heavy responsibility, but you will
the opportunity to strike, s
ries, armed with all the instru¬ .telling blow in the present strug-ments of modern science, he -is
gle between
those r who would
stiil assured personal freedom and
knowledge
It is true that our
Teachers
of
Endowed with the ac¬
the necessaries of life.
livered at the
Too often, when declining markets come along, many securities
salesmen fall into a rut of their own pessimism. It is so easy to
follow the lines of least resistance-—to follow the crowd. The power*
,
isation in labor and the resulting
ipter-dependence of groups, the and contentment.
tional history. America finds her-,
individual is no longer capable- of
| "When even the rudiments; of self in command of enormous
taking care of himself;, that only knowledge Were possessed by only wealth and power.
The free na¬
the1 State can protect him .from a,
tions of the world are looking tC
privileged few, when
exploitation and provide him with appalling ignorance handicapped her for leadership.
Whether this
:
J
corporations make this very great majority of the people
capitalists in the truest sense of the word. r
K
J
1
;
:"So why worry about the Jackasses and the Mules when there
free society who, because of supe¬ are so
many Thoroughbreds available?"
.
'
'
rior Intelligence, education! or po- ■-&. We
agree with Mr. Healey on everything except his opinion
s'tionj are aware of the danger. that this nation is in the soundest position in it? history—but that
The' great mass of people must is open to argument and besides if he believes it, and it helps him
dnderstand the nature of the to sell
securities, then most heartily we say, AMEN TO THAT,
In
^
.
,
should
CV'KC
not
discovering their defects and to
ism.
may
be j ustificati on for
intervention, but interven¬
erful stater I'
agree,
devising ways and means of re¬
moving them. The breakdowns in
our own system weakens our re¬
sistance to paternalistic measures
hi government, which, if carried
too.far, eventually leads to stat¬
failed
ing to be found in the world. The
Today the belief in the durability
or desirability of a free society is
being challenged by the advocates
of some form of statism, whether
Already
;
to
no
our
economic
be,v limited to such
prevent areas and watched with a jealous
them from destroying the rights,
eye lest we find ourselves comprivileges and immunities that
pletey dominated by an all-pow¬
economic
is
this I
With
cure.
attitudes
there "
State
see
enough. A. uni¬
versity also should examine with
the same 'critical and
objective
where
has
can
President Conant, of Harvard
University, stated recently that a
university should study Commun¬
ism for the same reasons, it studies
cancer; that is, to ascertain its
causes, its effects, its prevention
in
areas
initiative
individual
or
By JOHN BUTTON
.
to
harmless on the surface,
their bite may innoculate us with
a death dealing germ, '.y,
and 1
instruments of
the
of
successful,
are
we
appear
ownership
individual initiative
eliminate
we
Securities Salesman's Comer
ally
economy,
the mosquito and the fly, which
activity,
of
an
hope for us without a collectivist
society are unconsciously the car¬
riers of the germ of statism. Like
production and service would
controllingF(these tion
toward
be¬
prevention
areas
rescued
disaster
Thp defeatists who
that
State
Whether
frighten-,
we
cannot meet?"
but
the
whereas
we
its
by law of
abuses of power which threaten
the; welfare of the people as a
whole and complete domination
by
that
and
difference
was
time,
communist
to
vast
a
industrial
slave of the State
a
in^;, legitimate
—Following- the industrial "revo¬
age,
is
the
tween
and
new
individual
would, be gone.
B.
struggle
mined * to
con¬
This inevitably
the
and human freedom as we
Young
the result
/
reduce
would
easily
They
won.
are
of
economic affairs.
we
breathe,
unions which, if not
this evil does not require that the
State take over and conduct our
or
less
own¬
mate¬
trolled by law, could destroy the
freedom and security of the indi¬
vidual.
But the elimination of
which
granted
of
of labor
en¬
free¬
doms,
monopolies,
raw
power
same
told, is the only means to
a world of plenty.
"If in the tragic waste of war,
we could so magnificently prove
the
strength
of
our
system,
founded on human freedom, what
challenge, is. there in- the future
more
rials and the instruments of pro¬
duction, and to the organization
today.
These
we
little
concentration of
ership and control of
nities
u
powerful
to the
aue
the
of
man was
slave
a
the
are now
The free society in which we live is comparatively new in the
long history of mankind. From the times of the Caesars and the
feudal lords and princes of the middle ages, until the revolts in
England, in France and in America, the ordinary
whose
whose
well as instructors
threshold of critical period
on
under
break
We
horizons,
from
Says responsibility for this action
stand
we
whether
greater need for
,
ing; at the
lies with teachers in grade and high schools as
in
been
of
men
11
strain,'will depend largely upon
the
ability of our educational
institutions to equip our people to
recognize the truth and to extendi
the boundaries of freedom to new
nies
stronger educational efforts to impress masses of danger of
urges
has there
(947)
intelligence, of wisdom,
"In World War II, we Amer- and of courage. Never has it beep
ipans welded Into a cooperative, so Important that public opinion
qnit the e n t e Y p r i s e, initiative, should
be
shaped by straight
spirit and will of many million thinking
and
sound judgment,
men and women; we crossed
the oceans, joined with oqr allies,
crushed
two
regimented tyranr
SMITH*
Dean, School of Law, Columbia University
'
<.
Conquered
B.
CHRONICLE
free
■
•
FINANCIAL
has been justified a? his own mas¬
ter; the state as his servant.
Statism—A Disease
■
&
'
-
t»-
.
:
THE/COMMERCIAL ANQ IWANCI^t CHRONICLE
25 PARR PLACEt *
*
;
:
NEW YORK 8, N. Y.
4
h
12
THE
(948)
COMMERCIAL
&
FINANCIAL
CHRONICLE
ahead
of
strikes,
Details
of
prospectus
request
SECURITIES
&
CORPORATION
RESEARCH
120 BROADWAY, NEW YORK 5, N. Y.
ness
Mr.
Gould Again
Mr.
Gould
in
stated
Mr.
£7%e
Gould
comments
the
fact
that during the past eight
in size at the-rate of nearly
$150 million a year. He then says, "That is a lot of stock to be taken
out of the market and as
fhis form of investment develops, it will
tend to make the market thinner than it is npw."
For one thing,
"Sewye
on
it
seems to this
writer, it should be borne in mind that not all of
that money went into stocks.
Furthermore, $150 million represents
less than 1/15 of 1% of the total value of all stocks and bonds listed
on
the New York Stock Exchange alone.
I regard the
PUTNAM
buying of
a
supporting influence in the market rather than
floating supply. Also many buyers of mutual funds
would be putting away stocks and bonds
directly instead of in¬
directly were mutual funds non-existent.
mutual
FUND
a
funds
drain
on
as
the
In
conclusion, Mr. Gould states that instead of making business
for the Stock Exchange and the other
exchanges, the growth in
mutual funds may be diverting business away from these market
places. Frankly, this statement is contrary to the facts, it seems to
me, since every $1,000 invested by a mutual fund provides a com¬
Trospectui upon request
mission for
Putnam Fund Distributors, Inc.
some
broker
as
well
the dealer who found the mutual
as
fund buyer.
50 State Street, Boston
r
Strength Replaces Weakness
i
"The
this
sharp decline in industrial production
year—with
no
consequential
ments—is very significant.
It is
decline
a
in
that
has
personal
occurred
income
pay¬
distinguishing feature of this
re¬
adjustment, in comparison with previous business readjustments.
"This maintenance of public
spending power is making it pos¬
sible
send
today
and other
descriptive material about
Fundamental
steepest
%
A
r
%
I
Registered
Investment
'&
1
Company J
■-
consumer
Available
,
from
authorized
any
from
or,
¥
■
-
.
-,',n
ness
Huch W. Long
48
CompanTj.
and
^incorporated
.
Wall
,;
'>
r
Street, New York 5
>
CHICAGO
LOS ANGELES
and
without
efforts
of
in
the
weaker
industries
to
put
would
have
become
more
seri¬
incomes would also have been felt by many
to operate 5near
capacity. But with
incomes maintained, customers are 'there' to
buy, when
now
are
continue
reduced to
minimum, because he still has good busi¬
a
though at a somewhat lower level than in recent past
By the same token, people still have current savings to invest.
"None of this is final evidence that the business decline is
com¬
pleted.^ The increased buying of
textiles and other goods recently,
major contraction in sales, may provide only temporary
stabilization for general business.
Several of the industries that
usually dominate the direction in which the
economy moves, have
following
a
likelihood
spiral
into
be
txmfA
eystone
i:
!
THE
ustodian
upon request
when
this
economy
Sinn
arises
from
inflationary
1950 danger
Feiners'
—
\ v
,
,
else
u/-Li
everyone
.
"What the economy needs now is not
higher steel and auto wages
lower steel and auto prices.
Such deflation is long overdue,
which by no means guarantees that it is about
to begin.
On the
contrary, corrective deflation—like Mr. Hoover's
prosperity—may be
doomed to remain just around the corner for a
but
long, long time.
"Many people
taking
are
bullish
view
of the stock market
because they have concluded that the
economy has finished correct¬
a
ing its postwar inflationary excesses, and that
sound prosperity is
(Lower steel and auto prices would
certainly bring sound
prosperity closer.) By the same token, those taking a bearish view
of stocks base their judgment on their
conviction that sound pros¬
perity is not at hand. We confess that our view is
at hand.
highly individual¬
istic—we agree with the bears that sound
prosperity is not at hand;
and, therefore, we agree with the bulls that stock prices should rise.
On the facts about the 1949-50
economy, we vote with the bears and
against the bulls. But we disagree with both the bulls and the bears
as
to the impact the
economy is about to have upon the stock
market. Specifically, we expect this
autumn's labor troubles to hurt
the economy and to help stock
prices (and,
so,
indeed, all prices).
the market
on
arguments)
vote
we
with
the
and against the bears
bulls
And
(disagreeing with their
(agreeing with their arguments).
Ours is a highly individualistic
view, we repeat, but that's what
makes horse races."—From Arthur
Wiesenberger's "Investment Com¬
News."
pany
•'
'r-
'
'•
''
'
'
•'
The
/'
'
-4
1
\
So..
•
set
(Continued from
'
pattern of fighting the legiti¬
mate demands of organized labor.
And in the city of
Washington,
industry has maintained a con¬
a
stant pattern of
resisting all Fair
Deal legislation to improve our
economy
and
strengthen
our
democratic rights.
'
This
and
industrial
obvious.
pattern is clear
The
corporation
lobbies have fought repeal of the
vicious
.
They
Taft-Hartley .'Law,.
The
the
our
unemployment
laws
to
meet
the
times.
Republicans and south¬
Dixiecrats
in
the
81st
Their
will
record
be
of
verdict
the
enactment
Diversified Investment Company
cope
with
we
by
misguided
of
will
press
laws
necessary
economic
our
can
will
the
fear
conquer
skills, the
to
do
power to lift
it.
And
and
resources
our
have
we
the
and
standards of liv¬
ing far above the levels of today,
We
will
can
move
forward—and
forward.
move
That
we
is
the
pledge which American workers
make
this Labor Day of 1949.
on
With Taussig, Day Co.
(Special
ST.
to The
Financial
Chronicle)
LOUIS,
hanich
Mo.—Charles Dojoined the staff of
has
Taussig,
Day & Co., Inc., 316
North Eighth Street, members of
the St. Louis Stock Exchange. He
was
previously with King Merritt
&
Co.
With Crouse & Company
(Special
to The
Financial Chronicle)
to
problems,
social welfare needs, our de¬
sire for stronger civil rights.
American labor and the Ameri¬
people do not intend to
move
(Series K1-K2)
Crouse
&
Company, Penobscot
Building, members of the Detroit
Stock
Exchange. Mr. Savage was
with Watling, Lerchen
formerly
&
Co.
O'.
.
Slayton & Co. Adds
(Special
ST.
to The
Financial
LOUIS, Mo.
Burgess
has
been
—
Chronicle)
Herbert I.
added
the
to
staff of Slayton & Company,
408 Olive Street.
Inc.,
EATON & HOWARD
I COMMON STOCKS
BALANCED FUND
WELLINGTON
(Series S1-S2-S3-S4)
The Trustees
24,
record at the close of business
September 15, 1949.
24 Federal Street, Boston
79th Consecutive
.
t"
Keystone Company
of Boston
l
Quarterly Dividend
-
Congress Street
prospectus
your
*•»
»
may
This dividend
be obtained from
local investment dealer,
'
'
'
•
■>
PARKER
200 BERKELEY
able
per
share
; STOCK FUND
Sept.
30,
1949,
to
i
The Trustees have declared a
dividend of ten cents
($.10)
stock¬
a
holders of record,
Sept. 15, 1949.
CORPORATION
ST., BOSTON 16, MASS.
of 20c
EATON & HOWARD
from ordinary net income is
pay¬
or
Boston S, Jf.L:;ac!xuscttJ
THE
:*
a
payable September
1949, to shareholders of
share,
a
local investment dealer or
50
have declared
dividend of twenty cents ($.20)
«JMUND
Prospectus from
share,
payable
September
record at the close of business
WALTER
y
Philadelphia
.t
,,
L.
>■
DETROIT, Mich. —Robert D.
Savage is now associated with
for
our
can
we
the
obstruc¬
remembered
on
.V'-'X
r:'v
Con¬
policies of these reactionary Re¬
publicans and similarly reaction¬
ary Dixiecrats.
r '
Los Angeles
tions,
any
of
■///'
page 6)
PREFERRED STOCKS
Tke
'
poverty and insecurity. We have
have
banded
together
strengthening of our
shabby
social
security
system.
They have firmly resisted the im¬
their
GScries B1-B2-B5-B4)
your
'
backwards. With the help of our
democratic
government
institu¬
corporations have unitedly fought
an improved minimum
wage law.
the American people in the elec¬
tions of 1950. The voters will cast
BONDS
>
'
Challenge to Labor
•.,
Meanwhile,
IN
!■
economy
spin the
else is worrying, and to worry when
everyone
tionism
INVESTMENT FUNDS
A
thus—the
gress has listened to the corpora¬
tion lobbies rather than to the
Certificates of Participation in
investing their capital
ever
Unfortunately, the coalition of
Lord, Abbett & Co.
Ll '
will
the
is gambling.
people.
Chicago
the
labor
people trying to make
long-term problems create their opportunities.
Money is made by the few with the flair and the fortitude to
gamble
northern
LORD-ABBETT
J
For
out of it: its
money
ern
—
facing
auto
disruptive, but for the stock market it promises to
'Twas
compensation
Shares, Inc.
Prospectus
New York
danger
and
whirl.
battle cry, 'Eng¬
land's crisis is Ireland's opportunity,' has
always applied to the duel
its wits, between the
economy and the
needs of
INVESTMENT COMPANIES
Funds
steel
fourth
be
dynamic.
provement
American Business
&
that
its
threatens to
against
WA
disturbing
its
consumer
that
the
most
,
business
even
years.
";
!'
rapidly
they are convinced that quality and price make goods attractive.
This has meant that the merchant must reorder
goods once his in¬
ventories
;,L investment dealer
reflects the
record,
on
Lower
industries
''
.
inventories
"Had the cut-back in production been
accompanied by an im¬
portant reduction in personal incomes, the readjustment would have
gained 'snowball' momentum. The falling off of sales that has been
ous.
■
reduce
financial house in order.
witnessed
Investors, Inc.
^
to
All along the line from manufacturers to
wholesalers through retailers, the stocks of goods on hand are
being
'tightened up.' The recent decline in bank loans to business, one of
the
;
businessmen
causing serious trouble.
for the latest
prospectus
for
Wiesenberger's View
"The
of
mutual funds have been growing
years
Long's "New York Letter."
"Journal-American."
column, "The object [of mutual
funds] is to give the investor diversification, plus—in theory, any¬
way—professional management of the investor's savings."
As a
matter of fact, each of the
larger mutual funds spends hundreds of
thousands of dollars annually on its research and investment man¬
agement activities. If that doesn't provide professional management,
busi¬
readjustment
depression is reduced if.
will degenerate into a prolonged and severe
not almost eliminated."—From Hugh W.
recent
a
this writer doesn't know what will.
£
in evidence.
now
which many industries were faced. To this
extent, strength in
is replacing weakness. The risk that the business
By HENRY HUNT
cial Editor of the New York
NATIONAL
all or most of their own
readjustments.
Serious
widespread fourth-round wage increases would likely add
"Nevertheless, the smaller decline in personal incomes than in
production is permitting rapid correction of the worst problems with
Once again the author of this column rises to defend mutual
funds against recent comments of Leslie
Gould, well-known Finan¬
and
program
upon
them
or
to the business deflation
Mutual Funds
INVESTMENT PROGRAM
An Open
Inves^meifTAVcount
Thursday, September 8, 1949
MORGAN
President
!
September 15..
f24 Federal Street, Boston
Volume
170
Number 4836
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(949)
13
covered
Holds
by U. S. European Re¬
Program grants, plus
small drawings on the Interna¬
tional Monetary
Fund and the
sterling area gold and dollar pool.
Sterling Devaluation Alone
covery
Will Not Solve British Crisis
Strengthening of External
Capital Position
National City Bank of New York, in
September "Monthly Bank
Letter" points out devaluation, to be effective, must be accompanied
by cost cuts, increased efficiency, and expansion of production.
v
Analyzing the sterling-dollar problem in the September
^
its
issue
emerging from the
tangle of. exchange
has been
for
1949,
ices
reduced
her
overall
and
increased
production
Government's
past
two
years
in
huge sterling liabilities
incurred during and immediately
Britain's
Economic
after the war, and a building up
of new external capital assets.
issued
last
March, indicates that in 1948 she
current
As
ac¬
deficit
deficit
tourist
and
The balancing of payments be¬
the
United
States
and
tween
Great
the
Britain
most
i
has
been
one
intractable
of
million during the second half of
1948.
postwar
problems, and it is highly
ques¬
small surplus of £30
was a
This
tionable that this month's discus¬
the
sions
.'</
V
marked
improvement
in
was
will
provide
quick and
easy answer.
The problem in¬
volves achieving equilibrium be¬
tween
the
whole
a
of
the
"dollar
overall
balance
of
payments
the
Fall
Stafford
of
As
in
two years
his
area" and the whole of the "ster¬
July
ling
Commons, Britain's production is
area",*
.
Britain
of
which
is the central
Great
banker.
It
includes adjustment of a compli¬
cated
industrial
economy
like
Britain's to changing world mar¬
kets in the fact of social and po¬
litical pressures at home. Involved
also is the problem of the restora¬
tion of internationl currency con¬
vertibility; for
ish
unable to
are
long
as
use
the Brit¬
as
their earnings
derived from trade with "soft
rency"
with
the
to settle their deficit
areas
the
cur¬
dollar
area
countries,
shortage" is likely to
"dollar
-It
"agreed"
was
^
at
the
three-
talks in London last July,
according to the official commu¬
nique, to explore remedies "other
than
financial
that
assistance
provided
States
this
and
by
as
United
Just
not
was
such
the
Canada."
means
what
elaborated
beyond the statement that
suggestion : was made that
sterling be devalued." To Ameri¬
upon
"no
this would seem to imply
recognition by the British of the
need for becoming adjusted to a
more
competitive
world,
with
greater stress upon measures and
policies
calculated
to
increase
efficiency, cut costs, and reduce
dependence upon foreign aid. ;
cans
By
British
contrast,
tends
in
speech
the
House
record level in the
a
of
whole of
lion.
her
history. " Overall
industrial
output in the last few months was
at least 30% above 1938,
tal
view
to
the
thinking
crisis
more
as
increase
.
"Achilles
Heel"—The
food and
Dollar
Deficit
But
the
shown
as
overall
balance
in
School
figures
on
of payments
"Achilles heel"
deficit with dollar
Nor is this the whole
the
countries.
story.
For
lem is
besides
responsibilities for
her
deficit with the dollar area,
Britain had (1) her
responsibility
for
the
dollar
deficit
of
the
rest
of the
sterling area, and (2) the
obligation to settle in gold or dol¬
lars
part of her balance of pay¬
ments deficits with third coun¬
Commonwealth
for
the
in
1949
as
Economic
"dollar shortage"
than
a
ster¬
ling problem, and appears to be
veering toward such proposals as
American support of prices, of
British
position for the long run. It is
only fair to point out, however,
that there
ital goods, and partly because the
inflationary expansion of their
purchasing power has encouraged
imports and discouraged exports.
is
As
another side
to
the
Federation
the
of
balanced
which
Britain
counts
last year was
* debts
what
British call "unrequited
were
the
exports":
fpr whichv no im¬
received in \ return.
These releases of blocked sterling
continuing, and--are causing
*
Table 2 shows the net gold and some further expressions of mis¬
releases recently
dollar deficit of the entire sterling giving. Of
granted India, the London "Econ¬
area, together with figures indi¬
omist" observed that they were
cating- how - it
was
financed.
are
Through 1948 this deficit was be¬ "inspired mainrly 'by a desire to do
ing successfully reduced. By the -nothing which might disturb em¬
end
of
the year
it had been ployment in the export industries
brought down to where it was
(Continued on page ,28)
TABLE 1
Britain's Balance of Payments
"Point 4" program
American
of expanding
investments
in
unde¬
veloped areas abroad, simplication
and reduction of American tariffs,
and even from some quarters the
suggestion of an all-round in¬
crease
in the price of gold in
order
add
to
to
the
dollar
1947
Dollar
area
trade
and
service
transactions
All
+
area
Western
Europe
other
—
areas
convertible. At the present time
sterling area consists of the British
countries,
Canada
ex¬
cepted, together with Eire, Iraq, Iceland,
and Burma. With the exception of South
Africa, which is responsible for its own
gold and dollar expenditure, these coun¬
the
Commonwealth
tries
55
-i
25
—.
..
5
countries
are
also
members
of
the
2 v
Origin and Settlement of the Sterling Area's
VGold and Dollar Deficit
they have to settle in dollars: the United
States, Cuba, Mexico, Colombia, Ecuador,
Bolivia, Venezuela, the Caribbean and
Central
American
Republics, and
the
Philippines.
Canada,
whiletechnically
not
a
"dollar account" country, is usu¬
ally considered as in the dollar area.
years.
ous
Royal Bank of Canada
Appoints C. B. Clark
to Novem¬
ber
it
took
a
two-thirds
majority
of
the
to
voters
Harold R.
longer period.
a
Since the first of the year, 107
School Districts have marketed
Deficit
of
dollar
rest
of
area
>1949
1948
1948
Total gold and dollar deficit
U.
S.
and
varied.
experience
in
the
of
international
banking
and, during the past three years,
has travelled widely on special
assignment for the bank through
all parts of the United States,
*an4
to
Britain, Europe, Africa; thq
Antipodes and China. Mr. Lawson
field
is
widely-known in banking cir¬
cles
in
the
United
States ^
a
and
member
of the Association of Reserve
City
1931 and active in
affairs of the Bankers' Asso-t
ciation for Foreign Trade.
j
'
)
The standard
safeguards built into the Bond
Proceedings now for the protec¬
tion of the investors in the bonds
include:
(1)
special tax
for the sole purpose of the
pay¬
ment of the bonds; (2) voting the
tax for one to five years beyond
the last maturity of the bond Is¬
sue; (3) providing for
reserve
equal to about one year's principal
and interest requirements; (4) al¬
lowing sufficient leeway between
tax
voting
collections
as
a
j
they
now are,
witfc
Walter J. ScoH
Cliarles E.
.
Bailey Co.
(Special to The -Financial Chronicle)
DETROIT, MICH.
Walter ^
Scott has become associated with;
Charles E. Bailey & pv Peh-j
—
obscot
Building, members of the
Stock .Exchange.
Mr,!
Scott was formerly a partner in!
Davis, Hunter, Scott, & Co. and!
Detroit
and the amount necessary to serv¬
prior thereto
ice the joonds so that there would
still be enough tax returns even
partner-in
Chapin & Co.
in a period of poor business; (5)
keeping the Bond Issue down to
an amount within the
capacity of
the School District to pay even in
poor times.
■■■■■'
.
That
bonds
are
in turn have found
12
Dec.
125
26
9
37
uals and
167
86
35
42
dealers
July- Jan.June
160
.
7
1,024
423
•
169v
239
•
was
a
J. A. Warner Co. Adds.
|;j
Bender, Ward & Lasker j
Co., Inc*j
York City,!
announce
that Edward Bender;
George Ward and Gerson Laskeir!
J.
120
Arthur
Warner
Broadway,
&
New
Morris Cohon & Co.
]|
ket
ready mar¬
Allan Blair & Co.
|j
.
k)l
(Special to The Financial Chronicle)
V
CHICAGO,
Saunders
has
ILL.
—
become
Ajtj
John
associated,
with Allan Blair & Co., 39
Soutfij
banks,
La Salle Street. Mr. Saunders was;
funds, insurance companies,
formerly with Reynolds & Co. and!
Blair & Co., Inc.
■ *
.
the
for
trust
a
li
John M. Saunders Joins
bonds
among
organizations, individ¬
During 1949 to
date approximately 62 investment
others.
have
submitted
bids
at
for Michigan School
District bonds. One large issue in
its entirety was resold to a life
sale
With Berwyn T.
Moore & Co.
r>
|$
(Special to The Financial Chronicle)
LOUISVILLE, KY.—William Ail
insurance company of national im¬
on—
707
Deane has become affiliated
withj
The interest rates paid
T. Moore & Co.,
Marion E. Taylor Building.
Inc*!
portance.
74
105
loan
13
14
by
the
loans
80
School District for their
have ranged from
1% to
grants-^—,^-^^,.---..--.--gold and dollar holdings
32
~~8
4%, depending upon various fac¬
169
"60
International Monetary Fund__
6
147
166
tors such as location of the
School
Berwyn
fill
if?
With M. H. Bishop &
Col
(Special to The Financial Chronicle)
Decrease in
of the sterling area___^
Total settlement of deficit———;
the amount of
$2,000,000 have been pur¬
chased direct from the municipal¬
ity by local banks the balance of
around $19,000,000 sold to invest¬
ment
dealers in Detroit, Grand
Rapids, Toledo, Cincinnati, Chi¬
cago and elsewhere. These dealers
311
South African gold loan____
,
su¬
the
fraternal
Canadian loan
E. R. P.
been
has
Bankers since
public
Drawings
who
Bond
655
——
Settlement of the Deficit:
Lawson
Districts
mos.
with
area
Net gold and dollar payments to non¬
dollar countries
'I.-
L.
pervisor of the department sinCe
1926.
Mr. Clark has had a wide
Europe. He has been
202
area
sterling
ny
Canada is announced. He succeeds
J.
issued could be improved, still
with the safeguards most School
are
mos.
.
U. K. deficit with dollar
Chapel
and
a
years
over
i *
Appointment of C. B. Clark |s
supervisor of banking arrange¬
ments for the
Royal Bank df
five-year period only.
was
altogether too
short a period to pay for new
school building on account of high
Five
12
Origin of the Deficit:
London
gold and dollar pool.
The British regard as the dollar area
the "dollar account" countries with which
20
Previ¬
about
-120
—630
table
school constructions.
new
ceeding
about 25 issues in
All
is
freely
authorize
ex¬
Michigan School District
being accepted and
have become associated with th#
—160 sought after by investors through¬
out the United States is shown by firm in its sales department,
jiij
Mr. Lasker >was formerly ..Ei&
the fact that of the approximately
N.
J.
manager
107 issues sold so far this year, glewood,
f<jr<
June
1947
within
many
not
Jan.-
;
mos.
(In Millions of £)
is an association of
which, generally speak¬
ing, the pound sterling arising from cur¬
rent
»7"
—655
area
Sterling
earn¬
analysis of the British
problem it is important to recog¬
nize the very substantial recov¬
ery which Britain achieved dur¬
ing 1948.
Table 1, based on the
electors
for
*
any
sterling
'
1949
Extent of British Recovery
1 The
i'.' 5-V* ^
>,•
l
(In Millions of £)
primarily South Africa.
countries
V
(Current Account Only),
Deficits and Surpluses, by Areas
ings of gold-producing countries,
In
•
purchase the
bonds, it is expected that
more School Districts will
the
interest rates.
that is, exports
ports
of investors to
ac¬
in payment
wartime
of
her
many
tax-free
are incorporating in the
Proceedings, their bonds are
British,' Industries^ has indicated,
finding a ready market at attrac¬
"a large part" of the exports with
tive
matter.
are running
dollar deficits,
partly - because of their heavy
requirements for American cap¬
12
ness
by a
majority of
vestment
tries
primary commodi¬
ties
through
stockpiling
pur¬
chases or participation in interna¬
tional "stabilization" agreements,
implementation of the President's
issued
Britain has been paying
bonds in the gross amount exceed¬
debt, adding to overseas in¬
ing $21 000,000. While the law un¬
and
improving
her der which School District bonds
off
as Belgium and Switz¬
Other sterling area coun¬
area
be
an
largely based."
in
tion declining, with the favorable
interest rates and with the eager¬
bonds
now
authorize
-
a
may
Thus
tries, such
erland.
school
capi¬ bonds
mainly then for
supply upon which our ultimate
hope of solving the dollar prob¬
continuing
area
that
so
"indis¬ construction costs which in most
pensable element in the program cases entailed an excessive tax
for
developing new sources of rate. The tax can now be
spread
Survey
1)
Britain's
(No.
conceal
the
—
law
conditions
Districts
throughout the
State, with the cost of construc¬
the
external
material production,
described
was
table
raw
in
authorized and sold bonds
The electors of the state at the 1948
overcrowded
representing
investments
The
in
school districts throughout the state have
for school building purposes.
changed
1947 and
assets,
* J
year.
election
This is shown in table 3.
The
own
persist.
power
at
6
during current
Since the change in the law last November allowing the issuance
of school building bonds for a longer than five-year period, many
has
area
1948, Britain
paid off some £350 million of
sterling
indebtedness,
reducing
the total to £3,362 million, while
at the same time increasing ex¬
ternal capital assets by £344 mil¬
Sir
stressed
Cripps
1947.
dollar
monwealth countries. Thus in the
accomplished by a great ex¬
pansion of production and exports
since
the
;
Nov ember
accompanied by the accu¬
mulation of important surpluses
in other areas.
These surpluses,
however, consist largely of ex¬
ports paid
for by
releases of
blocked sterling and exports rep¬
resenting British capital invest¬
ments overseas, chiefly in Com¬
£500 million compared with 1947.
Thefe
with
]
of 107 issues of Michigan school bonds:!
Britain's
1,
been
(trade,
shipping
interest, as distinct
following is taken from the
from capital movements) by about
Monthly Bank Letter
The
Table
in
seen
count
efficiency.
five to 20 years. Cites sale
the
over
accompanied^
Survey
complicated
transactions
substantial reduction
a
|
Investment dealer points out benefit of new Michigan law which
has extended maximum maturity of school building bonds from
provement in the British position
of
monthly publication, "Monthly Bank Letter," the National City
British
By HAROLD R. CHAPEL
Partner, McDonald-Moore & Co., Detroit
Still another aspect of the im¬
Bank of New York concludes that solution of
the crisis "comes back
largely to the British themselves" and a devaluation of sterling will
be ineffective unless
by other measures, such as re¬
duced production cost, expansion
of the output of goods and serv¬
Millions oi Michigan School
Bonds Taken By Investors
152
1,024,
55
(423
* 169
•»
Source—British Information Services.
51
16
»
:
v
239
*,
".v.
if;
District, the amount of bonds to
MINNEAPOLIS, Minn.—Daniel;
be sold and outstanding, tax col¬
lection record and prospects, debt L. Needham is now-with M. HL
record, population growth and the Bishop & Co., Thorpe Buildings
various safeguards incorporated in He was formerly with Harris, Up*
the Bond Proceedings.
With the ham & Co.
I
1
•:
14
THE
(950)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, September 8, 1949
American producers
that
Will the
Canadian Securities
Washington Conference
Result In Universal Devalnation?
To judge from surface appearances there is little to indicate that
Commenting
constructive plan for the solution of Britain's grievous economic
problems will be forthcoming as a result of the U. S.-United KingdomCanadian discussions in Washington. According to the Canadian Min¬
ister
of
Finance the primary re-^
Never will there be
offering sugges¬
tions for the improvement of Brit¬
ain's dollar position rests with the
United
Kingdom.
Similarly
in
better op-;
a
portunity to resolve in a friendly
practical fashion the basic
and
U. S.-British differences that
dollar in 1933 led to disastrous deflation spiral.
now
U."S. official quarters emphasis is
the necessity to suggest
nothing that might be construed
as
interference in the domestic
attainment
affairs
an
on
of
the
United
is left to the representatives of the
United Kingdom.
It
would
still clings
that
appear
to the
Britain
belief that
the
country notably in the shape of
stepped-up stockpiling purchases
the sterling area, drastic
within
reduction of U. S. tariffs, the
es¬
tablishment
for
raw
of
price-floors
materials such
as
tin and rub¬
ber, hnd U„ S. loans for the devel¬
opment of British colonial areas.
Even in the event of U. S.
agree¬
ment in principle on these
points
it is highly
unlikely under the
circumstances
proposals of this kind
present
that
any
would
be
generally approved by Congress.
Similarly the Canadian sugges¬
tion
that
free
hand
Britain
be
permitted
a
in
deciding where to
spend her allotment of ECA doL
lars would likewise
appear to have
only the remotest chance of favor¬
able Congressional action.
As far
this
as
country is concerned the
satisfactory disposal of this year's
bumper
crops
existing
farm
in
addition
surpluses
to
the
already
constitutes
a major U. S.
problem.
It is to be hoped therefore that
before the termination of the
pres¬
ent discussions
the British
and
Canadian
representatives
will
bring attention to bear on long-'
range
planning to remedy the
basic
causes
of British and Cana¬
dian economic ills.
The continued
employment
of mere palliatives
only to aggravate the deepseated disorders that are
urgently
in need of drastic treatment.
It
serve
should
that
now
the
trade
be
clearly recognized
chronic
with
this
imbalance
country
Britain and Canada
remedied
trade
can
by continued
restrictions
and
of
never
be
resort
to
exchange
controls.
;
volume
There
trade.
is
little
of
unless
are
designed to
restore the normal functioning of
international commerce. Adequate
assistance would be forthcoming
provided that there was reason¬
able
artificial
tional trade.
is not
that as¬
indefinitely ex¬
tended
to
perpetuate not only
palpably overvalued currency
will
suppose
on
tirely
principles that
to those
circum¬
of
country.
r
During the week both the
:
ex¬
prob-
a
animation
while
is
likely
suspended
being ■- held
that
might vitally
change the immediate course of
British
the
omies.
Canadian
and
Free funds after
econ¬
initial
an
Sir
C
r
r
n
m
would
States
the
G
activity and
at
low
a
t
n
Einzig
Paul
Dr.
done, it may be taken for granted
that all Sterling Area currencies
was
also
a
strong
feature following heavy New York
demand based - on the railroad's
extensive
interest
in
Alberta
oil
lands. Despite heavy
in Upper Canada
profit-taking
Mines, a recent
speculative favorite, other, gold
issues continued to forge ahead.
Colonial
Management
spread over a period-of
time
this
years
The
Jr., as a general partner
appointment of Earle P,!
to
the
firm's
investment
,
MUNICIPAL
CORPORATION
been
a
is
a
they
simultaneous
dollar
is
be
would
within
or
a
past four years,
Vice-President of Gas Indus¬
ates
is
investment
Railway *v and
Company, the
Trust
CANADIAN STOCKS
of
dustries
the
advisor
Light
America
to
Securities
Bond
Investment
and
Gas
each other.,
likely
to
NEW
YORK
5,
N.
Y„
able to refuse
matter.
States
NY
1-1045
Club, Travers Island.
pro¬
Sept. 9, 1949 (Philadelphia, Pa.)
Municipal Bond Club of Phila¬
delphia annual field day and out¬
ing at the Manufacturers Golf &
Devaluation is urged upon Brit¬
ain,
and
to
less
a
countries,
balancing
being
as
their
This would
upon
I means
a
dollar
mean
unable
extent
for
Country Club.
deficits.
that, instead oi
buy American
to
Sept. 9-11, 1949 (Oregon)
Pacific Northwest Group of the
1949
United
the
is
maintain
well
in
a
the
present
gold value of the dollar, and po¬
litical pressure in favor of its de¬
quite negligible.
is
permissible to
it
whether
it
is
in
possible to cut devaluation
it
is
Sept. 16, 1949 (Cleveland, Ohio)
Bond
Club
of Cleveland fall
fine
so
best
States
interests
to
press
of
than
an
too
little.
all-round
As
a
rencies
the
overvalued,
way
it
as
dollar
would
in
was
in
is
Presi¬
com¬
Winship Joins
the
depreciation of
large
a
number of currencies recalls
con¬
was
only this
larger
num¬
.
This in itself would be
no dis¬
If the overvaluation of the
dollar should reduce the excessive
;
serve
proportions
it
portant
stable,
other
more
currencies
whereas
less im¬
or
remained
the
now
also
Swiss
probably be the only
that would keep the dol¬
lar, company
the
rest
in
would
its
pathy with sterling.
1931-33
it
stability;
devalue
was
.
in
.
all
sym¬
;
would
not
would
make
give
markets without
cut
the
-
Glen B.
come
Winship,
service
associated
a
deflationary
spiral.
Albert
Inc.,
131
Security Dealers As¬
quarterly business dinr
meeting at 5 p.m. at the
-
Downtown
Athletic
Club.
Sept. 21, 1949 (New York, N. Y.)
Association of Customers' Brok¬
ers
election,
4
Delmon's
„
Sept. 23, 1949 (Chicago, 111.)
-
Municipal Bond Club of Chicago
Field Day at Knollwood
Annual
Country Club, Lake Forest, 111.
Sept. 30, 1949
Club
Bond
(Pittsburgh, Pa.)
Pittsburgh Fall
of
Outing at Chartiers Country Club.
their foreign
fight, and they
Oct. 5-9,
;
sociation
effort to
(Colorado Spring*
1949
Colo.)
National
As¬
Traders
Security
Convention
Annual
at
The Broadmoor Hotel.
to
be
American
re¬
prices
Oct.
11-13,
1949
Fall
meeting
Governors
Stock
of
prices
would
mean
traction of demand.
vicious
avoided
if,
con¬
Oct. 20, 1949
Annual
could
simultaneously
be
(St. Louis, Mo.)
Convention
sociation
substan¬
Even in the absence of an
of
pansion
basis
of
the
such
realized by the United States Gov¬
would necessarily produce
a few years
ago, for the
entire Bretton Woods scheme was
ulating
effect
mestic
demand
production.
on
a
on
stim¬
do¬
American
would
(New York City)
Dealers As¬
Dinner at
the Hotel Pierre Grand Ballroom.
New York Security
With
ex¬
credit
American
and
This
an
of
at the Holly¬
24th
Annual
ac¬
expansion, the psycho¬
logical influence
(Hollywood, Fla.)
with
buying price
raised
~
wood Beach Hotel.
lars,- the
be
'
>
Investment Bankers Association
Dec. 9, 1949
American
,
meeting and election of
of sterling and
other currencies in terms of dol¬
devaluation
of gold would
of
of
the
officers of Security Traders Club
Annual
/
spiral
Board
Association
Exchange Firms at Haddon
Dec. 4-9, 1949
such
falling
of
the
Hall.
by
inevitably suffer
prolonged deflation, as
City,
(Atlantic
N. J.)
of St. Louis.'
the
at
p.m.,
Restaurant, 16 Liberty Street.
be squeezed down further
in consequence. American
domes¬
tic trade would
tially.
(designed with the main object of
tier
up
would
tual credit
causes which at present
operate.
But the impor¬
tance of the sterling factor should
not be underrated.
It was duly
ernment
Law,
Street, New York City.
and
do
not
'New York
a
supreme
would then have
peated,
tributory
specialist in
with
•
There were, of course, many con¬
advertising, has be¬
Frank-Guenther
Cedar
a
disastrous
meeting
annual
their costs and
This
mainly
Philadelphia
would
a
while
and many
•
Sept. 20, 1949 (New York, N. Y.)
same
maintained
parity
■
.
sociation
become
very useful purpose. The
between the stability of the dollar
trouble is that American
exporters
a
Agency
of
cur¬
aster.
(normal
and
'
,
and dinner at Palumbo's.
side
of
the
1933,
in relation to a much
ber of currencies..
{
is short, but the contrast
memory
.
Sept. 16, 1949 (Philadelphia, Pa.)
Investment Traders Association
result, after
devaluation
grossly
United
the
\
,
by devaluing it too much rather
of
the
thet rest
Hollow Country
Sleepy
at
iarty
club..
the
of
...
the
Gearhart
the
at
Hotel, Gearhart, Oregon.
to
time it would* befcome overvalued
ask
with
accordance
meeting
too expensive. For it would be im¬
safe
Technically
to
Association
Bankers
investment
the Britain and the United
States
to stand would be on the same level. Thai
to discuss the
even
Government
position
In
Albert Frank
trust
WORTH 4-2400
more
it operated
be
unilateral depreciation of
sterling
that -forced -the United States -into
Glen
STREET
even
than
Y.)4.
Security Traders Association of
New York annual summer outing
and dinner at New York Athletic
utmost impor¬
have met tance that
sterling should com¬
emphatically negative re¬ mand confidence at its devalued
ception in Washington. Owing to level, in order to avoid a
repeti¬
their strong bargaining position, tion of the
painful operation, it is
the American negotiators will be advisable
to err on the
panies.
WALL
an
extent
Field
Investment
Sept. 9, 1949 (New York, N.
an
currency
partner,
The
a
the dollar price of gold
with
In¬
A. E. AMES & CO.
TWO
command
establish the precise "equi¬
librium rate" at which prices in
franc would
Fund, Inc. James H. Orr,
managing
dent of the three investment
INCORPORATED
In
16 years ago.
as
Hunsaker, who ditions prevailing during the early
security analyst with 'thirties. Then, as now, the dollar
firm for the
spiral.
United
prices.. There
at its old gold would
be a
sweeping deflationary
sterling and many drive. In so far as it
would be suc¬
tries Fund, Inc., while Mr. Mer-1 other currencies
depreciated. In¬
ritt formerly was with Francis I. deed the isolation of the dollar cessful, it would nullify the effects
of the all-round
devaluation, and
duPont Co. and * previously was would now be even .more
pro¬ before
very long the world would
Vice-President of General Ameri-I nounced than it was in the
early revert
to
the
pre-devaluation
can Investors
Company, Inc.
'thirtiesr at that time the French status
quo. The all-round devalu¬
Colonial
the
German
Management Associ¬ franc,
reichsmark, ation
the
PROVINCIAL
1933, only to
since
Yet
the
Merritt
has
-
always
And yet
the
goods for lack of dollars, Britain
entirely without precedent, for and
Europe would be unwilling to
while in the 'thirties the devalua¬
buy them because they would be
tions were
research staff. Mr.
GOVERNMENT
which
world to devalue, while; keeping
BOSTON, MASS. — Colonial the-dollar aloof from the world¬ American
export surplus to with¬
Management Associates announces wide
currency
trend.
Human in
saker,
tjie
EVENTS
is
valuation is
!
Admits J. Hunsaker; •' i
Merritt Appointed ill
itself.
devaluation of
a
deflationary
a
the
of
corporate-arbitrage rate was only important currency
virtually unchanged around 15%; aloof from this world-wide change.
rate could only be calculated with¬
Stocks on the; other> hand were
Suggestions that the' opportunity in a margin of error of 10 or 15%.
active and stronger with investor
of
this 7 all-round ;< devaluation or even
more, on either side. And
interest mainly centered on the should
be taken for an increase of
and
,
the
can
nounced
pound, and that other
a
ebb.
base-metal and Western oil issues,
experience
repeat
COMING
liberately bringing ahout a repe¬
tition of the currency situation of
be
now
The
Canadian Pacific
increase, it is
the
that
would
that Britain
in 1949 the
United States Government is de¬
few weeks from
but
5%
feared
Monetary Fund, an
or.
majority.
o v-
e
without
institution
Stafford
i p p s,
British
e
of
borhood
remained
curren¬
remedy lies in the hands of the
Washington Administration.
sterling that would force
with that object
consent
either
interest
into
unilateral deprecia¬
a
10%
wishes
the
of
International
relapse held steady in the neigh¬
of
ex¬
:that,
continue devalue. We may witness a whole¬
sale devaluation of currencies that
are
to
the current discussions
a
against
ble
much
large number of European and
Latin American countries will also
of
other
an
fault of Britain if
sterling beyond
would follow the
state
j
"
-
And this time it would not be
any
1945 not to devalue
ternal and internal sections of the
this
the
of
of such
1931-33
made to give a solemn under¬
taking in the Loan Agreement of
bond market remained in the dol¬
drums;
•
American
was
now
prepared to
en¬ devalue'-' o n
.>■ >
'4?/
this certain conditions. Should this be
are
opposed
the
the United States into deflation. It
but also economic systems
based
was
appears
be
levels
In
stances it
On the other hand it
logical to
tion
agree
the
interna¬
on
preventing
perience of
sterling.
exchange rates and the
of
American business. In the
on
be
to
of
Viewed from London
repetition of the
deflation¬
a
the pound forced the United States
they
prepared
to a
devaluation of
the abolition of
ensure
removal of restraints
sistance
to
that any additional
assurance
would
increase
devaluation
cies
'
securing
would
a
buying price of gold would off^
set, and more than offset, the con¬
tractionary effect of an all-round
•
con cessions
approve any measure
aid
sterling has become considerably intensified.
it appears that the British negotiators have no chance of
that
the admission of Jerome C. Hun¬
CANADIAN BONDS
of
world
doubt
An
:
LONDON, ENGLAND—On the eve of the Washington discussions
Britain's dollar crisis, American pressure in favor of a devaluation
on
overwhelmingly
would
of
both
a
mutually
expanded
Congress
$4.03
pound can be maintained
with additional support from this
is actually
beneficial
objective—the freer movement of
Consequently unless the British
viewpoint has fundamentally
ceptable solution if the initiative
and
Common
Kingdom.
changed there would appear to be
only the slightest hope of an ac¬
what
of
on
depression at home.
ary
absence
confuse the approach towards the
placed
They
embark
to
valuation abroad and
British and American representatives on the dollar
shortage, Dr.
Einzig points out enforcement of sterling devaluation is Lkely to
repeat experience of 1933 by leading to general devaluation of all
{ currencies. Holds it is not in interest of U. S. to hold aloof from
world-wide currency trend and recalls unilateral devaluation of
expansion of their
an
pricecutting competition which would
only result in a repetition of de¬
the forthcoming conference in Washington between
on
have
not
of their overseas
some
markets.
domestic
By PAUL EINZIG
any
spohsibility for
the loss of
markets in
By WILLIAM J. McKAY
in gen¬
eral would find compensation for
mean
(Special
Equitable Securities
to
The Financial
Chronicle)
-
NEW ORLEANS, LA.—Ellis M.
is with Equitable Se¬
Corporation,
Whitney
Building.
" '
1 *
Woodward
curities
Volume
Number 4836
170
THE
COMMERCIAL
in
&
FINANCIAL
this
the
country.
day!
CHRONICLE
(951)
15
May God speed
Toryism—Another Evil
But Communism is only one of
the twin evils which beset our
times.
NSTA Notes
The other is
Toryism, pro¬
by a reactionary combina¬
tion in Congress.
moted
Denver & Rio Grande
Despite
recent
the
sharp
very
earnings in
months of the
These
published
periods, and cumulatively. for the first
seven
continued
profess to hate
but consciously or
unconsciously, they are through
of themselves. They have legislative action drawing work¬
strength in the face of ing people into the ranks of the
however^ shown consider¬ Communist Party.
have participated in the
The Tories profess to love free¬
to
give a fairly good account
displayed any notable independent
generally desultory markets.
able
resistance
They have,
to
selling pressure and
periodic abortive rallies that have characterized the railroad list for
many months. This performance holds promise of fairly sharp price
recoveries
when,
and
if,
public
psychology
changes.
'
Percentagewise, there
ing
Tories
Communism,
the various securities of Denver & Rio Grande Western have
year,
not
Western
in
contraction
wider
any
for
industry
the
earnings
declines
has
than
Denver
at the Annual
Convention to be held at the Broadmoor at Colorado
Springs Oct. 5 through Oct. 9.
:
labor.
..
}
To my mind, the basic crime-of
the Tories is that they seek to
)
r
The Nominating Committee of the National Security Traders As¬
announce the following slate to be voted on
by the delegates
;?■
sociation
dom, but only for themselves, not
few railroads that have been report¬
are
year-to-year
toward
NATIONAL SECURITY TRADERS ASSOCIATION
and prohibit the natural
suppress
instincts
&
and
desires
all
free
improve their
con¬
of
Rio Grande Western in the past few
months. For the month of July
alone net income after fixed charges and
contingent interest, but be¬
Americans
fore
curity for their childen.
664 for the
crime against the basic principles
of natural
law and the demo¬
sinking funds, amounted to only $114,377 compared with $411,like 1948 month. This represented a drop of some 73%.
For the full seven months net income,
similarly computed, declined
approximately 54% to $1,921,242. Even though more favorable com¬
parisons appear assured in the closing months of the year, it is
obvious
that
below the
1949
earnings
on
the
common
$16.22 realized in 1948.
are
.
cratic
of life.
way
This is
";
*
;
a
v
Promotion of the welfare of the
going to fall well
American
people," which is ex¬
plicitly set forth in the Constitu¬
.....
Actually, the road's operating results have not been so
comparison with a year ago as would be indicated from
to
ditions in life and to provide se-.
tion
in
as
of the
one
primary objec¬
government, is con¬
sidered by the Tory combination
reading of the published net figures. There are a number of
dis-|
tortions and special considerations.
It is a recognition of these' and the interests they represent as
unusual factors by railroad analysts and followers of railroad secu¬ a
dangerous and revolutionary
rities that has presumably resulted in the market more or less ignor¬ idea.
They berate the; "welfare
ing the figures. One important distortion is caused by credits for | state" as a form of totalitarianism,
deferred
if not
tives
mere
a
of
our
Donald
H. Frank Burkholder
C. Sloan
Latshaw
John
maintenance accrued
difficult,
poor
seven
to
months
during, the war period when it was when it is really the true goal of
impossible, to get the necessary materials. In the democracy.
When
through July 1948 such maintenance credits amounted
the
results
of
the
1948
they amounted to only $337,486.
merely bookkeeping items; Eliminating them from both
years would leave net income of $1,583,756 for the 1949 period com¬
pared with $2,258,358 a year ago, a decline of $674,602. This is very
materially less than the $2,260,159 dip showrf in the published re¬
ports; 1 y-
election
Another consideration is that Denver & Rio Grande Western,
along with a majority of railroads, has apparently been spending
unusually heavily on its properties in anticipation of the 40-hour
Congress to enact
the liberal program on which he
$1,923,043.
These
In the current
year
week for
non-operating employees that went into effect
when
had been
ther
railroad
most
the
common.
analysts and it is doubtful if
any
the
to
about?
come
coalition
As
able to
were
'
-
result, Congress failed for
a
time
treacherous
failed
to
being to repeal the
Taft-Hartley Act; it
bring
about
our
So¬
cial Security system and it failed
to make any substantial progress
likely by
such action would
authority
health
shame,
failed to enact
gram.
not
Congress do
defeat for
a
orga¬
tive branch of
these Tory
to the Marshall
tic support and encouragement of
the American Federation of La¬
to
to re¬
legisla¬
government of
rid
our
ers
the
that they don't get elected by de¬
' ,;'v
'-yj--; ■ .'-/.y.'
'
fault.
legislative program favored by laand
espoused by President
Hor
ican
propaganda
of
the
Communist
leaders, we upheld the honor and
integrity of America's policies and
we won the fight.
'
Without
the
the
European
could
never
support
of
labor,
Recovery Program
have succeeded.
The
Communists sought to undermine
that support through the so-called
World,
Federation
of
Trade
bor,
banding
are
will form
ganization in defense of
democracy
conference in London.:
is
It
no
Communist
ropean
lin's
hopes
of
war
coincidence
refused
to
join that organization because we
recognized it
as
a
Communist
front.
In time, other free trade
union
organizations which had
been hoodwinked into associating
themselves
with
the
World
Fed¬
eration of Trade
Unions, began to
realize how they had been duped.
Less than a year ago they quit in
a body.
Now the World Federa¬
tion
of
Trade
Unions
fallen
has
apart, thoroughly discredited and
almost
completely
as
a
at
also
a
that
the
charge
European
lose faith in
their unions.
Federation
Labor,
harbored
munism
hails
the
of
within
the
CIO
new
to
The
American
which
has
tolerated Com¬
or
register and vote in the 1950 elec¬
I
.
confident
am
because
"The
itself of Com¬
leadership. It is
trend,
one
a
healthy
a
I
venture
to
the
of
sweep
unification
is your job and
.
It is un¬
designed
the American people
dodge the real issues.
American
is
„
-
Statism
of
be¬
oppose both a dictator¬
ship of the right and of the left.
We have
advocate
never
a
undermine
and
we
program
the
will
never
which would
American
on
indif¬
way
of
On
the
contrary, we are
firmly convinced that our pro¬
gressive program is a sound mid¬
dle-of-the-road policy, which will
strengthen
the, free
enterprise
Taft-Hartley Act is repealed.
■■
7
Those who believe in the
Amer-y
ideal, must realize that it can ?
triumph and survive only if the
American
people are given full
and free opportunity to improve
their standard of living and to
secure their future against the so¬
cial handicaps and economic ca¬
tastrophes
which
cause
heart-,
ican
aches,
discontent
eventually
and
lead to revolution.
can
If
>
allow the Tafts and Byrds
we
our country—and to run it
policy of doing nothing—we*
will get nowhere. We believe in
doing something and getting some- •
where.
And. we invite the pro- v
run
on
a
gressive farmers, the small busi¬
nessman, the merchants and the"
professional workers to join with'
labor
in
the
truly k Americani
pioneering spirit in that noble ad- '
venture.
..
system, reinforce the economy of
country and make American
freedom and democracy more se¬
apolis
»;
Minneapolis Associates, Inc.
and
meaningful to the
American people.
,;>
Today the American Federation
of Labor stands, as always, as a
bulwark against Communist in¬
cure
filtration
more
on
the
one
hand and
as
guard against monopolistic big-
business control on the other.
;
ica
free
and
do
strong must realize
so
American labor
in
that
to
must be kept free
to
and strong. For
are fighting with
It that reason, we
mine to see to it«all our power and we will con¬
MINNEAPOLIS, Minn.—Minne-'
Associates,
formed
Officers
Sheldon,
John
P.
Hanson;
o
b i
been
the Rand
Albert
are
T.
Edna
Jr.,
R
has
Inc.
offices in
with
Tower.
n s o n;*-
?
M.
Stevens;;
Richard S.
V. Dayton.
and Leonard
j
J. W.
Goldsbury Co. Adds
(Special to The
Those who want to keep Amer¬
voters
them back into power.
tinue to fight until the obnoxious
to
Federation
opposed to
elections
American
non-Presidential
predict will promote the eventual
relying
customary apathy and
Move¬
organized labor
are
that
cause" we
a
reactionaries and their po¬
unions
of all
the good
intelligence
Column
Fifth
of the outcome
faith in
strategists
to
v\
brand
propaganda
mislead
Labor
I
our
policy of do-nothingism.
ference
which
have
and
litical
munist
I
to achieve
of Amer¬
ican voters. They know full well
that the Tory program has noth¬
ing constructive to offer them,
that it is based almost entirely on
sense
its
own
ranks,
determination. of
purge
and
man
in America and their fam¬
tions, we are certain
this great goal.
-
it.a
as
now
utterly false.
as
adulterated
to
us
A"v-'
and
Here
life.
;
working
ilies and friends make certain to
cold
is
every
woman
Eu¬
among
began to
Communism, American workers
also woke up to the danger of
growing
Communist
influence
never
If
as
1948 against
'
Tory candidates.
that
Nor
determined to roll up an even
bigger vote than in
"
?
winning
diminished.
workers
over
are
And the free trade
Communist
ment.
isolated
or¬
and
peace
coincidence
influence
our
workers waned, the Krem¬
of
consistently
.
Thus, we have already trained
sights on the 1950 Congres¬
sional election campaign and we
and
,
November
next
Unions. The American Federation
Labor
together
international
new
a
1950 Election
of life and lead
way
Statism.
The
on
<
Harry L. Arnold, Paine, Webber, Jackson & Cur¬
V./>
' ■y*-1
Morton A. Cayne, Cayne & Co., Cleveland, O.
The members of the Nominating Committee are: R. Victor Mosley, Stroud & Co., Philadelphia, Chairman; John F, Egan, First Cali¬
fornia Co., San Francisco, Calif.; Jay L. Quigley, Quigley & Co.,
Cleveland, O.; Robert Strauss, Daniel F. Rice & Co., Chicago, 111.;
Stanley L. Roggenburg, Roggenburg & Co., New York; James F.
Jacques, First Southwest Co., Dallas, Texas; and Mrs. Ora M. Fergu¬
son, Merrill Lynch, Pierce, Fenner & Beane, Louisville, Ky.
and to
obstructionists.
Sights Trained
;
For Treasurer:
of 50 nations, with the enthusias¬
Plan. We exposed the hypocritical
challenge
a
efforts
newed
(Continued from page 7)
in opposition
but
lowers,
Latshaw, Uhlmann & Latshaw
tis, New York.
For Secretary:
nized labor and its millions of fol¬
Toryism: Twin Evils
Sloan, Sloan & Wilcox, Port¬
f.iV.V-;.
;
Truman would change the Amer¬
....
represent
John
•
sterile charge that the progressive
Congress also
These rebuffs from
Communism and
For Second Vice-President:
Kansas City, Mo.*
So far, the keynote for the Tory
campaign is the empty, barren,
of
civil rights pro¬
a
; "'UO
V"
To its
insurance program.
everlasting
Donald C.
"...
land, Ore.
a
the ; establishment
toward
Securities Corp.;
sorely
the
revitalization .of
needed
possible
the
fair deal to the American
a
people.
the
with
Dixiecrats and together
these obstructionists
deny
Morton A. Cajns
For First Vice-President:
Why
of
tight
a
Southern
j
H. Frank Burkholder, Equitable
Nashville, Tenn.
Congress.
leaders
For President:
repudi¬
Toryism welded
the
surviving remnants of the
reactionary Republican forces in¬
This is not considered at all
find favor with the Interstate Commerce Commission, whose
would be required.
in
people rejected fry the 81st Cpngress?
We all know the answer.
than adequate coverage of the $2 a share dividends that have been
paid in 1948 and 1949. Also, the earnings would be unusually high in
relation to the. selling price of the shares. Surely, in this writer's
opinion, even a railroad stock is entitled to some speculative fol¬
lowing when it sells for less than jthree times indicated current year's
on
had
Harry L. Arnold
fur¬
any
the wishes of the American
The
-
stock dividend
he
How did this
indicate the likelihood of. earnings of between $8
and $9 a share for the full year 1949. While this would be a far
cry from the $16.22 earned last year, it would certainly provide more
a
he got scarcely
than
were
tenance, outlays,
from time to time of
But
called
triumphantly re-elected,
organized labor en¬
ated 80th
mately $9.20 earned a year earlier. Normally the company gets a
seasonal bulge in the fall months and it is logical to look for at least
some improvement this
year.: This, and expectations of lower main¬
rumors
justice.
Truman
new
which
dorsed,
through July 1949 earnings on the common
reported, amounted to $2.75 a share compared with approxi¬
There have been
the
on
For the seven months
earnings.
President
upon
and
social
and
progress
year.
as
ob¬
was
people had registered
resounding mandate in favor of
a
'
stock,
counted, it
American
Sept. 1.
Even eliminating the bookkeeping maintenance
credits, the road's
maintenance outlays have been well above a year ago in the face of
declining traffic and revenues. There is little question but that these
could, be fcurtaiied in line with the present business volume, and
it seems probable that they will he cut in the last four months of
the
were
vious to the entire nation" that the
are
Financial
Chronicle)
MINNEAPOLIS, Minn. —Theo.
A.
is
Nadeau
Goldsbury
Avenue.
&
He
now
Co.,
was
with
J.
W,
807 Marquette
previously with
King Merritt & Co., Inc.
f
r-
16
(952)
THE
Vim>lt*M,**
'Vrt**wJu **#» i«WW*
*
■
HvWWif»WrW»
i
co: tWJW ftCIAL
Captain
&
-of
Field
ft
CHRO
FINANCIAL
Artillery
Thursday, September 8,1949
in
World
War I and recently served
Chairman
of
the
Louisville
as
News About Banks
1
'Bank and Insurance Stocks
,
Army Advisory Committee, Uni¬
versal Military Training.
;
CONSOLIDATIONS
.
.
By H. E. JOHNSON
NEW BRANCHES
NEW
Bankers
and
OFFICERS, ETC.
REVISED
The
Trust
CAPITALIZATIONS
Texas,
from
At
the
regular meeting of the
City Bank Farmers
directors
of America
a
father,
the
who
Director
died
late
A.
June
a
P.
After
ice
his
*
National
York
Dimon
City Bank of
of
uation
Mr.
the
oi
the head office of the bank. Dur¬
ing
World
served
War
II
Mr.
of
Dimon
States
a
*
if
.
:
*
that Mr.
James B. Birmingham has been
a Director of the Hellenic
Bank Trust Company, 139 Wil¬
rectors.
lately
the
Mr.
National
ciated
'
■.
City
Bank
of
New
distinguished
of
32
serv¬
during
years
also actively asso¬
the American Insti¬
Banking.
*
•
*
'
*
ficer of Chemical Bank and Trust
Co. of New York has
joined the
Empire Trust Co.
of New York
Assistant Vice-President.
*
The
*f
as
New
York
State
announced
Banking
Sept. 1
on
license had been issued
Banco Di Napoli of
a
to
the
Naples, Paly
to
maintain
an
in
agency
■
John
©f
«
Co.
and
of
the
Board of Managers of the Girard
Trust Company of
Philadelphia,
died at University
Hospital in that
City on Aug. 31. He was 63 years
©f
President
age.
of
the
Penn
Mutual for the past 10
years, he
recently celebrated his 21st anni¬
with
versary
the
company
ac¬
Superintendent
of
city
a
:®<ihool system, it is learned from
the "Bulletin," which also
said in
part:
■
:■
,\"c\"
:
,
""He
was
invited
negie Institute
by
the
Car¬
of
Technology to
'become director of the first school
<©f life insurance
%
salesmanship in
higher institution
of
learning.
This led to his association with
the Equitable Life Assurance
So¬
ciety of; New -York,
where
of
of
the
state
program.
.
.
"He
came
to Philadelphia in
1028 to take over the
direction of
Penn Mutual's home of iiice
He
agency.
was
ident
elected Agency Vice-Pres¬
1931, Executive Vice-
in
President of the company in 1936
®nd has served as
President since
1939."
if
The
Trust
Md.,
in
located
are
ently given as
Michigan,
and
which
inadvert¬
was
Ohio
the
instead
we
of
accordingly
make this correction".
v,:;-v
.y-'v *
.
*
Co.
Trust
tive June 17.
the
*
&
noted
Company, effec¬
The plans to change
of the
name
in
these
institution
;.y
,
;"y''
vy
were
columns April
page 1740.
21,
,
*
Wallace
M.
Davis
and
elected
was
Director
-
of
the
31, according to an announcement
by A. B. Paterson, Chairman of
the "board.
In
nouncement
""Mr.
making
Mr.
Davis
has
if
directors
the
of
Cumberland,
on
tirement of John
Liberty
Sept. 1 the
R.
Hamilton
re¬
as
Manager of its Lonaconing, Md
branch office.
continue
as
Mr.
an¬
said:
his
en¬
tire life to banking.
In fact for
the past 30 years he has worked
in one bank—the Citizens Fidel¬
Louisville,
Ky.
only
Company of
He
has
until
widely
grown
today he is
known
and
highly regarded in Louisville, but
also
by the banking fraternity
throughout
the
entire
United
States.
We
feel
happy
very
having Mr. Davis join
here at
us
the Hibernia National Bank."
-Mr. Davis has
resigned
ecutive
Vice-President
Louisville
Bank1 to
>
as
Ex¬
of«".
the
assume
Presidency rof the Hibernia
tional
Bank
succeeds
about
the
late
who died last
A
Davis
y
of Law
started
A.
the
Na¬
1.
He
P.- Imahorn
May.
graduate
School
Oct.
in
at
the
Jefferson
Louisville, Mr.
with
the
Citizens
Fidelity Bank, working his
way
to become successively Assist¬
Cashier, Assistant Vice-Presi¬
dent, Vice-President and Execu¬
tive Vice-President. Mr.
Davis is
up
ant
Director of the Louisville Branch
of the Federal Reserve
Bank of
a
St.
Louis.
He
is
member
a
and
former director of the Association
Reserve City Bankers, and
Hamilton will
Chairman of the Ad¬
visory Committee of the Lona¬
coning Branch. James G. McElvie
served
years.
as
its
He is
a
Treasurer
for
two
San
the
1948.
end of the second
California
Independent
Fonda
are:
Executive
far
this
the
year
ahead although at not
insurance
the rate
prising
group
a
business
of
are
now
gains and
Long
com¬
Beach
financiers, in¬
cludes Nelson McCook, Mr. Markworth,
Fonda : McCook,
Clyde
Doyle, P. H. Boyson, T. W. Burnam, Glen L. Clark, Keith Enloe
and Nelson McCook, Jr.
r
"Vif
if
sociation.
member
Council
He
of
of
the
also
presently
Eastern
a
Area
the
American
Red
Cross and Chairman of its Louis¬
ville chapter. Mr. Davis served
as
to
the
move
last half
are
or near their highs. Others show
only modest
selling lower than at the end of the year.
if
Price
Current
Points
12/31/48 Price
Change
5ff%
48V2
49
55%
Agricultural Insurance
65 V2
58
61
64
American Ins. (Newark)
Boston Insurance
19%
15V2
17%
18%
+
1
681/2
60
651/2
641/2
—
1
—
Aetna
Fire'
+ 6% '
;
Continental Insurance
64
56%
637/s
Federal
631/2
62
54
591/2
611/2
Insurance
Fidelity-Phenix
70
Fire Association
66
Fireman's Fund
83
67%
60
66
761/2
82%
83
-f
%
147/g
■
17%
50
681/2
56
Glens Falls
Great
17%
+
2%
50
+
1%
34
+
2%
+
1%
*
471/4
15%
48%
34y4
30%
31%
33%
American
i/a
2
+
631/2
•
Fireman's Ins. (Newark),—
Hanover Fire
3
+
30
Hartford Fire
Home Insurance
133%
Insurance Co. of N. A
110%
31%
117%
31
132
29
97%
,
33
121
27
-
•
r
6
+
Marking what is termed the end
of one of the biggest office-build¬
ing projects in Toronto in recent
years," Toronto press representa¬
tives on Aug. 31 previewed the
Bank
of
Montreal's newly-com¬
16-story Ontario
head¬
quarters building in Toronto's fi¬
nancial, district.
The
Toronto
pleted,
main i office
in
its
Day.
commenced
new
quarters
business
after
Labor
Rising
and
office
224 feet, this bank
building is the' maxi¬
size allowed under building
regulations for; the ground area
covered. New home for the bank's
mum
Ontario headquarters and its Tor¬
onto
main
for
staffs
numbering
with
a
office, it also has of¬
space
<
thousand.
fice
on
35
tenants
more
than
The bank's main of¬
occupies
*
some
the
banking
the ground floor.
room
Various bank
departments occupy the 2nd, 3rd
and
4th floors, while there are
vaults and a large securities de¬
partment on the sub-ground lev¬
els.
Office space in the
upper 12
floors is for tenants. The bank's
new
on
Toronto
the
ronto
,
than
a
headquarters stands
spot
where
office
was
its
first
located,
Tormore
century ago.
108%
2%
4-
56%
48
49
56%
National Union
37%
303/4
36%
35
—
Phoenix Insurance
1%
89%
79
87
85
—
2'r
Providence-Washington
35%
303/4-
33%
St. Paul Fire & Marine
89
75%
35%
31%
Security Insurance
Springfield Fire & Marine.
United
States
was
Co.
a
.
Vice-President of Blair &
V
;
.
,
4-
76
88%
31%
34
4-12%
4- 2%
41
44
45%
4-
56%
60%
62%
4-
In terms of the
indexes, the Dow-Jones Averages at the
August stood at 178.66 and showed a gain for the
points.
At the
points higher
-j As the
tributed
this
-%
was
145.3 and
%
1%
2
end of
\
>
"
date of 1.36
year to
time the insurance index
than at the end of the year.
same
same
to
7%
333/4
46%
7.0
was
*
f
>
fundamental factors are still present which con¬
performance, the insurance stock group
excellent
should continue to show
One of the most
a
better-than-average market performance.
important factors in this. connection is the
prospect
for dividends. The
leveling off of premium volume has improved
the capital position of most
companies and as investment income is
showing
some
increases
in
Thus,
further
dividends
gains
is
this
the
year,
promising.;
.
..
.
outlook
"
for
additional
*
.
.
although
insurance stocks .will be affected by trends
general equity market, it is believed that
the group
should continue to
give a relatively favorable performance. < ;
4 /
I
within
the
Robert M. Tanney Opens
Robert
in
M.
Fred E. Lmder Dies
Tanney is engaging
a
securities business from
fices at 140 Cedar
Street.» He
Fred
E. Linder died Sept. 5 at
the age of 61 after a
long illness.
Mr.
L'nder, a director of the
of¬
was
formerly with Richard K. Kauf¬
man, Alsberg & Co., Edward A.
Viner
&
Co.,
and
Ferro-Enamel Corporation in the
past was associated with Van Al-
Herzfeld ;&
.
styne, Noel & Co. and had been
partner in Love, Macomber &
a
Co.
Douglas V. Macpherson died at
the age of 65 after a brief
illness.
Prior to his retirement in 1932 he
<
4-
62%
Fire
Stern.
Douglas Macpherson Dead
'
+11
4- iy4
30%
106
lJ/4
—
*
National Fire
Director of Louis¬
is
in
selling at
few
a
ville
Textiles, Inc. and a Trustee
of the Louisville Credit
Men's As¬
continued
exhibited
was
1949
and
Directors
of
that
Price Range
McCook,
and
men
has
group
Nevertheless, as illustrated in the following table a num¬
ber of issues show substantial
appreciation since Dec. 31 of last year
and
Bankers
Vice-President
Board
loss of only
a
Fran¬
Cashier; Clyde Doyle, Vice-Pres¬
ident; Kurtz B. Ballou, Assistant
Cashier and Auditor; and Walter
Niemann, Assistant Cashier.
The
bank's
same
of 1948.
Other officers of the
bank
new
in
August 1948 the Dow-Jones
time Standard & Poor's index
Between that time and the end of the
121.7.
was
cisco Federal Reserve District and
a former President of the Southern
Association.
week
,
So
&
the
of
of
In other words for the five-month
period the Dow-Jones had
lost approximately 2.33 points and the insurance
stocks had shown a
gain of 16.6 points.
H. G.
a
Association
ers
half
stocks stood at 138.3 for the week ended Dec. 29 for
% point.
many years Exec¬
Commercial
in
Between November and the end of the
year, the relative per¬
formance of insurance shares was even more
impressive.
By Dec.
31, 1948 the Dow-Jones had declined to 177.30 for a loss of 15.86
points from the high. The Standard & Poor's index of insurance
Savings
Bank, Santa Monica, Calif., which
post he resigned several months
ago to head the new institution.
fice
of
of
of
Company
announced
it
the
Paterson
devoted
ity Bank and Trust
Monica
although still
both indexes reached new highs, the Dow-Jones the first week
November 193.16 and the insurance index 138.8. The
respective
gain in points was 13.53 and 17.1.
Califor¬
Bank's President,
volume
in
member of the Executive
Council of the Independent Bank¬
of
and
The
He is
The Mercantile Home Bank
Trust
nia.
Southern
final
of insurance stocks
dent of the Independent Bankers'
of
premium
year
utive Vice-President of the Santa
Hamtramck, Mich, the designa¬
tion
he
served as Second Vice-President
4n charge of that
company's train¬
ing
*
Markworth, for
not
Illinois, served
©s a high school
principal in that
state, and before he was 23 be¬
came
y
man
Mich, with the Bank of Commerce
with that bank
in
At
capital and surplus
a
time
Averages stood at 179.63. At the
$600,000
Association
who
born
of
first
insurance stocks has been made.
the
In noting in our issue of
July
14, page 172, the consolidation of
the Community Bank of
Warren,
cording to the Philadelphia "Eve¬
ning Bulletin."
M~.
Stevenson,
was
for
Nelson McCook, pioneer Southern
California banker and first Presi¬
*
:
member
a
with
starts
.j
yyyyyy!
;
*
"
A.
the
ance
*
charter
the
and
In order to measure the market
performance of insurance shares
during the final months of last year a comparison of the Dow-Jones
Industrial Averages with Standard & Poor's
weekly index of 18 fire
City Bank was issued
17, as reported in our
Aug.
on
The
for
risks
at a slower rate.
so
was
Sept. 6 issue, page 875. The bank
early President of the
;
President
♦
National
increasing
as a
throughout
California.
and
retained at the year-end despite a
generally declining stock market
result of the unexpected turn of the national
election.
27,
and well wishers,
including rep¬
resentatives from banks and other
financial
institutions
the
.'.v-;v\J Hibernia
National Bank in New
Stevenson, President Orleans at a meeting of the board
Penn Mutual Life Insur¬ of directors of the
bank on Aug.
<•
...
Aug.
ing.
York State at 37 Wall
Street, New
'v
Saturday,
on
attended by numerous friends
was
costs
As usual the market for insurance
shares anticipated the favor¬
able results and advanced sharply in the fall of the
year to the best
level it had reached in over two
years.
Most of the advance
board of the bank is
New
York City.
for the
souvenirs
Organizer and Chair¬
Bank
Department
quarters
state
Kansas City, Mo.,
changed its title to the Mercantile
'
Special
Rising
power.
several years the
statutory under¬
writing results of the industry became profitable and in contrast to
the previous periods of losses, substantial
earnings were reported
handed to each of the open¬
ing day depositors.
An
invita¬
tional
preview
of
the
bank's
of the found¬
one
Avenues.
the industry began to
emerge from
1948
earning
values and
doing
was
Thus
building
of the
"V
*
Horton,
an
for
rising
were
1902
advices
the increased
new¬
Beach. The
banks
if
Announcement ' is
made ' that
William Pfaffle, formerly an of¬
cust
Central
Europe
same
bank
impaired
had
the various companies.
dent of the Cleveland
chapter of
the American Institute of Bank¬
di¬
was
with
tute of
■
of
is a
Vice-President of
a
record
which he
board
Birmingham
retired
York, with
ice
its
in
modern
own
the middle of
of
has
year
severely affected the statutory underwriting earnings of
About this time, however, fire losses
began
to level off, adjustments in rates
brought a better balance between
stock.
fully subscribed by
Bankers Association for Foreign over 200 business,
professional and
Trade, has also served as Presi¬ community residents of Long
liam Street, New York, N.
Y., and
also a member of the Executive
of
and
ers
in
The
losses
♦
.,
period
a
came
just completed at Tnird and Lo¬
his
Sept. 1, it is
a
traveled
bank.
r/ ^v.v-'4,V
elected
Committee
its
the
he
,
;.
i'.-
new
Around
banking institution, formally
opened for business on Aug. 29, in
foreign department, be¬
coming a Vice-President in 1921.
In the '20s says the "Plain Dealer"
Captain in the United
Navy.
\
as
has announced
high school
joined the
as
The market action of insurance stocks during the past
been among the best for
any group of equities.
•;
effec¬
$50,000
This Week—Insurance Stocks
.
capital
est
Messenger, advanc¬
ing by progressive steps to other
posts, until he was named as head
uis-
division
overseas
from
Horton
Bay town,
its
Beach, Southern California's
serv¬
National
of Cleveland, Ohio, Frank
Horton, a Vice-President of
National
&
The National City Bank of Long
learned from the Cleveland "Plain
Dealer."
Shortly after his grad¬
Aug. 30, John T.
appointed an Assist¬
ant Cashier in tue Caribbean
trict
Central
retirement effective
on
was
the
the institution
*
meeting of the Executive
of the
New
v:'
period of 47 years'
a
with
M.
Committee of the board of direct¬
ors
*
Bank
Giannini,
$
Mr.
further
the
*
*
Bank
to $200,000,
through the sale of
succeeding
*
■
♦
$100,000
while
Na¬
succeed
3.
*
At
to
of
increased
coning Branch
Hamilton, v ;
tional Trust & Savings Association
of
San
Francisco,
Calif.,
was
elected
Company
'
has
Manager to Manager of the Lona¬
Sept. 6 L. M. Giannini, Presi¬
dent of the Bank
National
tive Aug. 19. Of the increase $50,000 represented a stock dividend,
has been promoted from Assistant
of
Trust Company of New York, held
on
Citizens
-
and
Edmund Seymour & Co.
.With the Marshall Co.
(Special
to
The
Financial
Chhontcle)
MILWAUKEE, Wis. —John
'
R.
David W.
David
Curtis has become associated with
The Marshall
Company, 762 North
York
Water Street.
after
Filor,
W.
Smyth Dead
Smyth,
Bullard
and
partner
Smyth,
in
New
City, died at the age of 69
a
brief illness.
THE
Number 4836
170
Volume
COMMERCIAL
would
Reports Assets of National Banks Moderaiety
FINANCIAL
&
have
been
CHRONICLE
for
approximately
Fuel
revenues.
costs
were
Public
down 3.2%
from the previous pe¬
riod while salaries and wages were
Preston
Delano, Currency Comptroller, in condition report as of
30, reveals, however, an increase of more than a billion dol¬
lars in bank holdings of U. S. obligations.
^
and other operating
7.9%
up
than
By OWEN ELY
by
the
000 for the
9% less than the amount reported
banks
April 11, 1949,
the
previous
call, but $242,less
as
3
0,
1948.
The deposits
the
banks
Presfon Delano
jriJune3 0,
19 4 9
w e r e
than
more
but
$78,000,000,000,
in¬
April,
an
of $549,000,000, in
Included in the recent de¬
decrease
a
the year.
posit figures
of
*
of $340,000,000 since
crease
are
individuals,
corporations
demand deposits
partnerships* and
of
$44,471,000,000,
which increased $153,000,000
since
April, and time deposits of indi¬
viduals, partnerships and corpora¬
tions of $19,009,000,000, which in¬
creased ;$102,000,000. Deposits of
the United
States Government of
$1,448,000,000
less
than
$365,000,000
were
in
brokers
to
and
April; deposits of
subdivisions of
dealers
of
or
,
<
-
r
These investments were 41.83%
of
42.45%
in June, 1948. Other bonds, stocks
and
securities
of
$5,532,000,000
which -included
obligations
of
States and political subdivisions
total
compared to
assets,
of
$5,399,000,000 showed an increase
of $104,000,000; and
deposits of
banks of $6,946,000,000 were $59,-
000 more than in June last year.
000,000 more than in April. Postal
savings deposits exceeded $3,000,certified
and
000
Loans
and
cashier's
$1,175,000,000.
were
and
/;
discounts at the end
of June, 1949 were
$22,578,000,000
deducting reserves of $261,-
after
000,000 for possible future losses.
net loans were $363,000,000,
The
about
less than the
of April 11
this year, but $275,000,000, or more
than 1%, over the net amount re¬
or
amount
Wz%,
reported
as
ported as of the end of June, 1948.
Commercial
as
Edison (in which
it; formerly held the entire capitalization) by selling bonds and pre¬
ferred stock, but still retains the common stock.
j", The company now proposes to offer the entire 835,000 shares of
up
States and political
checks
has partially disposed of its interest in Staten Island
companies,
>,. The subscription price for the new stock being introduced to the
The FPC also reported operat¬
pur¬
public will probably not be announced until shortly before Sept; 8,
carrying securities, and ing revenues of natural gas com¬
when the usual registration "amendment" will be filed with the SEC.
loans
to
banks, etc., increased panies totaled $65,509,693 in June,
The stock is currently paying $2.24 and if it were to sell on the same
an increase of 8.6% over the $60,nearly 15% in the year. The per¬
reported
for
the same yield basis (after market seasoning) as does New York State Elec¬
centage of loans and discounts to 341,881
tric & Gas, the price would work out around 32 l/z.
As a new
month a year ago.
total assets on June 30, 1949 was
and non-seasoned issue it might be expected to open somewhere
Gas utility operating income for
26.53, in comparison with 27.06
around 30, with a yield of about ll/z%. Recent share earnings were
on April 11 and 26.13 on June 30,
June, 1949 amounted to $8,456,516,
oply $2.57 per share, and while this- figure .seems abnormally low
down 1.6% from the $8,592,784 re¬
1948.
/
(reflecting/earnings of only about 4% on the estimated rate base)
Investments of banks in United ported for June, 1948. Net income
it would make the current price-earnings ratio 11.6 with an esti¬
States
Government
obligations for the month was $7,765,553 com¬
mated price of 30.. The subscription price would of course be some¬
(including $2,000,000 guaranteed pared to $8,650,859 reported iri what below the market
price; in the case of New York State Electric
obligations) on June 30, 1949 ag¬ J une, 1948.
■
v :
& Gas the stock opened several points above the subscription price.
gregated
$35,598,000,000, •' which
Gas operating revenue deduc¬ In any
event, by the time this article is published both subscription
Was an increase of $1,015,000,000,
tions amounted to $57,072,381, an ahd
market prices will probably be available.
,
or
nearly 3%y since April this increase of 10.2%. Of this total,
;
With revenues of about $29 million, the company serves an area
year, but a decrease of $633,000,operating expenses accounted for in and adjacent to Rochester with a population of over 515,000.
000, or nearly 2% in the year. $43,997,962,;; up 14.2%; deprecia¬ About 95% of electric revenues are obtained from the Rochester dis¬
chasing
5,004
of June
were
and others for the purpose
reported
active banks
$5,710,000,000
advances
000,000
the
its New York subsidiaries.
than 8% and consumer loans
more
the date of
by
Utilities, in connection with its program to con¬
Utility Holding Company Act, is disposing of
The stock of New York State Electric &
Gas wa& offered to GPU stockholders at 41 some time ago and the
stock later advanced to 50 and is now close to' that figure.
GPU
form with the Public
including operating and non-oper¬
ating income, aggregated $515,198 000, for the first six months;
common stock of Rochester Gas & Electric to GPU
stockholders of
to
individuals
at
$3,988,000,000
12.9% higher than in the like pe¬ record Sept. 8, in the ratio of l-for-10; rights will expire Sept. 30.
were
up
nearly 13%, while all riod in 1948. Net
ineome, after, A! nation-wide group of dealers will solicit subscriptions on a fee
other • loans
of
$3,132,000,000, income deductions of
$129,889,000, basis; heading the group will be First Boston Corp., Lehman Bros.;
which included loans1 to farmers,
was $385,309,000,
Wertheim & Co., and Merrill Lynch, Pierce, Fenner & Beane.
or 14% higher.
of
estate
of
as
Rochester Gas & Electric
,
General Public
period.'
Gross income of the
in June of last year, loans on real
4,996
national
than
penses up 3.6%.
more
reported
Utility Securities
ex¬
Provision for de¬
preciation, and tax accruals in¬
creased 6.9% and 13.2%, respec¬
The total assets of national banks as of June 30, 1949 amounted tively. After the above deductions
to more than $85,000,000,000, according to Comptroller of the Cur¬ electric utility operating income,
rency Preston Delano. The returns covered the 4,993 active national including income from plant leased
banks in the United States and possessions. The assets were $334,- to
others, amounted to $442,196,000,000
industrial
and
of the recent call date
$10,009,000,000
and
were
loans
totaled
nearly
$3,410,000,000, were
Cash
of
Reserve
banks
trict and 5% from the Genesee district.
and
city in the state and
of
$11,727,000,000 and balances with
other
banks
(including
cash
items in process of collection) of
of 13.2%;
$6,064,609, a de¬
for
taxes
of 13.8%.
crease
Gas sales to ultimate consumers
Eastman
cubici
feet,
an
dential
3.3%
resi¬
increase of
1948.
June,
consumers
Sales
to
decreased
0.8%
while sales to commercial and in¬
dustrial
and
consumers
increased 3.1%
3.6%, respectively.
from
sales to ultimate
increased
4.0%
and
Revenues
consumers
amounted
to
$7,556,000,000, a total of $20,376.$31,447,528. .Revenues from the
000,000, showed a decrease of $89,three classes of service, residen¬
000,000 in the~year. •
* • ;■
commercial, and industrial
•/The unimpaired capital stock of tial,
increased 1.6%, 4.1%, and 5$%,
the banks at the end of June, 1949
respectively, i - >>1 ; ■ .; •. <y * ■
was $1,908,000,000 including $22,For the 12 months ended June
000,000 of preferred stock. Surplus
$2,507,000,000. undivided 30, 1949, gas operating revenues
profits $1,084,000,000 and reserves aggregated ' $941,789,909;
an
in¬
$329,000,000 or a total of $3,920,- crease of 16.8% over the total of
Rochester is the third largest
important industrial center with about 700
manufacturing establishments, including the famous
diversified
Kodak
About
in June, 1949 were 115,883,000,000
over
$1,093,000,000 reserves
Federal
with
$222,000,-
tion for $7,009 810, a gain
65%
28% -from
gas
an
factories.
of
<
-
wbre
revenues
;
'
,
v
obtained from electricity in 1948,
and 7% from steam. -Of the electric revenues 36%
residential, 27% commercial and 25% industrial. The company
produces almost all of its own power,; priricipally from steam plants.
s.
Capitalization, is 52% debt, 17% preferred'stock and 31% com¬
were
equity/ The company plans a $33 million construction
during the period 1949-51 and it is estimated that; about $17
million funds may have to1 be raised.
Stock financing on about a
l-for-7 basis appears likely some time,before next March.
mon
stock
program
stock (after providing for pre¬
as follows, assuming that
the present shares of common had been outstanding during the en¬
tire period, that the net income of Canadea. Power Corporation had
been paid to the company, and that Federal income taxes had been*
;
Earnings per share of
/
ferred, stock
dividends)
provided for
on a
common
would have been,
separate return basis:
12 Months
was
Total capital accounts of $806,420,265 reported for the 12
$5,828,000,000, which were 7.43% months ended June 30, 1948. Net
of total deposits, were $282,000,000 income for the period amounted to
more than in June last year when
$165 782,743/ compared to $149,for
the
they were 7.02% of total deposits. 327,161
previous
12
000,000.
months,
cr
an
increase of
11.0%.
/Net gas utility plant of the re¬
Federal Power Commission Reports
Earnings of
Natural Gas and Electric Utilities
privately owned electric companies
earnings of $385,309,000 or 14% above same period of
porting companies aggregated $2,270,354,506 on June 30. 1949, com¬
pared to 'the $1,929,560,210 re¬
ported a year earlier..
Calendar Years
Ended
••
1944
Share
1946
1947
$1.18
$2.24
$2.76
June 30,
1948
$1.06
Earnings
1945
$2.85
earnings also rise.
/"-•' previous year. Natural gas companies net
Net income of the
first six months of
larger privately owned electric utilities in the
1949 amounted to $385,309,000,
the
Earnings in 1946 and subsequent years were substantially larger
in
prior years because dividends on preferred stock'were
decreased by a re-classification of 6% and 5% preferred stocks on
Dec.
28, 1945 and by
and
1946.
"/
retirement' of $8 million preferred stock iri 1944
*
/
/
•
•
/
\
■
j * The- average residential revenues per kwh. in the 12 months
ended June 30, 1949 were 3.37c; the residential usage per annum 1,445
kWh. 'The company has received two adjustments of gas rates during
the past year and has asked the PSC fpr about $800,000 additional in¬
/
crease.
Celebrates 23 Years
No increase in electric rates has been requested.
"The
biggest gap in this island (Britain) is noL
but the gap between the condition
of the British^ Treasury and the condition of the
worker's personal treasury.-' There is another gap
equally large, if not larger, between the condition
of the 'British Treasury and the' condition of the
14% higher than
the dollar gap
same
•
in the same month last year, nev¬
from
ertheless received higher revenues.
While
industrial
however,
January 1949 showed an in¬
crease
Of equal importance was the re¬
duction in fufel costs., Although
generation in the first six months
of, 1949 was 4.5% higher than .last
year,
3.2%.
tant
fuel costs were reduced by
The savings in this impor¬
item of expense
reflect some
lowering of coal and oil prices, as
well as greater efficiency of the
new generating'stations placed in
service.
Electric
the
-
...
operating revenues of
amounted to $2,-
companies
167,080,000,
up
7.1%
over
the first
sales,
of
...
10.2%^-•• over
Board of Governors.
"
pounds-that: he is . not particularly interested in
earning doD rs in a tougher market. Like the em¬
ployer, the worker feels more secure, too, and, since
not one in ten thousand has ever seen a dollar bill,
he does not
"In
.
of the
Chicago Exch. Members
1948,- the monthly rate of increase
CHICAGO,
ILL.-r-The Execun
steadily declined thereafter until tive Committee of the Chicago
ip June 1949. revenues were 0.1% Stock Exchange has elected to
| Electric operating
revenue de¬
including operating ex¬
provision for depreciation,
.tax.accruals, during the first
ductions,
penses,
ahd
C. Waters,
Waters & Alcus, and
.membership
partner
G.
of
Arthur
of
Labouisse, Friedrichs &!
of New Orleans, La.
394,000,
out
or.
an
increase
of
5.6%
the.like period in 1948. With¬
the savings in fuel costs re¬
ferred to above the percentage in¬
crease "
in
revenue
deductions
see
what all the fuss is about.
-Exchequer, -is worried about -earning more
employer and the average em—
not—-and until that gap between official
unofficial thinking is filled the dollar gap will
be filled either."--James Reston in a London
dollars the average
-
ployee
and
not
are
dispatch to the New York "Times."
Shelby Friedrichs, partner
Howard,
Co., both
six month ol 1949 totaled $1,727,over
quite
short/ while Sir Stafford Cripps, Chancellor
"
...
less than in June 1948.
large British employer's treasury.
-"The British Treasury is running out of dollars
but the British employer's treasury is so full of
.
"
January
Claiborne With R. L. Day
John H. Claiborne is
Day & Co.,
York City.
with R. L.
14 Wall Street, New
'
7
than
Skder-Winckler Go.
DETROIT,
MICH. — Shader,
periods in 1948 according to comparative statements of Winckler
Co.,
Penobscot Bldg.,
revenues
and income for the period issued by the Federal Power
Detroit stock brokers, are cele¬
Commission. An important factor^
brating their 28th
anniversary..
contributing to the improved earn¬ six months in 1948; Increases in Frank
J. Shader and Frederick J.
ings in the first half of the year, revenues received from sales in Winckler became
partners
and
the
several
classifications /were
says the FPC, was the continued
organized. the firm bearing their
increase in sales in the profitable led by the residential group with a
name in 1921,
They were elected
residential and commercial cus¬ 10.7% increase followed, by in¬
to
membership in the Detroit
tomer
classifications
at
a
time creases of 8.4% and 5.0% in the
Stock Exchange on Sept. 6, 1921,
when the high volume/ low profit commercial and industrial groups,
shortly after they were licensed
industrial sales were easing' off. respectively. The increases shown
by the State and have operated
Additional revenues also resulted for the residential and commercial
continuously since that time, i Mr.
from rate increases granted during groups'for the six months period
Winckler is a former Exchange
the period.
In consequence, . in closely approximate those for the President and Mr. Shader is pres¬
June of this year, some companies, individual months during the pe¬
ently serving on the Exchange's
With - respect: to revenues
while delivering less energy than riod.
in
-
'49
$2.57
Estimates in first-half of 1949,
had net
17
equal to the 7.1% increase shown
Increased
June
(953)
"
What an'accurate observation—and
criticism of "socialism"
or
any
what
ism, including the "managed economy"
'
In
exist.
a
a
basic
other form of stat-
systems!
really free economy no such anomaly could
Nature would automatically provide the in¬
centives and exact the
penalties!
•
H
COMMERCIAL
THE
(954)
18
.
Thursday, September 8, 1949
Constructive Approach
To the Gold Problem Possible?
C.
'
CHRONICLE
a
Composite opinion of Business Survey Committee, headed by Robert
Swanton, is that both production and new orders in August overbalanced declines by three to one.
-
FINANCIAL
&
other
Pdrchasing Agenls Report Uptrend in Business Is
,
ntyjw
V; :
<
(Continued from page 4)
composite opinion, covering the month of August, of pur¬
suffering
from
"dollar
short¬ with up to now, provides an out¬
chasing agents who comprise the Business Survey Committee of the
age."
standing example in support of its
National Association of Purchasing Agents, whose Chairman is Robert
Thus complete abandonment of critics.
C. Swanton, Director of Purchases, Winchester Repeating Arms Corp.,
When the Fund, at the begin¬
gold production would increase
Division
oL*>
:
•
The
Olin
condition for such
prompt service.
tries,
Inc.,
New
Haven,
Conn., is that
is
August
strong indication in
a
declining
that
have about reached bottom.
bottom
27%
and
turning
new
ders
or-
months and
both
have
i
creased,
!
ncing
those
report¬
ing
declines,
by
r
3
to
1.
are very en¬
couraging, Purchasing Agents
point out that heavier ordering is
Few
short-range com¬
consequently, produc¬
tion schedules and buying policies
geared
are
view
of
this current
to
future
business.
In the "up" column were: Alco¬
inventories
anticipation
of coal and steel labor difficulties,
inventories
would
be
Employment
has increased, though not in pro¬
portion to the production increase.
Buying policy, which has been
Moving "down": Ammonia, as¬
bestos, asphalt, bakelite, castings,
cement, some chemicals, starch,
dyestuffs, electrical supplies,
grains, cast iron, leather, some
on
a
"hand-topredominantly
mouth to 30-day" basis, shows a
slight swing toward the 60-day
position.
/.
The
.
of
consensus
lumber,
mercury,
paint,
phos¬
phates, platinum, synthetic resins,
rubber, solvents.
purchasing
future
on
Harder to get:
manufac¬
turing activities is that only hesi¬
tant, short-term programs may
ized and
...
%
Commodity Prices
The
tendency
August
was
of
to stabilize.
change
no
in
t
v,
■
Canada
V-V.
*
re-
Order
books
same;
ma-
with a
Prices
Prices
Those reporting price irirheveni
offset
remain
about
the
are
ments have been held up awaiting
recommendations
of
the
steel
Fact-Finding Committee and set.tlement of pending wage nego¬
tiations in other industries.
ricated items,
where labor is not
the major cost,
fcecome
f
are
continuing to
competitive.
more
Inventories
___■
].Industrial
.
Fab¬
tories
purchased
show
further
declines
hedge against possible
interruption of steel and coal pro¬
duction. Many who have been out
Of the market during a period of
inventory
liquidation
are
now
purchasing to cover immediate
centive
to
stock
There is
up,
dustrial materials
as
are
no
most
in¬
in¬
available to
meet requirement schedules.
United
States
American
of
assistance
not
necessarily the ones with
largest gold production.
are
the
From a theoretical and purely
objective point of view, the prob¬
lem of gold production as a whole
is
not
of
one
major significance.
It cannot by itself make any ma¬
tain parts of the
very
are
LOS ANGELES, CALIF.—John
MacFarlane and Roy J. Shel¬
don have been added to the staff
of
King
Merritt
&
Co.,
Inc.,
Chamber of Commerce Building.
gold
as
a
7/
However, once a decision has
been made that gold production
shall
(Special
to
The
Financial
FRANCISCO,
Fenwick
Smith
has
discontinued
but
continuing
be
actually harm the aims
attained.
'>:<?■V.v/t
to
of
Davies
of
higher gold price.
The present situation is quite un¬
satisfactory to all concerned par¬
ties.
dies
devices
and
subsi¬
the
New
York
ods
increase
to
This makes
price
gold
naturally, these free markets at¬
substantial supplies from
the producing countries.
The Fund felt an obligation to
support the par values regardless
Sidestepping
taking any defi¬
!
*10
Buying Policy
The prevailing "hand to-mouth
A
quired
30-day"
commitment
dropped from
70%
to
-
range
64%
this
emphasize
^schedules
crease
of
as
which
in many
deliveries.
claims
of
lack
policeman
of
has
to
acted
and
as
maintain
a
and
has
Gold
of
Exchange,
taken
in
_
eventually turn into
may
among
experts
various
of
wholesale
prices
warehouse
in¬
generally reported
Adams
has
been
added
York, and
Exchanges. ' "'
Cincinnati
\
Stock
of
Article
ate
changes in the
10%).
of
change.
Obviously, such uniform change
would
have
the
upon
respect to gold; for the relations
among
the
would
remain
member
accepted par values which are
pressed in
ficiaries
U.
would
view
In
the
the
of
charter makes
gold
pro¬
fact
that
the
special provision
a
for
changing the gold price, why
the Fund been unwilling to
propose the use of this section in
order
to
relieved
be
from
embarrassing
present
One reason,
of
the
situation?
is the often
course,
Qqvernment js required under the
charter
but
provision,;
^provision did
if
even
exist'no
not
unfavorable vote of the U. S.
der present
an
un¬
conditions.
heat to the infla¬
more
tionary situation which has pre¬
vailed
not
in
only
but
but
of
gold producers
actually unfavorable.
There is
no
unfavorable
need to discuss the
gold
the/world.
measures
vent
_
_
a
whatever
their
reported gold
the last decade.
during
reserves
On
the
Banks
and
Governments1
gold /price.
728
__
624
—
32
—
2,430
548
2,690
1,610
7,614
3,348
vetoing
1.882
1,080
127
1831
31
—
240
—
133
+
—-
8,139
3,459
—
from
present
the
an;
1948
report
ejtcellent
"
cf
bogy
the
serve
any
satisfactory motive
progressive gold pol-
a
as
increase of the
an
cannot
a
Short-Term
Long-Term
or
Solution
21
—
__
offset
or
Therefore
104
—
V
be¬
and
icy.
$83
__
check
to
inflation
longer
Difference
$5
past
inflationary effects may
be the result of
for
1948
ago,
has
have been taken to pre¬
methods
Plan countries have lost
of
the
Moreover, it is possible to de¬
vise
60%
of
spread of deflation.
The table shows that the Marshall
some
months
few
inflation
then
matter
a
Certain¬
war.
important consid¬
was an
until a
since
come
distribution, of
throughout
reserves
was
United
the
throughout the world
eration
Europeans
an
4,266
'♦
414
4,680
the Bank for International Set¬
of developments regarding
'■ I' '
recommending
price as a
are
increase of the gold
short-run device to increase their
dollar
the
In
holdings.
proceeds
higher
receive
from
mined
gold,
the
States
addition to
they would
sale
they
to
of
newly
expect
distribute
the
the
"profit" that would accrue from a
revaluation of the gold already
in
the
United
States.
The U. S. Government is under¬
stood
monetary gold.
b&
ex¬
Bene¬
who would get more dol¬
since the end of the
_
tiken
dollars.
S.
ly, this
_
are
and
change in the
no
un¬
Hi
data
currencies
unchanged
there would be
States
_
These;reports
effect
undervalua¬
or
tion of individual currencies with
held
'
immediate
no
over-
situation
Central
Britain
-1 The
than
more
A member has the right to
refuse participation in the
government would grant them
vigorous
Total
tlement.
defines
values of
par
Since those subsidies
have to be paid out of taxes, no
Spain
"'J.
IV
the currencies of all members." A
United
the
New
7
earnings.
and
to
staff of Westheimer & Co..
326 Walnut Street, members of the
Section
the rules for "uniform proportion¬
would add
Marshall Plan Countries
CINCINNATI, OHIO —William
those
change could be made against
81
Chronicle)
whereby
gold price has been especially
provided for in the Fund Charter.
living- this
and
162
Earle
an
the
on
index numbers
29
ware¬
sight
It is well known that the U. S.
321
Financial
in
countries might be able to acquire
sufficient gold for such purposes.
The question of a change in the
Treasury has been the principal
opponent.
Consent of the U. S.
Sweden
The
currency
devaluation
the
Turkey
to
domestic
1933-34. The dis¬
from
trend, but does
(Special
thing
the
Yet there is hardly any¬
for the status quo. But this is
probably not the decisive motive.
53
.Westheimer & Co. Adds
more
be¬
84
delivery
of
gold prices
Norway
South First Street.
and
money,
expressed preference of the Fund
—
40-D
inflation
in¬
—
Co.,
of
paper
the
66
&
price
basis
For
53
France
pro¬
gold
the
on
to feel
gold
$88
_
of
has not gone
costs
resulted
Denmark
Great
merit
evidence.
(million U. S. dollars)
;
1938
_
systems.
of
Reserves
_
attacks
severe
overissues
less it had been satisfied that the
conditions
Country—
Belgium
re¬
insignificant amount
although it is clear that following
to avoid a decline of gold
mining which in turn would de¬
prive them of valuable dollar
objection to such characterization
member
the
other
of the need to keep rules
Fund
been
It is well known that the U. S.
virtually
all the gold
producing nations Treasury has been fearful that an
(except the United States) have increase in the gold price, which
been compelled to subsidize their would be tantamount to a broad¬
gold producers in one way or an¬ ening of the monetary circulation,
support the status quo rather than
forward looking statesman who
is taking a constructive attitude
aware
of
higher
a
However, more important from
practical standpoint seems to be
a
a
changing
an
to
has
the undeniable fact that
leadership
Fund
bent
satisfied
costs.
7
principal complaint against
The
for
little
merits
the policies of the Fund has dealt
vision.
duced
and
currency
reserves
has
the increase in
pute
Gold Price
a
which
out
167
being drawn on,
These
are
the
argument
or
International Monetary Fund and
The
product.
,
998
instances, in place of mill
ventories
■
193
orders. Local
are
worked
of the dollar in
a
different.
outstanding
lars from the U. S. Treasury.
yond
continuation of rules- laid
down in the past when conditions
were
tween
$6,900 million,
countries the ratio be¬
ducers
have
have prevented any realistic poli¬
cies up to this date.
Are they
facts
their
The Fund is understood
;;
convincing
for
Italy
Rudolph
the
legal
Netherlands
available for the in¬
new
house stocks
and
Paul
C.
re¬
detail
short
a
that
are
prices
crease
to The Financial Chronicle)
be
its members, the vari¬
and
maneuvers
sions.;':.
JOSE; CALIF.—William E.
in
Drew has become associated with
lihonth, the> decrease representing
an increase in the
60-day forward
position. The change is not suffi¬
cient to indicate
(Special
SAN
would
study
describe
to
statistical
on
most
metallic
cat-and-mouse game between the
but
^vould
merely i n c re a s e
present uncertainties and confu¬
reasons
In
to
than 30%.
or more
and Great Britain have
special
nite^ position will lead nowhere
With Paul C. Rudolph Co.
In view of
countries.
ducers
answered about the
$10,500 million
rigid relationship between par
and gold this meant also
that
But first the question has to be
$700
values
nobody.
the gold
on
from
majority of the total voting power
is needed plus the express consent
of members having 10% or more
defense of the official gold prices
in both producing and consuming of the total quotas (only the U. S.
the
Austria
c"
"facts of life."
of the
unavoidable.
the issue to avoid
died at his home at the age of 73.
In
tracted
was
production.
decision
a
Switzerland
that country had begun sell¬
ing gold in London at premium
prices.
A
face-saving
solution
Chronicle)
Stock
countries.
respective
ter
expansion of those meth¬
an
of
directors' trip to South Africa af¬
by producing coun¬
tries to prevent a decrease of gold
production. Nobody would advo¬
cate
those
fidence in
the
fact, however, these official gold
prices were purely nominal in
many member countries and the
"free" markets quoted high pre¬
miums for gold transactions. Quite
higher
used
are
$14,500 million to $24,200 million,
million to $1,387 million. The re¬
serves of all countries
except the
U. S. and Switzerland fell from
in
were
Various
question
immediately the
up
held by
reserves
States increased from
adequate gold reserves would go
a long way to restore
public con¬
charter,
This most fascinating story culmi¬
nated recently in the managing
brings
hand, the
United
supposed to reflect the gold price
accordance with the
&
Hays,
expressed in U. S. dollars in
were
a
This
Hays Dies
William. H.
values, which
par
producers by their governments
as well as giving them access to
outlets
where
they
could
get
of its policies and has called at¬
Mejia, Russ tention to a number of minor
Building,, members of the. New achievements where it
helped in
York and
San, Francisco Stock
bringing about necessary changes.
Exchanges.
*
':
Yet its
handling of the gold
problem, perhaps the - most im¬
portant problem it had to ;deal
William
staff
those
members
hair¬
splitting that led to acceptance of
particular methods of subsidizing
flexible and adjustable.
CALIF.—
joined the
operations, decided
upon the par values of the cur¬
rencies
of
its
more
important
ous
policies
which
its
of
Fund
expanded, there is hardly
;The
SAN
be
point, in
a
ning
.
not
rather
is
Mejia Add
storehouse and refuge
of value.
toward
Davies &
world would be
grave; last not least, there
the psychological aspects of
with
A.
in
a
production needs.
(Special to The Financial Chronicle)
!
Rave been sharper if some addi¬
tions to stock pile had not been
made as
With King Merritt & Co.
,
inven¬
(August. The rate of decline would
need
tendency to hold based
are advancing; inmerely
by those. re¬ !ventories declining. iEmployment
porting further declines. Purchas¬ is steadier. Declining exports, if
ing Agents comment that the cur¬ continued, will forecast an indus¬
rent trend may be temporary, as trial decline.
•
■many
anticipated price adjust¬
creases
the
foreign assistance but not to
any decisive extent.
As a matter
of fact, the nations most urgently
crease as
64%, the
their
in-
no
in the United States, but
a very high percentage are reported holding to July schedules,
in
ifriglgTcost structure durjng the
month.
'■■■
/7i>'c77
Production has shown
prices
highest number since January,
port
galvan¬
black
Business in Canada has leveled
•
t»
Aluminum, brass
sheets, tile,
pipe.
steel
scrap,
be developed while major labor
^osts remain unsettled.
1
of
for
oxides.
lower than in July.
executives
'■
hol, brass and copper, products,
building materials, burlap, cable,
cottonseed
products, detergents,
fats, food products except grain,
fuel oil, lead products, menthol,
some
papers, soap, textiles, zinc
pile buying in
industrial
V
Indus¬
continue to be reduced. Except for
stock
important
creases.
August, the "ups" equalizing the
Purchased
in Novem¬
the increases balance out the de¬
close
trial price trends have firmed in
"downs."
with 26%
price changes
are reported
this month. In the
number of items changing price,
for seasonal and
mitments;
layoffs,
burden
ber,
when
employment
really
jor contribution to the problem of
started to decline.
While re-em¬
.economic and monetary world re¬
ployment is listed by 21% of thehabilitation.
It may be useful to
reports, the highest since last Oc¬
put this fact on record.
tober, it is noted that production
But as a practical matter there
increases for the month were re¬
will certainly be no end of gold
ported by 42%.
mining.
Too powerful
interests
are involved, the effects on
Specific Commodity Prices
cer¬
n-
over-
bala
While these statistics
further
reported
which compares with an average
of
50%
for
the
previous
six
up.
Production
and
Robert C. Swanton
rolls
Only
pay
reached
is
the
in
There
has
curve
good
Employment
business
the
be in
to
Indus¬
the
to
those
oppose
mendations!
for
a
relief
recom¬
of
the
summary
"dollar
shortage." *
This
position
COMMERCIAL
THE
Number 4836
170
Volume
FINANCIAL
&
CHRONICLE
(955)
1#
"A*
this
abroad
and
country
remedies
superficial
tutes for deep-seated
consent of the Fund. * A
Adoption of the proposals by
the U.
S. Government and the
members
of
the
International
of
substi¬
as
ills. It would
an
price
every
few
ate
method to
cre¬
dollars.
more
this
However,
does not
imply
support for those who are satis¬
fied with continuing an unhappy
status
(1) The difficulties of the gold
mining industry would be re¬
lieved and an expansion of profit¬
years as a conve¬
nient and painless
able
There is need for a
constructive approach which ac¬
possibilities of changes if
be expected to lead
they
production
possible.
made
Present subsidies and other round¬
quo.
cepts
the
would have
following principal effects:
Fund
Monetary
in the extreme to
adjustment of the gold
dangerous
have
pledged without the ex¬
or
press
among
all those who are getting tired
be
sold
widest approval both in
deserves
can
getting higher
of
methods
about
prices would become unnecessary
and could be eliminated. Another
of the post-war
black market or¬
would largely disap¬
ganizations
toward relaxation of tensions and
pear.
ultimate elimination of difficulties.
Based on the present pro¬
duction rate the dollar proceeds
As
far
the
as
gold problem is
concerned, the weight of evidence
seems to
be favoring changes in
the
rather than
present policies
not hold any hope for
present
set
continuation
of
which
do
"uniform proportionate
change" of par value, or, stated
simpler, a change in the dollar
purchase price of gold, should be
made only as a part of a broad
and long-range program of eco¬
nomic and monetary improvement
But any
and stabilization. It ought to rep¬
an
important and perhaps
step toward that goal.
would be its only but real
decisive
This
justification.
gold mining industry would
increase by about $260 million.
of the
>
A Constructive Program
production could be brought
If
up
the better.
resent
(2)
to the 1941 level (this
should not be impossible), those
again
up
proceeds would increase to $1,600
million or twice the present in¬
particularly
after
riod
will be less
during therfirst pe¬
adoption of the new
Actual proceeds
come.
prices.
In
event, the increase will
and bring consid¬
any
substantial
be
relief
erable
the
to
producing
countries,
particularly
Sterling block area.
the
to
One of the main obstacles
stability and re-es¬
tablishment of public confidence
would be removed. Whatever the
monetary
theoretical
of
aspects
the
for
long range program/. It will have
to be carried through in such a
Surely, the time required to re¬
establish normal conditions would
to encourage efforts to¬
ward permanent monetary, finan¬
cial and
economic stability.
It
be
as
way
shall
applied
be
crowning
as
in
move
a final and
such a pro¬
It is not concerned with
short-term assistance but it may
gram.
providing a
psychological stimulant and thus
may be helpful in connection with
be
in
important
the unavoidable
measures.
'
But it offers an
tion
the
of
unpopular
•
immediate solu¬
gold price
problem. This should lead to an
expansion of gold production and
higher dollar procjeeds- for the
gold producing countries. Fof the
U. S. the result may be some re¬
lief from the heavy burden of
but without any
appreciable danger of any increas¬
ing trend toward inflation. '■
foreign support
The following are the
principal
a
price of gold from $35
$47 (approximately one-third).
purchase
to
(2) Such a move would increase
the value of the existing gold
stock of the United States by ap-
proximately $8 billion. This
amount of gold would be set aside
for purposes of world monetary
stabilization.
As
a
result the
monetary gold stock of the U. S.
would remain unchanged at $24
billion (at the new rate of $47 for
a fine ounce of gold).
The U. S.
Treasury
would purchase new
gold at the new price of $47.
(3) Administration and distri¬
of
the
earmarked gold
would be handled by the Interna¬
tional Monetary Fund in accord¬
ance with the terms of an agree¬
ment to be negotiated
between
the Fund and the U. S. Govern¬
bution
These terms would
provide for
allocation of an appropriate
of the
share
gold to member countries
which, in the opinion of the Fund,
have taken all the necessary steps
toward
the
currency
would
as a
to
serve
The gold
exclusively
backing for the domestic cur¬
rency
than
stabilization of their
and economy.
have
of the member.
10% of that gold '
gold stocks of the
small as they
countries,
be, will be increased by the
appreciation of the gold price.
This again will help those coun¬
tries either to increase the back¬
ing of their Currency or use the
No more
could be
for
purchases
needed materials and
additional
gold
of
abroad
equipment.?•'' /:'-.i ' •'
['
:[
'
Experience has shown that an
in the gold- price tends
increase
hoarded
bring
to
gold
into
the
and into the coffers of the
central banks. There is good hope
open
this happen once
see
(4)
again.
Among the most significant
effects would be the impetus and
currency"
countries to make a determined
effort toward monetary stabiliza¬
tion.
There are great difficul¬
ties
to get
democratic govern¬
ments to take the risks unavoid¬
for
stimulus
the
"soft
involved in such measures.
governments could point
to the large benefits to be de¬
rived
from
the distribution of
ably
If those
gold, it should be easier for them
to
convince
voters
about
the
necessity
for making new sacri¬
fices.
(5) As far as the United States
concerned, the often empha¬
sized
and
perhaps overempha¬
sized inflationary dangers should
not materialize to any substan¬
is
tial
degree.
There would be no
inflationary dangers from the ex¬
isting gold stocks under the pro¬
posed
ward
set up. The tendency to¬
expanding the money sup¬
ply would be restricted to
purchases of new gold by
S.
U.
ment.
..
this vital prerequisite
presented so far.
The domestic
member
Treasury.
the
the
-
Obviously, any inflow of gold
an
inflationary trend un¬
starts
der
the
lation.
present
.
not
an
unman¬
monetary
legis¬
It is to be expected that
gold production will
sale to the U. S.
both*
on
work
But it is essential to
ures.
types, of projects at the
Otherwise the short-
time.
same
not
technical
decreases
or
the
supply by almost $1 bil¬
monetary authorities
have ample means to handle any
situation which may develop from
an
inflowv of gold in accordance
with their overall monetary poli¬
money
bookkeeping figures. Incidentally,
the
cies.
other
diffi¬
the
hand,
culties of closing the gap between
American
and
exports
somewhat relieved by
be
larger
gold
inflow.
would be
solution
a negli¬
It
one step toward a
this problem but not
just
gible one.
(6) The
organization
most
strongly affected by the proposals
would be the International Mone¬
tary Fund. A completely new era
be opened up for its activi¬
Its position and influence
may
ties.
world
upon
events
monetary
strengthened
be
would
enor¬
provided
the
officers
should be willing to assume ap¬
responsibilities, some¬
been somewhat
propriate
thing they have
reluctant
In
do
to
the first
trend
to
up
now.
place, there would
to
join the Fund by
the nations still keeping on the
a
(perhaps with the only ex¬
of
Switzerland).
Few
would be willing to forego the
fence
ception
of getting
chance
valuable pie.
Then there
a
be
very
a
Fund
the
for
the economic policies
member countries by
the
de¬
principles which
make members eligible for
termining
would
the
that there is
is
It
shares.
their
piece of the
would
opportunity
to influence
a
well
known
widespread opinion
members that they have a
legal right in their quota allot¬
ments and the Fund has rib right
among
impose conditions when selling
dollars. Whatever the legal posi¬
tion
no
this
in
there cotrid be
the Fund's right
case,
doubt about
allo¬
would
impose conditions before
to
gold.
cating
be
this
Indeed,
the very
essence
of the plan.
1
Therefore, it will be of utmost
the Fund to set
principles clearly and
importance for
down those
distinctly and
to make sure that
they are not only accepted but
actually carried out regardless of
the usual™ cries about infringe¬
national sovereignties.
'.Here is an opportunity for the
Fund to break with its not too
ment upon
successful "trial and error period"
and make a new start
aim
which
for
it
was
toward the
organized,
that guidance
and leadership that had been pro¬
vided by the City of London dur¬
ing the nineteenth century and
by the Presidents of the leading
central banks during the inter-
namely
to furnish
period.
pointed out before, there
has been a certain reluctance of
war
As
far-reaching
responsibilities and a tendency of
the Fund to
assume
activities such as collecting
formal
statis¬
tics, where it has done an
excel¬
itself
restricting
lent
it
should
be
made
be
can
should
every
people
people
understand
to
made
now
a
The
problem.
be
some
the
of
coun¬
the iron curtain
far-reaching
right time to
fully as
highly
as
such
that
behind
are
members of the Fund
explain it to
to
with
done
required to
effort
be
plan,
American
the
might open
possibilities at the
narrow the gap that
between Western and
exists
Eastern
Europe. In this way, the
could make a substantial
plan
contribution toward peace in the
political and economic sphere.': i
Strangling American :§
Economy
Sees Tax Structure
to
more
job indeed.
Important as all this may be,
is just a first step. There is
leadership
provided
for by some organization.
This
may be the Fund's last chance. If
it should fail, it can be safely
predicted that some other organ¬
ization will be set up to fill the
need
and
for
it
courageous
will
have
to
be
leaving the Fund to its pure¬
ly technical activities.
The fact has been stressed re¬
gap
,
peatedly that this is a long-range
"New England Letter" i
First National Bank of Boston, in current
venture capital is
says
imports
would
to
the
<
the
On
be
would
adopt
fact
tries
The
lion.
of
meaning as a step toward
permanent solutions.
Whether or not the consent of
Congress
'important part qf
an
long-term stabilization program,
merely a juggling around of
a
its true
banks increases
that here is
is dissipated and loses
term help
The problem should
proper proportion.
After all, there will be a ten¬
dency
toward
increase of the
money supply as long as popula¬
tion and production are expand¬
ing.
Yet a 1% change in reserve
requirements of commercial
in its
seen
of
has been
is
one.
be
systems/ There is no
hope to repeat this method par¬
ticularly since the needs are so
much vaster.
No other way of
monetary
achieving
it
but
ageable
great
Government will
decision of the In¬
ternational Monetary Fund in ac¬
cordance with Sec. 7 of Article
IV resulting in an increase of the
to
for¬
After the First World War,
to
proposal:
(1) The U. S.
consent
substantially.
may
vexing
features of the
people puts its trust.
shortened
> annually.
*
Surely this is not a negligible
amount
eign loans provided the basis for
re-establishing gold stocks and
adoption of bur¬
often
and
densome
gold backing, the shattering
effects
of
ten
disturbed
years
have to be offset by something
a
in which the
mil-
$500
lion-$l,000 million
needs
proposal to be outlined be¬
low appears to be in accordance
with the principles laid down be¬
fore.
It does represent part of a
The
another
by
mously
(3)
to
this
boost
siphoned off by heavy tax payments.
.
-
;
private enterprise and our democratic form of gov*
ernment hangs in the balance, as our economy is being strangulated
"The fate of
crushing taxation that is dangerously siphoning our supply' of
capital," says The First National Bank of Boston in its cur¬
England Letter." Con
——
■
tinuing, the bank says: "Our fore¬ cient to compensate top execu¬
most task is to overhaul the tax tives for the worry, strain, and
structure
expended in the arduous
by revising provisions energy
creating a malignant growth that task of management. In a ques¬
tionnaire conducted by "Fortune"
is
obstructing the creation and
flow of the 'lifeblood of business.' magazine among American busi^
by
venture
rent "New
"Venture
capital
'seed
the
is
money' that provides the dynamic
force to our economy. When there
is a constant and an ample flow
the economy is healthy
expanding, but when slug¬
of capital
and
the
70% replied
the question,
executives,
ness
negative
to
in
'If
could double your income by
working two or three more hours
a
day, would you do so?'
And
this response should cause no sur¬
you
gish, progress is halted and stag¬ prise in view of the tax schedule.
nation follows, as was the case in In the case, for instance, of a per¬
the 1930s when the flow of this son whose salary is doubled from
money was reduced to a trickle, $50,000 to $100,000 a year, he re¬
with the consequence that unem¬ tains only $12,000 of the addition¬
ployment mounted to the highest al $50,000, while the Government
takes $38,000.
levels in our history.
It is obvious then
that our tax policies not only de¬
"Over
the decades the major
savings were stroy 'seed money' but also de¬
ploughed back into prive the nation of valuable tal*
and the savings of those ent that could make a great con¬
tribution
to our material wellhigher income brackets.
of
sources
the
business
the
in
capital
money
Taxes absorb such a large propor¬
of the income
tion
being.
of this group
that the individuals work in
real¬
"The
most
is
Our fore¬
is clear.
course
task
to
save
the Ameri¬
ity from six to nine days out of
system from destruction from
10 for Federal, state, and local gov¬ within
by restoring its vitality
ernments. The aggregate amount through a constant and large flow
of income after taxes of those re¬ of fresh capital.
To do thi£ there
can
ceiving $25,000 and over a year in must be a change in our national
1946, the latest year for which economic philosophy and an over¬
such data are available, was 26.% hauling of the tax structure. /
below that of 1929, while total na¬
"While the tax system needs a
tional income during this period
complete overhauling, those pro¬
showed a gain of around 105%. In
visions that prevent the accumu¬
consequence the proportion of na¬
lation of and; retard the flow of
tional income held by this group
venture capital should be given
declined from over 8% of the total
first consideration. The release of
in 1929 to 3% in 1946.
this additional capital from taxa¬
"Not
only has there been a tion would provide the most ef¬
sharp decline in the upper group fective means of attaining the na¬
^income after taxes, but "a much tional
objective of a high level
smaller
proportion of this income of production
risk ventures
the net return on such in¬
because
vestment, even under the most fa¬
vorable circumstances,-would be
if
little
tained
any
from
The
ties.
than that ob¬
tax-exempt securi¬
more
government takes the
lion's share of the winnings,
while
the investor absorbs all the
losses.
employment."
and
is being invested in
New York Stock
Exchange
Weekly Firm Changes
Exchange
following firrii
The New York Stock
has announced the
changes:
>
*v
>>;-■
>
Transfer of the exchange mem¬
'tails I win, heads
bership of the late Eugene Bal¬
you lose' conforms
to the Karl lard to John D. Britton will b&
Marx platform of a century ago
considered by the Exchange on
of destroying the private enter¬
Sept. 15.
Mr. Britton will con¬
prise system by imposing a heavy tinue as a partner in Conning &
progressive or graduated income Co. and Ballard.
'
This system of
tax.
..
,
;v
.
s
..
ji.*
,
^Interest of the late Robert D.
"By following the tax policies of Hartshorne in Abbott, Proctor &
the
Communist platform, Great
Paine ceased Aug. 31.
>
Britain is scraping the barrel for
Interest of Lucius Wilmerding,
new venture capital and her econ¬
limited partner, in Harris, Uphtam
omy is bogged down. The United
• ^ j
States is rapidly moving in the & Co. ceased Aug. 31.
direction.
same
As
the
distin¬
guished economist, Willford King,
has said: "We are apparently doing
up
Two With King
(Special
best to imitate the British, dry
our
the sources of capital, and thus
our industry to impotence
reduce
and
nation to poverty.'
our
only is our economy sjffering from a lack of fresh capital,
which is the lifeblood of business,
"Not
but the
taxes
shrinkage in income after
the two percent of our
of
population who are the business
leaders is destroying the incentive
to assume the heavy responsibili¬
to The Financial
ST. CLOUD,
&
MINN.—N. H. Pe¬
Mike J. Thelen are
associated with King Merritt
terson
now
Merritt
Chronicle)
and
Co.,
North.
1211
Inc.,
v
.
*
First
Street,
i
•
With W. M. Zuber &
(Special
to The Financial
Co.
Chronicle)
COLUMBUS, OHIO—Arthur J.
But its adoption would
Prendergast has become affiliated
with W. M. Zuber & Co., 16 East
Treasury. This amount plus some strengthen immensely all the ef¬
ties of directing our economic ac¬
forts that will have to be made
Broad Street.
In the past he was
gold from other sources is now
to provide stop gap and temporary tivities. Many firms are finding it
more than one billion dollars. Ap¬
with Vercoe & Co. and the Guar¬
solutions.
Thus it is not a sub¬ increasingly difficult, in view of
preciation of the gold price and
anty Trust Co. of New York.
stitute for those short-term meas¬ taxes, to provide rewards suffi¬
expansion of gold mining may
the
be
annual
offered
for
program.
20
THE«COMMERCIAL
(956)
&
FINANCIAL
CHRONICLE
than enough
more
The Function of Bank Reserves
to hold
a
deposit
or
banking
institutions
veloped, however, our conception
the primary function of legal
reserves of banks has undergone
of
Originally the
principal purpose of legally re¬
quired reserves was to assure the
ability of
individual banks to
meet liabilities on demand during
a period of strain. That is to say,
it was to provide for the converti¬
'Significant change.
bility of bank notes and bank de¬
posits into cash.
lishment
With the estab¬
the
of
Federal
System, the role of bank required
was
greatly modified,
and today they serve mainly to
limit
a
on
the total volume of
bank credit and the money supply.
bank
by
reserves
requirements
reserve
a
main
readiness to
obligations, they became
the means by which the central
banking authorities exert a re¬
directs,
extend
to
credit
and
The
factors
and
reserves
as
have
just
to
volume
set
of
include
to
came
reserves
which
funds
a
bank might have on deposit \yith
a financial center.
another bank in
In the course of time it became
evident that
not
banks
and
their
which
reserves
depositors.
bank
a
which
pay out.
could
bank to honor its
a
on
not
were
bank
Ir) other words, required
did not assure the ability
reserves
of
the
The
legal¬
was
ly required to maintain
reserves
were
protection: to
adequate
an
alone
reserves
obligations
demand,- Moreover, since part
of these
reserves
posit
with
their
held
was
de¬
on
recall
for
banks,
meeting the de¬
mands
of
local
depositors only
transferred to the correspondent
banks the problem of raising cash
to'liquidate banking system' lia¬
bilities.
In
fact, in deposit with¬
emergencies,
outlying
banks tended to rely on borrow¬
ing
from
their
correspondent
drawal
banks with whom they maintained
deposits.
But these banks cquld
use only their excess reserves
jfor
such lending, and the scattered
excess reserves of the entire
bank¬
ing system were inadequate when
a' large
number of banks were
facing unusually heavy depositor
withdrawals.
mate
safety of bank deposits de¬
pended
much
more
availability of
serve
the
upon
reservoir of
a
funds, to be drawn
re¬
upon
in
of need, than upon
legal re¬
serves.
That is, what was needed
case
was
institution to provide ad¬
an
ditional
and
money
emergencies; and,
to
provide
in
reserves
more
important,
additional
of
means
payment, under appropriate regu¬
latory safeguards in accordance
with
the
growth
industry and
The
of
agriculture,
Federal
System
ties
were
empowered
They
money.
issue
to
also
were
em¬
powered to lend to member banks
or
to
buy United States Govern¬
ment
securities
of commercial
market,
a
or
bank
form
member
at
the
reserves
Reserve
kinds
bank
Banks.
It
was
not
and since
produce
excess reserves
income,
it
was
do
ex¬
pected that member banks would
not
ordinarily keep excess re¬
dollars
six-fold increase in bank deposits.
A
contraction
in
of
reserves
a
given amount tends to produce
six-fold contraction of deposits.
basic principle
The
a
underlying
this possible expansion
and
con¬
If
there
only one bank in the coun¬
try and if we can assume that
people hold their money in the
,
of bank
form
deposits, the bank
could expand its deposits indefi¬
nitely by making loans to its Cus¬
and
tomers
crediting
the
ceeds of the loans to its
pro¬
customer
.
banks are,
the greater the volume
deposit expansion a
will
additional
of
volume
given
:
and
support
re¬
the
:
greater the volume of credit and
deposit contraction a given loss of
reserves will tend to require. Sec¬
ond, with our system of 14,000 in¬
dependent banks, legal reserve re¬
quirements at some level are an
essdhtial
ism
ume
element in the mechan¬
through which the total vol¬
of bank credit and deposits
may
loss
all control.
of: deposits ;to
Those
who
the
on
banks.
merely
transfer of deposit own¬
on
the books.
The only
.
limitation
posits
the expansion in de¬
on
arise
would
out
of
*
the
amount of .reserves
its
in proportion
which the bank
deposits
maintained, either because of its
rules
own
because of legal re-
or
requirements.
At
,the
time member bank re¬
serve
present
requirements average about
serve
Requirements of the
Reserve
Federal Reserve Banks
credit to member banks.
credit.
That
understanding of the modern role
commercial
of
contrast
mercial
ments
bank
significance of com¬
bank
reserve
require¬
the
and
reserves
the Federal
Reserve
needs to be
as
applicable
Banks.
recognized that
requirements
reserve
in
requirements
gold certificate
to
to
reserves
the
far
as
are
It
con¬
15% of total deposits. Fifteen per
cerned, as in other respects, there
are important differences between
cent
commercial banks and Federal Re¬
permit
reserves
expand
about
six
deposits
and
to
two-third
Banks.
serve
As
we
have seen,
the
times.
principal present-day function
one
commercial bank
Thus, if there were but
large commercial bank serv¬
ing the entire country and hold¬
ing all the deposits of the people,
its deposits could expand to $666
for
each
additional
serves.
#
we
:
,
:
$100
,
have not
of
one
re¬
bank but
Therefore, in the actual
competitive
bank
no
situation
that
exists
expand its deposits
can
by making by itself
investments
of
loans and
new
six
times
the
amount of any newly acquired re¬
serves. It
can not do
so because
customers
the
do
not
borrow
leaving
deposit;
they borrow in order to spend,
and the funds they borrow are
more
apt to be checked out to
expectation
borrowed
funds
of
on
deposit
expansion
tends
to
it
reserves
are
re¬
System
tain
counting
when
expanding Reserve Bank
credit beyond a certain point. This
would then tend to put an auto¬
limit,
high
although
sometimes
the total monetary
expansion that could
one, on
credit
take place.
does
not
The System, however,
expand its credit irre¬
may
expanded
in the
seems
so.
Authority
Bank
'
'■
know,
you.
reserve
ber
banks.
ments
.
'
;.vf
'''■
:
■'
Board
requirements of
The
basic
it
may
ob¬
by redis-
"borrowing
at
its
Although
or
the Reserve
accommodation
such
is
Bank
under
applies for
obligation
no
to
member bank with
satisfactory collateral can usually
grant credit,
obtain it.
a
Federal Reserve policy
established
7%
for
mem¬
by law against
13%, 10%
are
central
reserve
city,
city, and country banks,
respectively.,. These
may
be
raised by the Board to a maxi¬
mum of 26%, 20%
and 14%, re¬
spectively,
Reserve require¬
reserve
ments
3%
time
on
member \
6%;
to
deposits
banks
Congress,
may
-as
;
from
last year,
anti-inflation
In August,
an
the Board tempo¬
gave
measure,
at "all
range
authority to impose addition¬
requirements on mem¬
al reserve
ber
banks
to 4%
up
deposits- and
posits.
Vk%
Under
demand
on
time
on
•
The
instrument
of changes in
requirements is not one
reserve
is
that
well
for
use
of
volume
to frequent
bank
the
credit
It is instead
deposits.
be used
to
adapted
influencing
needed
to
contracting
time
panding the liquidity position of
the
banking
system
and
for
encouraging or discouraging
borrowing by member banks is
bringing the other credit control
principally not in the
granting or refusing of loans but
in
the
rate
charged for redis¬
serve
counts
When
advances.
and
the
Federal Reserve believes that it is
in the public interest to encourage
credit expansion, it traditionally
sets its rediscount rate low in re¬
lation to
prevailing market rates.
it
When
wishes
to
discourage
expansion, it raises the re¬
Banks,
and
as
/
.
the
entire
Bank
Reserve
of
Federal
the
credit situation.
In the period of
financial
reconversion
through
which
from
largely passed, however, changes
reserve requirements as¬
sumed
an
exceptional importance
instrument for
flation
control.
because
case
instruments
credit
This
the
for
and
was
money
have access
credit through
deposit
$100, it must put aside $15 as
against the deposit and
lend $85.
When it has done
this it has both the $100 deposit
posits which member bank lend¬ .and the $85 deposit put to the
ac¬
only
to
emergencies
of
meet
been
national
depression
and
Moreover, if the
System
disposed to act in an irre¬
sponsible way to expand credit in
a period of
inflation, it has now
as
the
buying of bills.
either Treasury
severely limited in use by
special circumstances arising out
of the financing of the war and
were
the
absence
the
war.
Bank credit is
may
play
effective
real' peace
the future.
be
of
after
Recent
developments,
which I shall discuss shortly, in¬
the latter while of great impor¬ dicate that perhaps greater em¬
tance in the
'twenties are not phasis may now safely be placed
widely used today.
The influ¬ on other monetary instruments
ence of the
that
the
instrument
of
System over the ex¬ and
tent
of ^such
access
to Reserve changes in reserve requirements
bills
may
or
banker's acceptances, but
traditionally made
by raising or lowering
interest yields or rates at which
the Federal Reserve will purchase
these market instruments.
Rela¬
Recent
a more
Federal
balanced role in
Reserve
Credit
Action
market
a
,
in¬
System's other
influencing the
made
receives
now
in bank
When
bank
war
have
we
the subject of bank reserves
a
Re¬
into broad contact with the
total volume of money and credit
well, also
Reserve
instruments
tively low Federal Reserve buy¬
ing rates encourage the money
have
as
ex¬
or
sponsibly; substantial increases in
credit
total
bank
measure
a
from time
for
and
Reserve
Bank
de¬
this
of
expressed
tem;
sales.
to
high
The
sell
these
rates
bill
A
when I
ago,
year
session
the
Sys¬
seminar
discourage
such
Banking, circumstances
to
avenue
has been
war.
traditionally the cheapest
were
Federal
Reserve
day the Treasury
an
inportant role
way
to
credit, and to¬
bill is playing
in
the
adjust¬
J
of
require¬
using an average reserve
requirement for all banks of 15%.
occur,
to
Reserve
the
demand, deposits
and
reserves.
reserves
member bank
a
These
tem from
buy
expand
Governors has the power to -vary
rary
Federal Reserve Bank.
to
require¬
Reserve
Member
the
restrain
can
bank
of
additional
Federal
reserve
to
to
authority,
which expired at the end of June,
One means of control has been
the Board raised reserve require¬
through changes in Reserve Bank
rediscount rates.
When a mem¬ ments last September, and low¬
ered them in May and June.
ber bank has lent or invested all
quired to hold in gold certificates
Such
and
or
it
as
gov¬
reserves
'1
employ to alter
may
volume
the
has importance in connection with
System.
're¬
contract
Requirements
As
three; principal in¬
struments which the Federal Re¬
.two major kinds of functions per¬
formed by the Federal Reserve
ments could, in a period of vast
credit expansion, restrain the Sys¬
Bank
contracted
Change
are
market
matic
be
credit
securities
credit.
Federal
Over
of the economy.
■There
Federal
Banks
Bank
by the System
!
;
discount rate.
Reserve
has
control
sell
to,
public interest to do
'
credit
of 25%
reserve
bill
bank
initiative to
that
deposits and help to bring about
their proper adjustment to the
serve
of
of
securities
thus
promote the expansion of bank
needs
and
market policy.
enter the market
can
own
government
influence the volume
can
against de¬
posit and note liabilities that the
and
Con¬
illustration of how credit
on
the Federal Reserve Banks?
the bank which lent them.
an
a
in the coun¬
try may be influenced. What is
the purpose or role of the reserve
a
and
as
tal amount of money
another bank than to remain with
sider
of
mechanism through which the to¬
approximately 14,000 commercial V The
banks.
is
requirements imposed by law
•
,
reserves
is, it
Reserve
increases, banks
reserves
bank
or
bank
Federal Reserve
volume
ernment
expand their de^
posits by a multiple amount; con?
versely, a loss of reserves tends
to induce a multiple contraction
of deposits.
Thus if the Federal
of
of
in its open
its
at
the
group may
Reserve
volume
is, having set for
instrument
the
over
ments of banks. When the volume
a
Reserve
rediscount
The
the Volume of Bank Reserves1 V
as
in¬
buying
Federal
the
its
active
serves
con¬
Influence
Reserve
of bank
the
bill
or
currency
Federal
rediscount
the
That
time
an
of bank deposits into
to extend needed
vertibility
of its available funds,
I believe it is helpful for a fuller
a
ership
be brought under some over-,
checks drawn
bank would deposit them
bank; the effect would be
the
at
other
receive
can
centage
checking accounts. Being the only
bank, it would not need to fear
it
the volume of de¬
may
the lower the per¬
reserve requirements of
serves
investing.-
and
authority to exercise
over
we
generaliza¬
First,
lending
reserve
influence
tions.
important
of credit and
a
regulatory
two
draw
illustration
this
From
*
.
traction is that bank deposits have
their
principal source in bank
of
a
the
insure
to
Reserve
the
and the money market in general
seek
out
Federal
Reserve
system we now have, there is no
for any mechanical limita¬
tion on the capacity of the Fed¬
eral
mech¬
to
monetary and banking
a
credit
buying rates, the System tradi¬
tionally awaits the action of banks
to $666.
amount
of
Stated in another
makes
The Federal Reserve Sys¬
tem, through its discount and open
market instruments,
was
given
serves.
under
the
more
essentially passively -to
reserves.
the
reason
sulting increases
addition to bank
possible about a
the
that
member
banks
could not legally reduce their re¬
serves below the
statutory mini¬
six
over
given
a
way,
reserves
with
provided
mum
support
bank deposits.
creates
deposits
mechanism
The reserves set
As I pointed out earlier, two
aside by the banks involved will
factors limit the volume of de¬
total $100, which is the 15% re¬
posits that banks may create and
quired against the aggregate de¬
hold:
the volume of bank re¬
posit of $666.
serves, and the reserve require¬
in
the
that
me
give
even
the
and
influence
ca¬
will
in the open bank
that
process
member
of
certain
paper
of
kind
lending and moving
to
seems
to
an
in
both
operates
Reserve
their
limit
posits created thropgh the succes¬
sive loans and investments, will
But
Reserve
established primarily to meet
these needs. The Reserve authori¬
the
on
to
serve
role
With
reserve
existing levels of reserve re¬
quirements, one dollar of reserves
commerce.
was
The
reserves.
tend
may
strument
these other
or
adjust to changing credit
instrument
pivotal
pacity to perform these functions.
It
in
At
to
Gradually
it
became
more
clearly understood that the ulti¬
bank
Banks
funds from bank to bank with re¬
$100 at the first bank and the de¬
deposits
actions
Recent
anism.
anything cause the people
to hold currency rather
requirements
general thing, they do not leave
the
banking
system.
So,
the
to hold as reserves.
were
correspondent
able
a
in deposits and
required reserves can continue
through a succession of banks un¬
til the total of the new deposits,
counting the original deposit of
bill
The System also is
responsible for providing needed
elasticity in the supply of avail¬
bank performing all the
business. ' Deposits may
shift from bank to bank, but, as
the process of
rates to
situations
or
liquid assets.
single
de¬
effective
an
want
than bank
banking
requirements
vaults./ Later these
own
to
is, all banks taken together con¬
a
system comparable to a
posits at any time.
I shall have
against
more to say later about the vol¬
circulating bank notes became a
ume
of bank reserves.
First, I
part of American banking law a
should like to examine with you,
century ago, and requirements
as I have before, the present-day
against bank deposits were intro¬
role and significance of bank re¬
duced by the National Bank Act
serve
requirements—that is, the
in 1363 and by two states even
earlier.
At first each bank's re¬ percentages of demand and time
deposits that banks are required
serves comprised the specie in its
Reserve
credit
reserve
Savings Bonds) into currency,
should
stitute
a
by the gold
(and today perhaps I should also
add
only one bank. That
were
expan¬
The System is the
agency
responsible for assuring
the convertibility of bank deposits
be reached
would
as
same
if there
bank
of
team
a
total
the
to
is the
the
Reserve
emergency.
continue
may
set
banks.
by the
System to increase
the flexibility of market interest
device
for
curbing
monetary expansion, it may
at
some stage hinder the Federal Re¬
serve
in
meeting
a
financial
,
process
Federal
is
market
taken
necessary
payment to a third
a
the limit on
of
in reserve positions made
by banks, particularly the money
limits
reserve
requirement is not
$12.75.
V
This
legal reserve require¬
ments—serve
limit
I
bank
second
through a succession of banks,
assuming
a
demand
for bank
credit, until taking all the banks
together a result is reached which
expand de¬
volume
through
way
the Volume of Deposits
two
is
that
bank.
Relationship of Reserve Require¬
mentioned—the
The
bank.
deposits;
posits.
ments to
sion
which
has
or
expansionary influ¬
public economic interest
on the ability of banks
as
probably be transferred
payment to a depositor of a
ments
begin to be effective.
even
While
■
leeway of ex¬
very serious
cause
before its
damage
would
this
But
It then
$72.25 left which it can lend
and which will probably find its
guaranty- of
strictive
borrower.
to
cess reserves
receiving the $85 deposit must in¬
crease its reserves by 15% of the
honor its
ence,
the
will
a
second
new
significance.
Instead of serving
largely as an individual bank's
Reserve
reserves
set
and
de¬
have
$85
These facts gave
liabilities in re¬
our
monetary
and
note
As
serves.
create.
certain fraction of their
of
count
ing and investing activities could
(Continued from first page)
Thursday, September 8, 1949
that
these
struments
ume
of
Federal
for
bank
severely
ness.
At
of this
discussed
were
Reserve
affecting the
reserves
limited
that
in
at
a
School of
were
their
such
in¬
vol¬
very
useful¬
time, with finan-
Volume
Number 4836
170
THE
cial transition to peace-time con¬
ditions
only ^partially
accom¬
vestment.
I
COMMERCIAL
believe- that
these
ic
&
FINANCIAL
securities.
CHRONICLE
(057)
21
sion
or- contraction.
This is a
form system of reserve require¬
modern
instrument
of
central ments would require all member
banking policy which is discussed banks, or preferably all commer¬
situation as it was, stability in making
the
current
economic ments are concerned tends to with approval in virtually every cial banks, regardless of
locatipn,
the government securities market situation somewhat more favor-' weaken the ability of the Federal textbook on money and banking. to maintain the same
percentages
was an
overriding consideration. able than in general it promised Reserve to promote proper ad¬
of reserves against each of the
As a fourth point, banks would
Open market operations, there¬ to be a few months ago.
justment of the volume of money be allowed to count vault cash three major classes of depositsto the needs of the economy. The
fore, were not then usable for the
interbank deposits, other demand
as
part of their legal resejrve.
How Should the Burden of
purpose of affecting aggressively
large difference in the require¬ The role of vault cash in the deposits, and time deposits. Banks
Holding Reserves Be Dis¬
the volume of bank reserves. For
ments tends to discourage banks
whose business requires the hold¬
banking
system
has
changed
tributed Among Banks?
exercising some measure of re¬
frpni joining the System, and
fundamentally in the past half ing of disproportionately large
straint
on
In order to keep the volume of could
result in weakening
monetary
expansion
the century. Before the Federal Re¬ amounts qf vault cash would mo
over the period of postwar infla¬
money in the country at a level System by encouragiiig banks to serve
longer be penalized by being re-;
System was established,
tion, monetary authorities were which is appropriate to econoinic withdraw from membership. It is vault cash was the ultimate re¬ quired to maintain the same re¬
serves in Federal Reserve Banks
obliged to rely on use of the then conditions, we have seen that un¬ difficult to see the justification serve of the
banking system, since
as
other banks doing a similar
substantial Treasury cash surplus, der our banking system it is es¬ for discrimination of this kind.
it alone was available to meet
on
a
modest rise in short-term sential that banks be required to
type and Volume (of business put
cash withdrawals.
The Federal
Uniform Reserve Plan
whose
cash
requirements were
rates, and on increases in reserve hold reserves, and that the Fed¬
Reserve Banks, however, are au¬
less. Changes in the total volume
eral Reserve be able to influence
As I said a year ago at this
requirements.
thorized to create additional re¬
By the end of last June cir¬ the volume of reserves available School of Banking, a staff com¬ serves or cash when needed. The of interbank deposits would no
cumstances were
At any given time, mittee
such that the to banks.
longer affect the volume of other
of the
Federal
Reserve use
of
vault
cash
as
reserves
deposits of member banks that
Federal Open Market Commit¬ there is an appropriate volume System has developed a plan for would not
impair the System's in¬
could be supported by a given
of total reserves that banks as a rationalizing existing practices for fluence over
tee
was
able
to
announce
a
the volume of bank
change in policy which should group need to hold to promote distributing the reserve require¬ credit, provided initial require¬ volume of reserves. City banks
help to restore the effectiveness monetary stability. But bank re¬ ment burden among banks. They, ments are established at appropri¬ would have to maintain larger re-*
serves than now
of certain traditional instruments serves are immobilized assets that have called the plan the Uniform ate levels to offset the
^gainst balances
change.
due to country correspondents,
for
put
influencing the volume of cannot be loaned or invested to Reserve Requirement plan, and at From the point of view of credit
the latter would be given
The required re¬ the request of the Joint Commit¬
correR
bank reserves. - Purchases, sales, earn an income.
control, there need be, no concern
sponding credits for such balances
and exchanges of government se¬ serves which an individual bank tee on Economic Report of Con¬ as to the form of Federal Reserve
curities are now made with pri¬ holds represent therefore, a con¬ gress they presented to that Com¬ Bank liability — whether it be against their required reseryes.
The uniform system would In¬
Federal Reserve notes or reserve
mary regard to the general busi¬ tribution which the bank makes mittee the results of their study.
crease
the required reserves ^for
effective
national
ness
and
credit situation.
The to
monetary The suggestions of the Federal deposits—that a member bank
some banks end iqwer them
jfor
policy of maintenance of a rela¬ policy. The basis or principle for Reserve staff group are in the prefers to hold as reserves.
The
others, but the changes would be
burden of discussion stage and have no offi¬ transition to the new system of
tively
fixed ' pattern
of
rates allocating the total
reasonable and in the direction of
lias been discontinued, although it holding
required
reserves
as cial status in the System.
I find reservef requirements would be
greater equity.
will continue to be the System's among different banks thus be¬ the ideas in the plan very in¬ facilitated by permitting banks to
teresting, however, and I should count vault cash as legal reserves.
policy to maintain orderly con¬ comes extremely important.
ditions in the government security
qf the suggested
The
Federal
Reserve System like to: tell you something about Establishment
The plan deals only with uniform
requirement against
market, and the confidence of in¬ has studied the problem of allor them.
vestors in government bonds.
member, bank
reserve
require¬ other demand deposits would in¬
eating the reserve burden among
About the time the change in banks for a
long time.
As you ments,. but if it is adopted it crease required reserves of coun¬
Since, however, such
open
market
policy
wias
an¬ all doubtless know, the existing could be and I believe certainly try banks.
A slate of officers and execu¬
hold
relatively larger
nounced,
excess
reserves
of statutory basis for member bank should be, extended with appro¬ banks
tive committee members has been
member
banks
were
expanded reserve requirements dates back priate modifications to cover all amounts of vault, cashthe increase announced
by
!
in their total requirements would
approximately $800 million by to the establishment of the Na*& commercial banks.
the Nominat¬
The Uniform Reserve Require¬ be offset in part by permitting
the expiration of the special, re¬ tionaF: Banking r System over 85.
ing Commit¬
ment plan consists of five basic them to count vault cash as legal
serve requirement authority that
years ago.
The requirements areg
tee
of the
Congress granted to the Board a related to the geographic location points. These have been described reserves.
Association of
The fifth and last point is to Customers'
year ago.
These free funds, seek¬ of the bank.
That, is, a bank's^ by the Chairman of the Staff
ing investment pressed down tbe classification for reserve require-j-Committee^ that developed
the permit a bank,to count as reserves Brokers. Elec¬
market yields on all government ment p u r p o s e s - depends
that portion of its balances held
on, jPlnn as follows:
tions will take
First, the plan would abolish at other banks which those banks,
securities; but particularly short- whether it is located in a centra
place at the
term interest rates.
After the reserve city or in a reserve city, central reserve city and reserve in turn, are required to hold ,as
Association's
short-term
yields had declined or whether it is outside of these £ity designations of banks.
In reserves against such balances. annual meet¬
about Vi of i 1 % it became clear cities—a so-called country bank. jOther
words, the geographica The relationship between corre¬ ing to be held
that these rates were under such A member bank located for ex¬ £basis for rthe assessment of reserve spondent balances and reserves is
Wednesday,
pressure that further precipitous ample in a reserve city must un¬ ^requirements wQuld be dropped a problem with a long history. Sept. 21, 1949,
■as
too
declines
were
inequitable
as
among After many discussions the staff at 4
likely, and the der this scheme hold reserves at
p.m., at
System made short-term govern¬ the higher percentages designatec Janks which are doing various concluded that correspondent bal¬ Del mo n ' s
of
ment
commercial
banking ances ought to be related to' re¬ Restaurant, 16
securities,
largely
bills, for such a center whether or not lands
serves in such a way that (a)
a
available from its portfolio in or¬ it is doing a reserve banking type 'business.
Milton
Leeds
Liberty Street,
der to avoid a disorderly market of
business.
Another
member S The second point of the plan shift of funds by member banks corner of Wilinto or out of "due from banks"
situation.
bank
doing a reserve banking |s that, for purposes of reserve
liam, 2nd floor,
;
would not affect the total volume
In early August the Board an¬ business but located outside the Requirements, deposits would be
The list of the candidates is as
of excess reserves in the system
reserve city areas need hold only
classified into interbank deposits,
nounced
further
reductions
in
follows:
as a whole; (b)
"reserve credit"
bank reserve require¬ other demand deposits, and time
reserve
requirements, and over country
would be allowed for precisely
Proposed,Officers:for Year 1950
ments.
From time to time the deposits.
Many a theoretical hair
August
and
early
September
the portion of "due from banks"
these
reductions
are
making Federal Reserve has been able to has been split in disputes over the
President: Miltqn Leeds, Per¬
that is on deposit with Federal
some
banks in reserve Classification
available to member banks an relieve
of
deposits.
The
shing & Co.
Reserve Banks (by way of the re¬
Vice-President: William Cogs¬
additional $1,800 million of ex¬ cities of a discriminatory reserve compelling practical objection to
serve
requirement imposed
on
cess
reserves.
Short-term gov¬ burden through its limited dis¬ treating all deposits alike is that,
well, Fahnestock & Cp.
deposits due to banks); and (c)
relating to depending on the level set, start¬
ernment securities, again primar¬ cretionary authority
Secretary:
Nicholas Novak,
correspondent bank relationships
ily bills, are being supplied in the outlying areas of reserve cities. ing such a system would create and interbank balances would be Drysdale & Co.
Treasurer: Alfred Elsesser, Kid¬
market from the System portfolio But many cases of inequity can¬ enormous excess reserves in cen¬
recognized as an established part
so that
banks may find at least not be solved in this way and a tral reserve city banks, enormous
der, Peabody & Co.
of our banking system.
The fifth
in nonreserve
city
temporary investment for these basic problem of equity of reserve deficiencies
point is designed to accomplish
Executive Committee
The compelling
funds
without
pressing
down requirement treatment as among banks, or both.
this result. So long as the rate at
practical objection to a full sys¬ which the
short-term yields to an undue ex¬ member banks still remains.
Archie F. Harris, Merrill Lynch,
"country" bank or the
There
is also
a
fundamental tem of deposit classification is reserve
tent. ■
;
city bank is allowed re¬ Pierce, Fenner & Beane; Maurice
that it would be impossible to ad¬
Glihert, Hirsch & Co.; Henry Ofserve credit for its "due from"
Generally speaking, the Board's problem of equity as between
reserve
requirement
actions member and nonmember banks, minister, since any classification balances is equal to the rate at ferman, Goodbody & Cp.; Jack B.
of deposits is somewhat arbitrary.
which depositary banks are re¬ Huhn,
Bache
&
Co.; Edward
coupled with the change in open where the differences in treat¬
Abbott,
Proctor
&
market policy of the System have ment are frequently very, very Advantages given for the pro¬ quired to maintain reserves on Wickman,
posed classification are that, by interbank
had two major effects that should wide.' Certainly from the stand¬
deposits, a giyen re¬ Paine; Fred Pease, E. F. Hut|on
and
large, the three classes of serve will support the samer vol¬ & Co.; Marshall Dunn,. Wood,
help to promote the availability point of the reserves it must hold,
of bank credit at this time. Mem¬ the average nonmember bank is deposits are usqd for different ume of non-bank deposits irre¬ Struthers & Co.; Kenneth Ward,
purposes, are readily identifiable, spective of whether the owner- Delafield & -Delafield; T. Alyah
ber bank liquidity positions—that now making a disproportionately
have traditionally
been treated bank keeps all of its reserve with Cowen, Peter P. McDermott &
is, their holdings of cash, excess small contribution to monetary
Thenonmember bank differently, and differential treat¬ its Federal Reserve Bank, or Co.; Arthur H. Cook, Fahnestock
reserves, and short-term govern¬ stability.
plished^ and with the international
credit actions by the Federal Re¬
serve have had some influence in
Discriminatory
treatment in favor of nonmember
banks as far as reserve require¬
Customers' Brokers Get
Slate of Nominees
"
.
~
,
...
.,
,
ment
securities—have
by
panded
about
the
At
dollars.
been
2,600
same
ex¬
million
time
the
not
only is subject
generally to
much lower reserve requirements,
also
permitted to hold
its reserves at .correspondent city
banks where they serve a double
purpose—both as legal reserves
but
it
is
yields on short-term government
securities are down considerably
from what they were in the early
Summer, and accordingly the at¬ and as a needed correspondent
A member bank holds
tractiveness of these investments balance.
is much reduced as compared with both a reserve balance in its Re¬
say
A loan to
a
business concern
serve
Bank and balances with its
I should also
mention the fact that the Reserve
correspondents.
System is no longer freely sell¬
ing government bonds to keep
their yields from declining. With
the adoption of this policy by the
control of
or
to
a
farmer.
tual
with
Further, the
contribution
a
a
reserve
to
ac¬
monetary
balance held
correspondent
*
bank
is
only equal to that fraction of the
balance which the correspondent
bank is in turn obliged to hold
System, pressure of market forces
brought about a decline in yields with its Reserve Bank, since the
on medium,
and long-term gov¬ correspondent bank is free to, and
ernment securities, with an ac¬ usually does, invest or lend the
companying tendency for inves¬ remainder. In some states, more¬
tors to seek
corporate and muni¬
cipal securities as outlets for the
funds they have available for in-
over, nonmember banks are per¬
mitted to invest a portion of their
reserves
ment would minimize initial
dis¬
turbances while yet retaining ef¬
fective over-all control. The staff
keeps a portion of it on deposit
with a correspondent and there¬
fore indirectly with a Federal Re¬
committee recommended that in¬
serve
Bank.
itial
vault
cash
requirements be established
at 30% against all interbank de¬
posits, 20% against other demand
deposits, and 6% against time de¬
posits, which would have left the
total volume of required reserves
at about the level existing at the
time.
(Slightly lower require¬
ments would be appropriate
of
course, should the plan be adopt¬
ed now).
The
that
third
the
point of the plan is
Federal
Reserve
should
be given authority to change the
requirements within limits estab¬
lished
in
the
law.
We have
al¬
ready
discussed
the
use
of
changes in reserve requirements
from time to time in order to
in interest bearing pub- prevent injurious credit
help
expan¬
In either case, only
balances which
and
are directly or
indirectly on de¬
posit with Federal Reserve Banks
would constitute legal reserves, v
The analysis of the Uniform Re¬
serve Plan may be summarized as
follows:
& Co,; William
Arata, Hornblower
& Weeks.
Nominating Committee
H. D. Horn,
Chairman, Eastman,
Dillon & Co.; Norton LeBourveau,
Secretary, Francis I du Pont &
Co.; Standish M. Perrin, Gude,
Winmill & Co.; Horace G. Oliver,
Hornblower & Weeks; J.
Rankin
O'Rourke, Ira Haupt & Co.; Ken¬
I.
Walton, Bache & Co.;
requirements are an
essential feature of the mechan¬
neth
James W. Sloat,
Goodbody & Co.;
ism
Marshall Dunn,
Wood, Struthers
MacLean, Shear-
Reserve
which the volume of
money and credit is adjusted to
the needs of the economy but the
present system of reserve require¬
ments is frequently inequitable;
required reserves of many banks
are higher or lower than those of
by
other banks doing a similar busi¬
& Co.;
son,
John S.
Hammill & Co.
'
Joins Bache & Co. Staff
(Special
to The Financial
Chronicle)
MINN. —Rolf
ness simply because of the classi¬
G. Juisrud is with Bache & Co.,
fication of the
communities' in Minneapolis Grain Exchange
which they are located! The uni¬ Building.
MINNEAPOLIS,
.
22
COMMERCIAL
THE
(958)
&
FINANCIAL
CHRONICLE
about
Truman
and
show
tion.
•workers
and
showing
products here today.
together
their best
exposi¬
industrial
industrial
an
Farmers
are
Farmers and industrial workers
•—agriculture and industry—ought
to show their products together.
For these two groups depend on
each other. Together, they are re¬
•-
sponsible for the tremendous production of this country's economic
system. No program for the pros¬
perity of the country can ignore
the interests of either group.
recent
In
people
out of
some
years,
have been telling farmers,
unions
labor
the
are
of the
Out
farmers.
mouths, that
bad for the
other corner
mouths, these same people
telling industrial
of their
have
their
of
corner
one
been
workers that programs
to benefit
farmers are bad for labor. If you
meet
ever
be
can
anybody like that, you
he
sure
is
industrial
the
who
great
other
each
against
groups
have
Those
worker.
trying to set these two
are
of
their
own
this
time
last year,
axes
About
country
to
engaged in
was
grind.
the
great
a
political campaign. I covered a
good deal of the United States in
the course of that campaign, and
I
I
xrffered
a
'-.needs of all
also
the
meet
to
program
saw
I
the plain facts, as
before the people.
put
them,
>
in this country
for growth and prosperity. The
votes of the people showed that
groups
they wanted that kind of program.
They were not misled by the
and magazines and ex¬
perts who tried to convince them
they did not want that kind of
newspapers
program.
The
<
knew
people
Their
wanted.
what
they
showed
votes
that
the farmers and the workers stand
together in demanding
citizens.
our
It
is
that
:.
almost
now
a
/
since
year
campaign, and I think it is
time to take stock of the situation
and
what progress we have
carrying out the program
the people voted for.
see
made in
I
happy to be able to report
to you that we have made prog¬
ress; and we are continuing to
am
make
progress.
Attacks 80th Congress
As
we
,
a new
election,
Congress in Wash¬
ington. And this
low-cost
rent
to make
people.
our
con¬
available
electricity
of
more
to
has
It
strengthened the soil conservation
reclamation programs.
This
and
improved
national
strengthened and
organization for
has
Congress
our
defense.
session is not
yet over.
And this
Other im¬
portant measures, such as those
raising the minimum wage and
extending
the
reciprocal trade
agreements act, are well on their
way
to final passage.
The
81st
Congress has taken
actions
these
the fierce
over
op¬
position of the selfish interests.
The organized conspiracy of the
selfish interests has gone
right
people from
Congress.
The 80th
to
almost
that
ward-looking
during recent
the
v
Congress
was
bit
every
of
a
of
threat
the
legislation
for¬
law.
to
that
But
We
settled.
issue
is
far
from
For example
it repealed the Wagner Labor Re¬
lations Act and replaced it with
the
unfair
and
restrictive
Taft-
Hartley law. It took social security
benefits
from
sands of
people.
farm
hundreds
programs.
of
thou¬
It weakened
our
It
our
attacked
national
the
books.
statute
Congress has
reversed
The
interests
selfish
have
al¬
working against the
good, since the begin¬
ning of our history. Our fathers
and our grandfathers had to fight
against them every step of the
way to make progress.
They had
to fight for a free public school
system. They had to fight for the
right of homesteaders to settle the
public lands.- They had to fight
for laws to protect the health and
safety of industrial workers. They
had to fight for labor's right to
organize.
."
been
ways
common
We face
the
same
We still have
day.
a
situation to¬
fight
interests
special
fail to
on our
that the way
see
always
of prog¬
the way of greater prosper¬
ity for themselves, as well as
others, lies in the direction of a
fuller and happier life for all.
ress,
Too
ford
people who can af¬
insurance policies for
many
big
themselves
the
not concerned over
are
of
need
expanding social se¬
curity. Too many who are making
money out of the rents from slums
are
not
in favor
of expanding
public housing to provide decent
shelter
for
income
low
families.
TLe
'
Congress
has
put a
stop to the piecemeal destruction
of the hard-won
protections and
benefits
that
the
people
built for themselves.
more
than
dustrial workers.
It
in
81st
that.
have
It has done
It
has
moved
forward.
right to organize among in¬
same
this back-
Ward trend.
is
hard,
the
need
'
perhaps, for people
comfortable
see
circumstances
to
for
improving the
well-being of the less fortunate.
Furthermore, they are always be¬
ing stirred up and misled by the
spokesmen and lobbyists for or¬
ganized selfish interests.
There
are
lot
a
of_ paid
agitators, pro¬
publicity experts who
living by frightening
Some people are trying to make
you believe that the 81st Congress
has been a do-nothing
moters and
That is simpl.y not true. The fact
is the 81st Congress has
already
groups about
Congress.
passed
for
it
the
many
good
important
of the
will pass many
,
measures
people—and
more
sive laws.
progres¬
case.
Campaign
"Scarewords"
These
oppose.
intended
scare
confuse
to
words are
the people
them against their own
turn
words
Scare
times.
change
interests
selfish
words
make
the
a
fat
people in the higher
income
forwardlooking leg¬
islation, and by organizing cam¬
paigns against it.
Ever
since
spokesmen
stirring
the
have
election,
been
•
those
yery
up opposition to pur
busy
leg-
prosperity
the backbone of this country, and
world.
raised
the
"Socialism"
of
and
But the Ameri¬
"regimentation."
people didn't scare.
Year after year the selfish in¬
terests kept up their refrain. They
tried new words—"bureaucracy",
can
that the
"regimentation."
or
So
the
selfish
a
back
room
to
priced
dewed.
old
the
had
words
Maybe it
they
of
set
set
become
change.
So
retired
interests
with their high-
advertising
experts
and
things over.
They de¬
that
cided
came
scare
a
of
mil¬
time for a
:'.V.-V1 \ ''V
'".V
up with a new
was
Now they're
words.
welfare
"the
and
their
they don't
words
mean.
freedom.
like
Programs
isn't
That
these
so.
make
the
care
—
what these
They are using those
they want to
words only because
free.
are
of
lic
in
their
old
age,
They are free of the fear
poverty. They are free of pub¬
or private charity.
They
And that
happier,
live
can
more
That's real freedom.
lives.
useful
is
something we should
be proud of—that's not something
to
be
slandered by trumped-up
Social
Security
with
of
words, we hear another ar¬
gument against adopting any for¬
ward-looking legislation. It is to
scare
the effect that
grams
things, we can't
because they cost
good
are
adopt them now,
and
much
too
if these pro¬
even
can't
we
can't afford
interests
these
afford
say
we
dur¬
programs
ing a boom because that would be
inflationary. They say we can't
afford
them during
a
recession
that would
because
be
deflation¬
They say we can't afford
them during a war because we are
too busy
with defense, and we
ary.
can't afford them in time of peace
that
would
discourage
because
And so, according to the
business.
selfish
interests,
the
But
ford
never
to; put
effect.
We
afford
can
them,
ought to have them, and
we
will
them.
have
them
have
do
.
Take
our
The
the
we
sooner
more
we
will
we
' ^
vV';"
save.
>.
for
programs
resource
development, for example. If
fail to
conserve
fail
soil,
our
valuable
most
our
we
we
lose
If
resource.
electric
build
to
we
power
ment of industry.
people, against
which the people
want, and need, and voted for.
see how the selfish inter¬
ests are using these scarewords.
The people wani public hous¬
ing for low-income families. The
selfish interests are
opposed to
J Let's
because
Take
people
let
we
existence
sys¬
our
old
charity?
to
Or
have
them
in¬
an
self-respecting
and
dependent
Security
force
we
turn
to
through
an
up-to-date
think it will old-age insurance system, paid
income; so for during their working years?
they call it "collectivism."
Take housing. If we do not go
We don't care what they call it.
forward
with our housing and
We
are
for public
housing be¬
slum-clearance
cause
the.y
their
down
own
it is the democratic way to
provide decent homes in place of
slums.
people want fair
will be
reduced;
are
they call thqt
so
"statism."
;;
We don't
this
country have a fundamental
right to square treatment from
employers.
The
people want
fair program
for the farmers, including an ef¬
fective
price - support program.
a
The selfish interests
this
because
profiteering
pense;
ism."
so
it
at
they
fight against
keeps them from
the farmers' ex¬
call
this1 "social¬
We don't
know
care
that
what they call it.
those
They
will
them
then.
programs
now.
The
be
not
misled
about
people know that the
sec¬
ond half of the twentieth
century
is going to be a time of challenge
to the way of freedom and prog¬
that
ress
sents.
lenge
democracy
our
As
shall
we
have
to
chal¬
fight,
have always fought,
we
repre¬
that
"meet
we
as
the self¬
ish forces of reaction and special
privilege.
people of the United States
convinced
that
we
will
con¬
tinue to win it through the years
to come.
•
The following is the text of the
President's
I
with
Des
Moines
happy
am
the
speech:
here today
be
to
American
of
Veterans
World War II.
is
three
time-1
third
the
with
met
weeks.
Miami
In
have
the
in
veterans
last
in
and
Philadelphia, I had the pleasure
of
addressing
other
the
of
two
veterans' organizations.
Today in Des Moines you have
given me the welcome opportunity
to
speak to this association which
has grown up since the last war.
Judging
this meeting, your
long, vigorous and
by
has
group
a
useful life ahead of it.
have
I
found
generally
life
They
;
veterans
into civilian
interest in na¬
strong
international
and
determined to do
are
thing
:
carry over
their
tional
y:
that
they
affairs.
every¬
that the
United States grows in strength
and prosperity and exerts its full
influence for peace in the world.
A
veterans'
organization
like
yours can
do much to aid qur
to
can
progress
toward
perity I
am
and pros¬
peace
all of you will
sure
do your part.,
see
V
•
,
today, in Pittsburgh, I
discussed the;-effort .we are mak¬
ing to achieve
a
better future for
country. One of the most im¬
our
portant elements in
is
future
And
our
country's
prosperity.
better place to
agricultural
there
is
no
talk about that than right here, in
the heart of the
nation's farm
belt.
V
Some
people
seem
to think fhat
nobody but the farmers ought to
be
of
ity. Some people claim that pro¬
grams to improve the welfare of
farmers are just "pressure-group"
politics.
The
selfish
interests
disease, immorality and crime
slums.
Consider
den
costs
schools.
our
of poor
The hid¬
education, lost
opportunity and poverty result¬
ing from inadequate schools are
with farm prosper¬
concerned
would like to have
because
us
believe this
they want to divide the
education
people and set one group against
another.
-'
•/,"
expensive than
ignorance and illiteracy.
The plain fact is that everyone
should be interested in the wel¬
the
afford.
nation
Federal
will be
a
can
aid
to
no
longer
lot less
..
have a healthy
United States; we
must have better schools, better
housing,
better
medical
care,
fare of farmers. The
better
fare
If
we
to
are
and prosperous
of
use
our
resources,
Social Security and the
improvements in our de¬
stronger
other
mocracy
that the people need.
prosperity of
this nation is indivisible. The
eco¬
nomic future of the whole country
depends
upon
of every
the
growing wel¬
in the coun¬
group
try^'If; we want a healthy and
'prosperous economy, there must
M%conomic opportunity, not just
for the fortunate few, but for all
Value of Democratic Way of Life
Those
We
interests
shall have to pay the rising costs
costs
Vy
what they call it.
that the workers in
care
believe'
we
laws for
interests
selfish
The
against these laws because they
mistakenly fear that their profits
We
programs,
bred in
The
labor.
being at¬
campaigns of scare
people were not mis¬
The
about
now
selfish
are
the
Earlier
" ;
Social
our
Shall
tem.
shall
by
their
words.
can
truth, is—we can't af¬
these programs
not
into
we
facilities,' we hamper the develop¬
this
tacked
them.
afford
that
programs
This
selfish
United
They made this clear again last
They chose the very same
them.
The
the
Fall.
am
campaign
this
of
them, they always choose progress
The
Along
people
have been winning that fight for
one
hundred and sixty years. I
Can Afford More
We
the
programs
the
—not reaction.
led
turn the American
cut
But
independent of big business and
corporate power.
People who have opportunity to
work and earn, and who have an
income
prosperity, but to the
and
peace
of
the
own
States do understand these things.
When they have the facts before
with
assured
States is the key not only
our
people more independent — inde¬
pendent of the government and
state."
The selfish interests don't know
—
pro¬
people.
The spokesmen for the special
interests say that these programs
make the government too power¬
ful and cause the people to lose
scare
little
talking about "collectivism," "statism"
government should
mote the welfare of all the
and
"Socialism"
dedicated to the principle
are
we
our
country from the great depression,
the
liberty of the people of the
United
We know that the little fellow is
Roose¬
D.
velt and the New Deal saved
scare
and
to
the
with
Franklin
When
so
slogans.
interests.
best
thought
policy for making the Too
many with big incomes are
benefits'of electric power avail-;
not interested in raising minimum
able to the public instead of the
wages. Too many who can freely
privileged few.
organize themselves in business
If the 80th Congress had not associations
or employers' groups
been
repudiated,
this
tearing are, not anxious to protect the
down process would have
gone on
and on.
But now the new 81st
their
of
weakness
Scores
going to continue
are
fight for the repeal of that re¬
pressive law until it is wiped off
passed
years.
they have
So
age-old device to hide
an
"bankruptcy." But the Amer¬
ican people still didn't scare.
turns.
Last November the people gave
V
.'/'J
the selfish interests the surprise of
Wants Taft-Hartley Act Repealed
their lives.
The people just didn't
One of the things that the spe¬ believe that programs designed to
cial interests have managed to do assure them decent housing, ade¬
up until this time is to prevent quate
wages,
improved medical
the repeal of the Taft - Hartley care and
better education were
working against the common
good, in spite of the election re¬
on
The
the
the
and
—
real progress.
This is
gress has an entirely different ap¬
proach to the needs and desires
80th
them.
before
are
adopted
This is the device of the "scarerestored the gov¬
ernment's power to acquire grain- word" campaign.
It is a device that has been
storage
facilities
necessary
to
used in every country and every
carry out the farm-price support
program.
This Congress has ap¬ age by the propagandists for the
proved
an
international wheat selfish interests. They invent slo¬
agreement which will give our gans in an effort to scare the
farmers a fair share of tne world people.
They apply frightening
wheat market at fair prices. This labels to anything they happen to
hands.
new
the selfish interests if all the facts
has
Congress
Con¬
of
81st
extended
It has taken action
trol.
result of last fall's
a
have
has
Congress
has
It
zens.
govern¬
a
ment that works for the benefit of
all
taken
wise and important steps in for¬
interested
not
in the welfare of either the farmer
or
islative program.
The
hue and
cry that has resulted, in the press
eign policy by extending the Eu¬ and on the air, and through the
ropean
Recovery
Program and mail, has been deafening.
These propagandists do not ar¬
ratifying
the
North
Atlantic
Treaty.
It has enacted a far- gue the merits of our program.
reaching
housing program that They know that the American
will benefit millions or our citi¬ people will always decide against
81st
The
helping the little fellow;
they call this the "welfare state.
We don't care what they call it.
Again Assails uSelfish Interests"
(Continued from first page)
Thursday, September 8, 1949
who
provements
oppose
refuse
to
these
im¬
face
the
of us— workers, businessmen and
farmers, without regard to race,
creed
or
color.
the
well-being of facts
of
today's
world.
They
country depends upon the don't understand the overriding
well-being of. the farmers, and urgency of proving the value of
that farm" prosperity must be pro¬ the democratic
way of life, not
Good
the
tected in the interest of all of
us.
The people want a better Social
Security system, improved educa¬
tion, and a national health pro¬
gram.
The selfish interests are
trying to sabotage these programs
because * they
have no concern
just with words, but with deeds.
They don't see that the very sur¬
vival of free enterprise depends
upon
and
They
work
a
rising standard of living
expanding
economy.
don't
recognize
that
to
Income
for
It's
just
plain
common
sense
that good incomes for farmers
good for the workers
the
who
are
make
things farmers buy. Farmers
will have more than $27
this year
an
billion to spend. That
for the
lion ..workers
increasing security
Farmers,
Good for Workers
ployment for
more
in
means
em¬
than nine mil¬
factories
and
w
Volume
stores
< •
farmers
things
When
that raises the stand¬
it is just as. im¬
portant to the future of our coun¬
why
try for farmers to be well off as
it is for workers or businessmen.
That's
why I believe the
this
of
ment
govern¬
country must work
Let's look at
of the
some
things
the government should do to help
achieve
continued
and
growing
farm prosperity. It is not always
easy for city folks to understand
the
conditions
and
the
farmer
the
need
for
faces,
particular
the
the government has de¬
programs
is
of
all,
of
killing,
weed
crop
against depression, the farm-price
support program. It had done this
in a sly and under-handed way—
by eliminating the government's
provide grain-storage
facilities. As .you know, we can't
support grain prices without ade¬
to
the
reminded
I
people at Dex¬
just as I am re¬
minding you today, that the wel¬
fare of the entire nation depends
ter
a
ago,
year
the welfare of the farmer. I
reminded them that they could
upon
their opinion of the 80th
express
Congress at the polls in Novem-
are
/■
r
know what happened
November. As a result, there
you
lot of
a
members in the
new
members, there has been a big
improvement.
Of course, there
are
still many reactionary Sen¬
ators and Representatives in Con¬
rotation and all
scientific
other
bulwarks
strongest
81st
He needs to learn and apply the
best methods of soil conservation,
in
advances
these
With
Congress.
new
facilities
health
modern
electricity
other
the
and
and
advan¬
tages of modern living were not
our farm population.
available to
In recent year, however, our gov¬
ernment has helped to make it
possible for many of our farmers
to obtain these
In
things.
addition, the farmer faces a
he
which
market
can't
and it is
going forward with
measures
for
a
growing
happened that
year's hard work went
nothing, because there were
unexpected crop surpluses or sud¬
den drops in demand.
In the past
a
F^m
been
have
operatives
co r
stability.
greatly strengthened. Cheaper,
abundant
more
been
available.
made
has
credit
farm
j
Price sup¬
ports, marketing . agreements and
other special programs have been
developed and steadily improved.
In all these ways, farmers with
help of the government have
the
been meeting and
overcoming the
system.
A
world trade.
American farmers
this agreement,
assured
are
international
new
agreement has been nego¬
and is now in effect.
By
fair
a
of
share
the
prices
Further¬
world wheat market at fair
for the next four years.
Congress is< going
this
more,
extend and improve the
Congress Is Doing
What 81st
The
to
This will
world trade.
more
mean
!
,
reciprocal
act.
agreements
trade
Congress is interested
81st
up farm cooperatives,
tearing them down. It under¬
stands that cooperatives
are as
fare of workers. Both
cooperatives
r
came
They were all opposed by
selfish and narrow-minded men
who didn't understand what the
easily.
against—and didn't
whether or not he was well
farmer was up
care
course
interests
these
Sometimes
off.
have
managed . to
reverse ! the
of progress, though fortu¬
nately not for long,
It
just about a year ago, a
few miles from here at Dexter,
that I talked to another audience
was
about farm
prosperity and oppor¬
tunity for the farmer.
At
that
time,
*
the outlook was
pretty black. -The Eightieth Con¬
gress
had been hitting sledge¬
hammer blows at the very foun¬
dations of farm opportunity. The
Congress
Eightieth
had
cut
the
soil-conservation program. In do¬
ing this, it had threatened the ex¬
istence of the farmer-committee
system, through which conserva¬
tions, price support and other pro¬
grams are
administered.
killed
the
was
reasonable
the world wheat market
assure
share of
wheat
negotiated
international
agreement, which
to
had
farmers
a
help maintain stability of
grain prices. It had caused farmer
and
co-operatives
to 'tear
for
'their
lives." It had restricted the recla¬
the
for
necessary
and
unions
men
who
can
become
whereby
economically
means
are
weak
are
enough,
strong
by
uniting, to bargain on a basis of
equality.
)•'
•'•>*;*
•'
will not listen to
This Congress
those
who
tives
out
tax
coopera¬
existence.
Further¬
want to
of
this
before
more,
Congress
ad¬
journs, I think we shall have a
cooperative
telephone
program
similar to the highly successful
rural electrification program.
This Congress
important
serious
has already taken
to
steps
need
electricity
for
and
the
meet
more
low-cost
revitalize
to
the
reclamation program in our west¬
immense
An
this
pur¬
sion
has
amount
stirred
been
of confu¬
about
up
these proposals in recent months.
Some
going around
telling industrial workers that our
attempt to improve the price-suppeople
are
port system will mean higher food
prices and heavier taxes. Some
people are telling farmers that an
improved
price-support
system
will take away the protection they
now
have
and
regiment
the
Much
farmer.
of this
talk
is de¬
liberately intended to mislead and
divide farmers and workers.
Kind
Farm-Price
of
their
beyond
under the best
the
In
like
storable
of
tobacco
or
The
the
81st Congress
has restored
authority to
overflow
by
that cannot be
farmers and
With
the
of
the
handled
grain elevators.
biggest supply of corn
in history now
ier.!
care
prcgirr.1
in sight, the
iz
crpccir.lly
im¬
portant; the government is help¬
eyes
on
words to frighten us
from the programs and poli¬
cies that are* good for us all.
scare
away
But
will not be
we
frightened.
ability
Too much depends on our
handle
in
not
our
spirit
a
only
problems
It is
cooperation.
future progress
our own
is at
that
common
of
stake.
is
It
the
future
peace
and prosperity of the world.
That
is
our
continue
all
to
goal,
work
and
we
toward
strength and all
our
it
our
shall
with
faith.
ucts must be used to avoid waste..
that is
We know that
adopt a new
method
of
price support.
The
most promising method yet sug¬
gested is the production payment.
Under this method, the prices of
certain farm commodities would
This presents a problem
not
easy
we
shall
to solve.
have
to
be allowed to seek their own level
the
market, and the farmer
paid the difference be¬
support price and the
be
the
Production
would safeguard
market price.
thus
payments
Myron Ratcliffe Is
Partner in Bache & Go.
Myron
admitted
F.
Ratcliffe
to
general
has
been
partnership
in the firm of
Bache
36
&
Co.,
St.,
Wall
New
York
City, members
the
of
New
York
E
h
c
x
(.?•
Stock
a
nge.
our
tion and
perishable foods would be avail¬
able to consumers on the regular
which
he
markets.
spent
in
the
propaganda and look at
the facts. And when that is done,
is
there
confusion
for
reason
no
about the kind of farm-price-sup¬
port program we ought to have.
a
need
we
a
fair return for their production.
the
in
often
farm
seen
past, we have
at give-away
prices
This
and
entire
method,
of
means
farm-pricesupport system that will afford
farmers an opportunity to secure
First,
at the same
production of
other
any
or
accomplishing the same
the
nation.
•
Our
of
system
omy.
■'v
••••••-••
.
Second, price supports must be
so
organized
and
administered
that they will give consumers the
the
four
of
U.<
ex-
t i
p
S.
o
n
years
Army,
Ratcliffe
Mr.
Lehman
that we modernize
It is urgent
.
Startling progress has been made
bad for farmers and bad
was
e
present legislation and giving us
a modern price-support system.
sur¬
temporary
c
has been asso¬
pluses resulted in distress selling.
because
with
would go a long way
toward overcoming the defects of
purpose,
price - support laws or we
shall face unmanageable surpluses.
our
in
increasing agricultural produc¬
in
this
country in recent
ciated
with
F. ftadcliffef"
Myron
Bros,
since
1936,
first
as
manager of
the firm's
Chicago office and, following the
war,
in the syndicate and newbusiness department in New-
York.
tion
This has enabled farmers
their produc¬
years.
This
lower costs.
ability
productive
new
for the good of our
must be used
people; it must not be allowed to
destroy
the
prosperity of our
farmers and the stability of our
Municipal Bond Club i
Of Philadelphia Outing
PHILADELPHIA,
Annual
PA. — The
Outing of
Bond
Club
of
Field Day and
the
Municipal
Philadelphia will be held at the
Manufacturers
Golf
&
Country
production.
Our people want to economy. This is the essential pur¬
buy. more milk and meat, more pose
,
;
«
that
we
should
seek to Club, Sept. 9, 1949.
Events of the day will include
fruit and vegetables, and all the achieve
by our new farm-price-
benefit
of
abundant
our
farm
fhings 'that go into a better diet.
We rriust, have;' a
price-support
system that will encourage farm¬
ers
to shift their production to
demand
the
meet
Present
is
more
at reasonable
better foods
tion
for
and
price-support legisla¬
adequate to accom¬
plish these objectives. It encour¬
surplus production of some
commodities,
such
as
potatoes,
and not enough of other products,
such as meat.
The worst thing
about the
present program is that
it takes food awa.y from consum¬
enabling them
ers
instead
of
eat
better.
The
to
has
had to buy tremendous quantities
of potatoes and take them off the
market at great expense.
The
government has had to build up
big stocks of dried eggs and is
wondering how to get rid of them.
government
Some people say
down
that we ought
prices, but
support
that would not meet the
The record shows
when
prices
problem.
that, in the past,
dropped,
farmers
produced bigger and bigger sur¬
pluses in
a hopeless
effort to
make up for low prices.
of
cutting
down
sup¬
port prices, we need to adjust our
system so that it
encourage farmers to grow
price-support
is
what
needed
to
consumers
use
and
encourage
what
will be good for the farmer,
pose
whole nation.
is
pro¬
farm-price-support system,
first of all should aid
farmers to adjust production to
Our
demand.
Farmers
are
under
the
economic necessity to adjust
supply to demand as are the pro¬
machines
or
do
other
product.
large they are willing
it, if they have assurance
And by and
to
any
the annual golf match with the
Municipal
Bond
Club of NewYork.
Bridge and gin rummy
tournaments
this
Brannan
Says
)
Plan
Will Be
added
are
Tennis
year.
club
features
championships will be
sored
usual.
as
for
matches
spon¬
*
Adopted
Committee
I
convinced
am
that
the
81st
Field Day Chairman: George J*.
Hanley, Walter Stokes & Co. farm-price-support legislation. I
Golf: Russell M. Ergood, Stroud
am convinced that it will
not be
& Co., Inc. ?
;
led astray by the loud opposition
Tennis: J. Brooks Diver, Mackof those who oppose any change
ey, Dunn & Co., Inc.
:
in our price-support system.
Card
Tournament:
Walter D.
Congress will enact this kind of
stability and progress of Fixter, Buckley Brothers)
agriculture is important not
Attendance:
Michael Rudolph,
only
to ourselves, but to
the Stroud & Co., Inc.
The
our
world.
whole
Over
the
last
few
farmers have taken a
leading part in the struggle to
feed a hungry world. In the fu¬
ture, foreign markets will be es¬
sential
for
many
of our farm
our
years,
products.
must remember that we
foreign markets
! But we
cannot
for
agriculture, over the long
Special: B. Newton Barber, W.
H. Newbold's Son & Co.
Transportation
fred
our
run,
unless
buy in return the
we
of
foreign
countries.
Foreign trade is not a one-way
products
street.
will be tremendous
There
benefits to this country, in
rising
living standards, in reduced ap¬
propriations for foreign aid, in a
more
prosperous world economy
and in closer ties between the free
if
nations,
we
buy
more
from
other nations.
S.
Knapp,
and Hotel: Al¬
Wurts, Dulles &
Co.
s
,
Ex-officio, all Committees: Wil¬
liam F. Mills, Pres. Phila. National
Bank.
Price
maintain
of admission
members
is
$7.50 for
and
$12.50 for guests.
Reservations should be made with
Mr. Rudolph.
With Johnson
McKendrick Co.
CSpecial
to The Financial
Chronicle)
MINNEAPOLIS, MINN.—Harry
G. Jackson is now connected with
Johnson-McKendrick
Co.,
Inc.,
Syndicate Buildingr
therefore,
same
price-sup¬
good for the worker, good for the
not
ages
to' cut
legislation. A
support
port system that fulfills this pur¬
prices.
ducers of automobiles or washing
corn¬
and
returns,
being met. Farmers are building
take
our
special interest. They are only
trying to
set
up
against
one
another. They are using slogans
time
to
duced.
to
keep
farm
will
preparing
must
main objectives. We must not
cut
workers
and
provide storage for grain under
the price
support program, and
the difficult storage problem
is
bins, and the government is
profited by experi¬
through the fog of misrepresenta¬
Instead
government's
23
be led astray by the false argu¬
ments and the loud clamor of the
to
crops,
cotton, we
can
and should store up a good
part of the surpluses as reserves
against emergency. In the case of
perishable products, such as meat
and milk, we cannot store them
very long. These perishable prod¬
average
have learned
control.
So even
circumstances, we
surpluses.
case
corn,-
tween
Farmers
adjust
shall always have some
would
Program Advocated
willing
their
production, and to change from
one crop to another, they cannot
eliminate the possibility of sur¬
plus. Weather, world conditions,
market fluctuations are all things
in
Support
But it will not succeed.
states.
ern
new
The Eightieth Congress
recommenda¬
made
pose.
in building
farmers as unions are
1
advances
has
how
to
be
may
tion of many crops at
tion
:
on
tions to the Congress for
matter
no
ing and injuring the whole econ¬
prosperity they need and the na¬
these
culture,
tration,
to.. We have
ence. '
'
our
to double and triple
welfare
of
for the wel¬
of
sys¬
Secretary of Agri¬
behalf of the Adminis¬
But
farmers
price
supports, therefore,
must
protect farm income from collaps¬
not
needs.
farm-price-support
tem, and the
That
special difficulties they face. They
have been making great progress
toward the steadily growing farm
None
Surpluses
Costly
Congress understands
81st
tiated
economic
Have
the importance to American farm¬
ers of
a balanced and expanding
help of the government, farmers
have been making much headway
achieving
life to the
on
Wheat Pact in Effect
_
The
wheat
in
and
program
lease
new
is
Congress needs to modern¬
our
for
however, with the
years,
The
ize
levels
this
expanded
given
farmer-committee
81st
completed its work. That
farm-price-support system.
yet
the
and
81st
inportant
one
farm program on
Congress has not
our
the
Too
whole
sixteen
and
agriculture.
control.
for
which
Congress understands
the
fundamental
importance of
soil conservation. It has restored
The
Years ago, it often
a
new
of
part
control
prosperous
can shift their land to other
without economic disaster.
We
mwhm<e^***w4«*<dkmiwira;l!iwlhtjia.
(959)
We
the 81st Con¬
However, there Is
but they are no longer in
as they were last year and
gress,
agriculture. One of the outstand¬ the year before. They are still do¬
ing accomplishments of our gov¬ ing all they can to slow up our
ernment has been its research and
Congress, but they are not able to
educational programs to help stop it. The majority of the 81st
farmers do these things.
Congress are going ahead building
Futhermore, the farmer is con¬ for the future.
fronted with special problems be¬
The new Congress has already
cause he lives in the country. Too
repaired most of the damage done
often in the past, good
schools to farmers by the 80 th Congress,
and
uses
v
.
in¬
with
they
storage.
•
mwwmmjifmbtibi'
CHRONICLE
ing farmers get every bushel in
top of all that, the 80th
our
power
FINANCIAL
&
has repaired past damage
and is making new gains.
He
sects, weeds, weather and erosion.
the
of
i
i
In all these ways,
Congress had started to tear down
one
last
faces
nature.
battle
constant
a
farmer
the
uncertainties
in
on
Well,
Why Farmers Need Support
First
And
j
gress
Congress Record
ber.
veloped.
the
80th
.
au
i
COMMERCIAL
quate storage.
for the welfare of farm people.
-*kt""
ity to farmers and other people.
at
country.
s
llimnuu* wsk
i
mation program and cut down our
efforts to bring low-cost electric¬
efficient
more
living of everybody in the
Thai
oji.irtfl.ash
farmers
adopt new - and
more
methods, and produce
ard of
enter¬
the
need
us
produce.
lower cost,
wvn
THE
■'»
of
All
business
other
and
wiwwra.iwnwm) jwan «*(«**«« vrs^itw
Number 4836
170
prises.
»> whb^iuwkumni&u abe
been endowed
to produce the
Our country has
with
the
ability
good things of the earth in abun¬
dance.
I am sure we have the
wisdom to
ing of
niiich
all
BEULAH,
Nisewander
works than
we
used
cf
King
Merritt & Co.
to The Financial
people. We know
tbcut cur cctySfctiy
our
mere
(Special
this gift as a bless¬
use
and how it
With King
MICH. —Gilbert A.
joined the staff
has
Merritt
New York.
■V r >.
Chronicle)
&
Co., In6., of
i
j.
.
■
24
THE
(960)
COMMERCIAL
FINANCIAL
&
CHRONICLE
farm
A New Faim Stabilization
build well
(Continued from page 4)
the standard of living of Ameri¬
can
We
want
to
that
What
going to sup¬
milk, poultry
agriculture and a prosperous na¬
tion.
Most of
here remember only
us
well
too
recall
years
after
lean
years.
became
World War I
We
fat
how
the
price
agricultural
of 1920-21, which has
been aptly described as the time
wherif "farm prices were cut in
collapse
two in the middle." Within
half
years,
a
few
million farmers went
Millions
of
workers
a
bankrupt.
unemployed.
failed and banks closed.
sales
from
recover
that blow for 20 years.
And it
dition
the
was
depressed
con¬
of
agriculture during the
that helped on the great
1920's
depression of the 'thirties.
Judging by their actions, some
people don't believe that it could
happen again. They've forgotten
how
fast
this
world
modern
They ignore? the warning
moves.
signs.
$8
are
now
to
them
for
ink
This
of American
part
year's farm spending will
nine
salaries for about
half million workers. Labor
a
that
in¬
farm
and
wages
rise and fall together.
isn't
It
just coincidence that
payrolls dwindle when farm in¬
declines. It's
come
and
cause
ef¬
fect. Farmer and worker are each
other's customers. A
the
in
buying
gain
the'
Neither
other.
farmer
"sell
to
buy cheap" at
the ex¬
of the other. Farmers "buy
cheap" only when prices of farm
I'm
sure
know in a very
personal
way
just what these
statistics mean. In July, New York
dairy farmers were receiving an
average of 86 cents less than a
year earlier for every can of milk
they shipped from their farms. On
the other hand, prices of most of
the
things they buy for their
farms
and
family living
have
stayed up and some have even
gone higher. Here is the old "price
squeeze" operating again—and the
farmer
is
caught right in the
middle.
happening in New York
is true of the dairy industry gen¬
erally. Milk at wholesale is now
averaging about a fourth below
last year. The purchasing power
of farm dairy products is now be¬
the
for
average
last
10
years which included years of low
prices
well
and
as
controlled
prices as
short' period of high
a
prices. Here, certainly, is
ing signal.
•,
What
are
a warn¬
sell to
the
it?
nearly
two
and
Government
we
has
and
work
can
to
and
a
for
its
under
York
dairy
of
recommenda¬
the
concerned
limits
price
conditions
supports.
Surely it is not in the public in¬
terest
to
support prices for
pro¬
ducers who
are
abusing the soil.
proposed, therefore, that eli¬
gibility for price support should
We
use—how
good
them
use
New
sure
report interesting.
Our final set of
these
put
can
am
tions
million
55
of butter and
commodities
of
words, to eat
to
farmers will find this Committee
175
tion
be
present
legislation to improve the diets of
the American people.
tied
to
believe,
the
In view of the remarkable hue
soil
also,
benefits
should
conservation.
that
of
make
a
and cry against the use of produc¬
tion payments, you might be in¬
terested in the recommendations
they
brink
Association
difficult than
other
farm
in
one
or
a
of
Milk
Dealers,
Dairy Industries Supply
'/^ -'//
In discussing possible
of price
support after
in
We
•
for
return
support, farmers
genuine effort to
in line with de¬
is
the
price
our
treat
The
the
general
a
as
as
is
also
to
belief
out the
my
carry
will need to
ting
because
jobs
chasers
had
farm
income
pur¬
to
buy
city-made goods.
High
level
farm
purchasing
power is as important to business
and labor as full production and
full employment are to agricul¬
no
ture.
We
have
suggested
a
as
goal
a
give
purchasing
power as it has had in a recent
10-year period. This income stand¬
as
would
be
much
used
the
as
basis
for
calculating support prices for
the various farm products.
Now
this
some
would
folks
that
contend
guarantee income for
farmers. Not at all. We have
only
suggested a method for determin¬
ing support prices on the basis of
a
valleys of supply and
continue
to
circumstances
•
."This
still
form
realistic
income
had
a
objective.
short
crop,
or
If
a
failure, this proposal would
crop
not affect their income at all.
is
need,
in
and
at
surplus situation
likely to last only
and
a
desirable
when
short time,
such
outlets
the School Lunch Program are
as
the
a
free market
quoting
support,"—I am
the Dairy Industry
Committee—"would
v
I welcome it.
have
In discus¬
sure
happens, I am
get the kind of a
will
we
-
that
When
•
farm program we need.
J
'
tend
to
pro¬
Together, let
serve
us
all
build a program
our people. Let
'
a program that can stand up
the demands of a fast-moving
national
and
:
world economy.
Let it be adequate and
realistic.
-
above
But
all, let it assure to *
producers and consumers alike a
fair deal.
.V-~:
<-v;/;•>■■'•.•
.
CCNY Offers Credit and Finance Courses
Under supervision of Oscar
Lasdon, member of New York Stockmoney and credit problems and
operations of financial institutions.
Exchange,
-
will be given in
courses
In keeping with the trend toward close cooperation between
industry and education, two leading associations in the credits and
finance field will act as sponsors for two new courses offered by the
Evening and Extension Division, Gity College School of Business,
New York, for the 1949 Fall Term<s>-
Other
beginning September 21.
the
Educational
Retail
tion
Credit
Greater
of
which
a
on
of
sponsor a course
When
dairy products,
of
price, if necessary, to maintain the
support. '
The
will
We
prices
prices.
Goal
income level which would
ard
marketing agree¬
ments and orders, which help to
maintain orderly marketing and
otherwise aid in evening out the
particular
follows:
as
particular times, the Government
purchase method of supporting
Steady Income Level
an
the
peaks and
price.
regret at all the discusrecommendations
our
caused.
to
tools.
need
.
;
it be
*We need the full effect of dairy
We
are
pro-
program,
v.
streets hunt-
"Compensatory
payment to the farmer in addition
in
cooperatives, which enable farm¬
bought cheap, too, in ers to do better bargaining, stimu¬
those days—when they could buy late competition, and provide a
at all. But a good four million city maximum of self-help.
laborers walked the
I do not
sion
that will
all the avail¬
use
These
farm
our
gram recommendations.
war,
solidly
to his return under
definite
that,
methods
the
out
came
bas;s of supply and demand; cou¬
pled-with a direct 'government
public,
adequate in amount as that
provided any other producer.
It
of
aims
sion, the basic issues will be clari-:
and
of
basic
fied.
"The
program must
basic commodity.
which is just
against further abuse.
the
left free to find their level
dairy farmer must have price
assurance
find ways to keep farmers
producing, and consumers con- J
suming. We must insure our soils V
described
support
milk
must
Payments to Producers" which it
that, in the interests of both dairy
and
Committee
for what it called
few buyers. Price
consideredr opiniori
my
the
Associa¬
and
■-
"
necessary to assure a
dependable day-to-day supply of
milk in urban markets.
It
Associa¬
tion.'
must
cases,
Manu¬
Cream
tion
production standr
most
Ice
of
International
facturers,
com¬
stability is
several because of the collapse
farmers
going to do about
we
that
the
on
every
agriculture
What is
I
203
Maybe the opporients of produc¬
payments can tell you how
to
Workers
farmers
the
low
so
are
The
Dairymen,
able
low
hands
storage
quarter million pounds of cheese.
to meet health re¬
quirements of milk are exacting.
Milk is a highly perishable prod¬
uct
and
must
be moved
daily.
dollar they saved, they lost
of
farm prices.
*
*
are
themselves
most
modities.
we
York
the
are more
for
farmers
the
nor
long expect
can
and
dear
areas
bankruptcy. From 1929 to 1932
bought cheap. But for
New
into
have
pounds
ards necessary
power
loss in the income of the
worker
loss
or
of either is
be reflected in a gain or
bound to
milk
those
,
the
and
big
a
business.
farmers
in
We
fore, that
surplus perishables and watching
them spoil in storage, we allow
market prices to find their own
livestock products they
will sell are expected to run $3
million below last year And last
yea* farm net income declined for
Here
seems
in
million gallons of skim milk.
We suggested, there¬
instead of purchasing
up.
order
dairy
It
cost.
or
them
put
products
the first time in 10 years.
loss
have
We have also in dried form
that the only sensible way to
handle surpluses of perishables is
Government
itself
adoption."
now
million dozen eggs in dried form.
me
averaging 18% lower than the
January, 1948 record. This year,
cash receipts of farmers for the
crops and
great
quantities of
to
-
pense
Prices farmers receive
them.
We
-
.
keep supplies
mand, and we proposed accord¬
billion on farm build¬
ingly that to be eligible for price
ings,
equipment, 4 transportation, level, and compensate the farmer
medical care, education, and so by a direct payment for the dif¬ of the Dairy Industry Committee supports, farmers should comply
ference between
with acreage allotments, market¬
the
just four years ago.
on.
They will pay out another
support
7
This Committee, by the way, ing quotas, and marketing agree¬
billion and a half in operating level and the actual average marr
machines and motor vehicles. All ket price.
represented the following: the ments when they are in effect. Butter
We must protect our agriculLet's see how this plan works American
Institute, Na¬
told, American farmers this year
will have close to $28 billion of out for a commodity all of us here tional Cheese Institute, American tural economy against the disas¬
income to spend. That's the dif¬ are interested in—milk.
Dry Milk Institute, Evaporated trous price declines that have oc¬
ference between red and black
The price problems in fluid Milk Association, International curred so often in the past.
We
about
come
1929. But agricul¬
fully
heavily upon farm
depend
in the bust of
not
their
that
know
purchasing power. This year it is
estimated tnat farmers will spend
knows
did
We need large
committed
out of
no good
-
The Dairy Industry
Committee recommends this
.
.
method
from
without
season
and
stored
be
can
consumers—in other
Businessmen
the boom of the 1920's that ended
ture
is conducive
which
economy.
pay
Industry recovered and went on
need a level of
stability for the whole national
to
Businesses
were
to
season
cost.
cessive
these needs?
are
income
farm
ply the American people with the
kind of diet I have been talking
meat,
that
conditions
uses.
produced—and got
com¬
corn,
these
First of all, we
Prosperous Farming Needed
products, fruits and vegetables—
we
need
a
financially healthy
no sense
cotton
wheat,
as
plan" or panacea for all
products in storage as an
agricultural ills. They were insurance against bad crop years.
Perishable
help the nation adapt
commodities, how¬
its
farm
programs
to
current ever, present a different problem.
needs.
They cannot be stored without ex¬
full production economy.
about—more
in
supporting prices of such
modities
our
efficient labor
force, and that means greater in¬
dustrial output, higher wages, and
But if farmers are
the
improving
were
in
recom¬
mote maximum consumption con-*
with demand and supply
sistent
Last year taxpayers bought one
bushel of potatoes of every three
intended to
citizenry—a more
a
Congress
our
"master
a
more
a
for
recommendations
youngsters, and
intelligent
educated
means
the
it
price supports, but they
see
much point in buying
perishables for uneconomic
purchase agreements be continued
price support program. These
farm
produce healthier bodies, and that
fewer people in hospitals—
means
better
April
before
had
mendations
to
abundance
use
last
Since
has
and children.
men, women
Program Needed
that foundation.
on
don't
Thursday, September 8, 1949
Committee
Men's
New
be
will
York
in
the
field
of
-
/
*
Management",;
which will be taught by H. Binks
Goldstein,
Credit
Manager for.'
Management"^ United Metal Box Company; "Ad-
v
taught
by
A.
S.
Kleckner, Credit Manager for the
Namm Store in
courses
credits include "Mercantile Credit
and Collection
in "Retail Credit
and Collection
will
of
Associa¬
Brooklyn, and the
National Conference
of Commer¬
available, it makes sense to buy cial Receivable Companies will
and provide a use for milk that sponsor the course in "Commer¬
might otherwise demoralize mar¬ cial Financing
and Factoring",
kets and go to waste.
taught
by Walter S. Seidman,
vanced
Credit
Collection
and
-
Management", taught by Sol Altschuler, Credit Manager for the
National Safety Bank and Trust /
Co.;' "Advanced Credit Management Problems", taught by Raymond
J.
Dougherty, Assistant/
Credit Manager, North American/./
Rayon Company and American,
.
been using all these partner of Jones & Co., factors,
however, and we find and a member of the New York Bemberg Company; and "Advanc-!;
ed Collection Practices", taught by
- "
that we need, in addition, the pro¬ Bar.
As a convenience for men and Francis J. Perrotta, Credit Execu-,r*
duction payment
method.
This
women
method allows
working in the field, a tive, Burlington Mills Corporaproducers to go
on
producing and consumers to go special mail registration will be tion.:,
;/
.<./ *
on consuming past the point
conducted for these two courses.
"Principles of Finance" is the *
where surpluses would otherwise Applicants for either course may basic course offered in the finance
begin to cause trouble.
It is a register by sending a check or field, and other courses include /
simple method.
If prices aver¬ money order for $17.50 covering "Business Financial Management", «.
aged less than a reasonable sup¬ all fees, and made payable to the taught by Mr. Perrotta and Mr. ;
port level, producers would re¬ Board of Higher Education, to the Dougherty; "Principles of Invest- /
ceive a payment for the difference Evening Session Office, City CoL ment" taught by Leonard O. /
We
have
methods,
..
,
A New Stabilization Program
One of
our
our
great positive needs
is the improvement of
farm price stabilization
pro¬
right
now
We
that
X We have come a long way in
the past 16 years. Our farm pro¬
grams have stood the
pression and
vinced
that
war.
we
problems of this
by relying
essentially
on
test of de¬
But I
cannot
am
postwar
programs
of
con¬
meet
the
period
that
are
most
come
Ten
and
to
our
ning is
depression—just
a
as
run¬
different technique from
jumping.
We
have
the
which to build
an
foundation
istic^ efficient price
stabilization
on
adequate, real¬
and
program.
income
Let
us
to
be
diet.
cotton,
—
fourths of cash farm income. The
livestock products in this list are
that
consumers
basic
want
in
fore,
have
that
use
and
gives
chance to
the
second
use
the
consumer
the
the abundance that
side of
a
of
loans
and
think
I
that
ments make
file
of
at
the
take
ket.
pay¬
The rank and
think so, too.
justifiably alarmed
consumers
Taxpayers
to
production
sense.
are
our
business structure and
knowledge of the functions and
our financial institu¬
operation of
Taxpayers Are Alarmed
a
recommended, there¬
the
nels
tions.
to
method of
price support which will help to
bring about more adequate pro¬
duction and consumption of the
commodities the people need.
We
Fischer,. Credit
Metal Box Company;
lege School of Business, 17 Lex¬
10,
price.
It offers the ington-Avenue, New York
producer an opportunity to sell N.Y.; on or before September 14.
more
A
milk at reasonable prices,
comprehensive program in
instead of selling less
Finance
has
been
milk at Credits and
higher prices.
It is a price sup¬ planned- to
bring to men and
women
port method which keeps the
working in the field a
Government out of business chan¬ clear understanding of the money
support
the farmer produces.
need—namely,
Manager, United *
"The Securi¬
ties Market," taught by Philip B.
Wershil, Member of the New York i
Bar, and "Investment Banking" •
between the market average and
the
-
corn,
wheat, tobacco, milk,
eggs,
chickens, hogs, beef cattle, and
lambs
provide around three-
.
a
further,
national
—
vintage:
Maintaining prosperity requires a greater amounts.
different technique
This brings us
than
rising
from
*
important to farm in¬
commodities
foods
prewar
suggested,
commodities
selected fdf priority use of price
support funds should be those that
are
gram.
have
the
they are spending
perishables off the mar¬
money
They recognize the need of
Under
the
supervision
of
Oscar Lasdon, member of the New
York Stock Exchange and Associ¬
ate
Editor
of
"The Banking
Law
a group of experienced
businessmen-instructors will em¬
Journal",
taught; by
Leonard
F.
Howard, /
Secretary, General American In-
"
vestors Corp.
Applicants
for
,
these
may register in person
ditorium of the City
-
;
; courses
■
in the Au- :
College ;
School of Business, 17 Lexington /*
Avenue,, New York, from 6:00 to 8:30 P.M. on September 15 and# 16,
.
from
11:00
September
8:30 P.M.
phasize the practical "learn-bydoing" approach to the subject
erans
matter of credits and finance.
Bill of
are
A.M. to
1:30
17,
from
and
P.M.
6:00
September 19.
on
to 1
Vet-
:
eligible under the G.I.
:
on
Rights.
ifiiau-tmwb*1
Volume 170
mattmud jitamuiwiftji 5i,w*uj jji M*sm
tww
mrwjumjteiuaialjuattl
Number 4836
THE
COMMERCIAL & FINANCIAL
How to Make the "Point
(Continued from page 5)
have not
can
a
tinning
aid.
I
recovery which
am
statistics
unimpressed
about
Woik
production
opportunity to participate in important.
Sovereignty as such
industrial expansion beyond our will
gradually become less im¬
120% of the 1938 levels. Tex¬
tile mills running on free Ameri¬
cotton and automobiles run-
can
borders is part of
wn
this
con¬
The rest of the world
this.
V y v:y ■. v ;,
cept.
offer
Europe having reached 110%
or
us
self-interest
of
psycnological barriers to such
an
peoples with inadequate produc¬
achievement
tion is to increase their total out¬
bler's
put of goods from their factories
Point Four program is carried out
but
chance
there's
of
a
gam¬
if
success
the
intelligently.
to reach this goal, perity
and
industrial growth
stops, the living standards in the
countries receiving it will fall.
whicn
can
run
getting
are
taste of this
reality in 1949 without having to
a
wait for 1952. There is
government
to
-
place for
a
government
-
credits in the future but
they must
take second place to
private in¬
j businessmen
Together,
creased
the
production is not
blessings that flow from
ernment offices in any
The
key fact
which
stands out is this:1 production in
countries
world
is
elsewhere
wholly
in
the
inadequate
meet the needs of the
to
people who
live in the rest of the world. The
monetary
economists
are
pres¬
ently concerned about the fiscal
crisis in country after
country.
But the best of
them
this
is
The
fundamental
only
of the world
crisis
and
know
surface
a
not
that
symptom.
crisis
today is
in
most
production
fiscal crisis.
a
The
simple
a
tive
capacity
those
why some
"soft'* is because
currencies
cannot
in
sued
the
countries
them,
which
is¬
Until production
is
raised and prices are reduced
Within those countries and until
that
production
is
distributed
widely
and
fairly
among
the
peoples of all lands, there is no
hope of solving the money prob¬
lems of the world.
The
so-called
"dollar
a
shortage"
"phony" in terms of seman¬
tics.
What people in other lands
is
Higher Living Standards Can Be
Achieved
Let
me
there is
here to say that
pause
mystery about higher
living standards in a technological
civilization. They can't be achieved
by more human drudgery. They
no
only be achieved by multi¬
plying human muscle power
through machinery and mechani¬
cal
horsepower.
Nations,
like
men, must learn to crawl before
they can walk. As a general rule
light industries must be working
successfully before heavy indus¬
tries
can
peak
of
established.
be
the
At
industrialization,
how¬
ever, over $10 thousand per fac¬
tory worker must be saved by
somebody and then invested in
plant and equipment to lengthen
the
of that worker.
arms
simple to
It's just
has
taken
though it
say even
in
here
decades
us
America to achieve it.
If the rest of the world has to
wait
use
the phrase is this: that they want
more of the goods which can be
to
its
generate
capital
own
to
multiply human muscle power
through investment in plant and
equipment, it will take several
centuries to do the job.
If pri¬
vate
capital from this country
its
A
course.
be made
world,
good start can
next ten years.
in the
The United States
now
holds
an
When industrial devel¬
opment first began in this coun¬
try
we
were
dependent upon
foreign capital.
We welcomed it
enough
ing
not
earn¬
buy everything
to
I
wanted.
Both
tion
production and distribu¬
must
world-wide
called
increased
basis
before
the
and before the
world
on
the
a
so*
similar
that
to
Seaboard
Eastern
the
which
of
our
own
country has held toward the rest
the
of
United
States
for
over
a
century.
and it
helped
us.
vided it made the
Those who pro¬
profit to which
dis^^heir savings and their willingcurrenciesrness t° venture entitled them.
"dollar shortage"
appear
of
be
will
Our
Eastern
Seaboard
again be
exchanged for each other without
rapidly
generated capital of its own, how¬
restriction.-
ever.
can
I
once
repeat
second
my
key fact, therefore, that the real
crisis in the world today is a pro¬
our
best bet for
avoiding
an
atomic war.
President Truman has suggested
a
direction in which all of us
of
It
was
from this older
that
country
our
went West and
the
area
money
crisis.
crisis
and
not
The United States is able to
duce
more
than
South to build up
borders
for
our
continCn-
men
it
cause
so named
the fourth
was
and
and
farmers
.
_
«
«
*
„
.
here in the United States and the. world to increase its own produc-
self-interest
where
we
in
our
world
friends elSB% djvity along lines somewhat simiis such ✓ifeate-ter to those through which the
ought to be able to combine
our resources
fit.
of
the
to
our
mutual bene¬
program
.
Our
eastern
seaboard
once
rest of the United
of
helped the
States with its
industrialization?
I
this country think it can if men in, each coun¬
can remain healthy only if it con-> try will examine their own selftinues to expand.
Our outstand¬ interests objectively. That exami¬
ing business need as far ahead as. nation will force countries toward
anyone can see is for an evergradual economic union.
People
increasing number of customers as individual producers and con¬
and for ever-broadening markets. sumers will slowly become more
economy
in
.
.
.
.
.
.
.
.
.
discount rate.
.
.
.
Many of the deposit banks have not done their own refund-
»
of
point in
the
world.
/
Actually, the opportunities are
even greater in the more
devel¬
oped areas. But so much the bet¬
.
.
.
.
LOOKING AHEAD
The money market, despite the early date, is concerning itselfc
small way with the December refunding, which at the present
time looks like a five-year 1%% note.
This would fit into fhte
;
in
no
.
ter.
This
Europe
that
means
Western
slowly be brought into
can
the
program
as
well at Latin
America, Africa and Southeast Asia.
It ought to be open to free men
everywhere
who are willing to
for higher living standards
work
and
willing to throw aside false
who climb to personal
obligations,
requirements, could,
push Bill and Certificate rates down which would decrease the
The Central Banks, by not supplying short-term
by promising people some¬
thing for nothing. The President
stressed the place of private capi¬
tal in this longe-range venture.
A few days later Secretary Acha
cost of deficit financing.
24, the President asked
for enabling legis¬
out
greater detail than had been
done previously.The emphasis
might have been changed here
and there, but on the whole it was
Congress
our
lation and spelled his program
in
excellent statement.
.
On the other hand, lower near-
.
an
effect upon the longer end of the
this
and
would
■
%
PRICE STABILITY EXPECTED
A five-year 1%% note for the year-end maturities, consisting
2s, 2%s and 3%s, would result in a savings in interest cost to the
Treasury.
Since the deficit must be financed, there is no doufefc.
about the monetary authorities being very much concerned ovep
the cost of carrying an increasing debt burden.
This probably
means as low a rate as will be consistent! with the pattern that seemar
to be evolving in the government security market,
Although it ISt
the stated policy of the powers that be that future debt and money
management will be carried out to meet more fully the credit needs
of business, it is also pointed out that orderly conditions in the gov¬
ernment security market will be continued.
Because of the
many eruptions which have taken place in the government market*
...
have
.
considerable doubt exists about what the
orderly conditions.
hard
area
have been
sipce last January is
for having great hopes
reason
for the future.
"
,
-
the
a
consideration
key elements of an
intelligent Point Four program. I
want to discuss these points one
by one.
Some of them have al¬
ready been suggested by the Ad¬
ministration and some of them
their origin elsewhere.
responsibility for emphasizing
have
;
.
J
obligations, it does not
seem
^
.
though the
as
»
tacular rushes
on
the
upside.
.
.
.
To be
spec¬
<
«*
demand for the
sure
carry prices of these securities ahead,
I
probably not substantially above current levels.
In other'*
higher income issues could
but
.
words,
an
cards for
area
of stabilization
.
.
the upside seems to be in the
on
quotations of government securities.
.
will last is largely up to the money managers.
.
|
How long it
.
,
.
.
.
'
DECEMBER REFUNDING SUCCESS ASSURED
■
obligation
has
no
doubt retarded • somewhat the buying
of the 2V2S d«©
9/15/67-72, since many institutions figure they will be able to takfc
a certain amount of Notes instead of the longest eligible.
The re¬
duction in reserves gives the deposit banks additional -funds, which,
they can even afford to put to work at low rates.
On these fun^t
they were formerly earning nothing at all.
Another sobering in¬
fluence in the eligible market is the high price level for the Septem*
ber 2%s which is the only long-term issiie in1 the' list,
: y Prices ofc*
this obligation could go up from here, but memory is still good
enough for many of the banks to remember what happened to theifr
when they bought this same bond in 1946, when money condition*
The announcement of
Note for maturing December
a
.
.
.
...
.
.
.
.
were
and they had Hobson's choice as they have today.
very easy
a
Decem¬
refunding operation, because the commercial
banks are the largest owners of the maturing obligations. . * »
These institutions according to the latest available figures, ht i&M
more
in
the
than $3,000,000,000 of the
will be retired
of the
total.
on
...
Dec. 15.
...
$4,375,000,000 of securities that;
This is equivalent to about 7w%
Other investors are next with slightly less
,
thia
■$800,000,000, or about 18%, with Federal showing Holdings of <
approximately. $265,000,000, equal to 6%, of the called issues. . . •
Savings banks and fire and casualty companies largely account for
the remainder, since life insurance companies held only very
minor amounts of the three called obligations.
"
i
strong unilateral state¬
by this country which faces
without shame, to the fact that
are a
competitive enterprise
FAIRHAVEN,
MASS.
Ray¬
—
mond D. Palmer & Associates has
up,
been
We need to say
(Continued
on page
formed
Church
with
Street.
Mr.
offices
at
Palmer
70
was
that for previously with Trusteed Funds,
26)
With Gaynor,
Raymond Palmer & Assoc.
ment
nation.
)
than others is my own.
(1) First of all there .is a deep
need for a
one-year
.
longer end of the government list is going to make any
ber Note
•
seven
some more
,
rate for
There seems to be no doubt about the success of
Program
We come now to
be
/
.
period, because of the problems which could arise in the future
from lower yields from all Treasury Securities.
With a D/6%
1
Key Elements in Point IV
•
.
.
.
authorities consider to
the matter
on
they have kept in close touch
with government people working
on
the same problems. Only re¬
and
developed
.
.
.
Nonetheless, it is believed in many quarters the 1%% certificate rate will be maintained by the Central Banks for a
No action
Many business groups
worked
.
.
likely at this session of Con¬
but since we're talking
about foreign policy for a century
to come, I don't think we should
feel
too
discouraged about the
present legislative inaction.
Great progress actually has
been
made
in
the
last eight
months in exploring ways in
which Point Four might be im¬
plemented.
.
.
is
we
„
enlarge the problems of institutions that
cannot put too much of their funds in low income shorts. ...
.,
list
gress,
The
.
term rates would also have
reserve
to
On June
of
through further decreases in
"climate" in other
countries which would be attrac¬
an
and
put great emphasis upon the
necessity for
.
...
power
tive
.
maturity schedule of marketable Treasury obligations quite nicety
since the securities callable in 1954 are very small, aggregating only
$681,000,000.
A four-year issue could be used, but it seems
as though this would be giving the market something which mo«k
experts do not believe will take place.... The Treasury can make the;
rate and maturity of the forthcoming note whatever it chooses, bid
it seems as though very little would be gained by moving out of the
yield pattern that appears to be developing. .
leaders?
eson
.
The partially exempts, which have been
pretty much on the inactive side, have taken on new life under
the leadership of the 2%s and the 2%s due 1960/65. . . . These *
two issues have been picked up at advancing prices by the large
money center banks. . . .
:V.,'
r. |
be¬
_
heavy machinery to step up .its-yaiQuery, can the United States
own production. Our self-interesL aaow
help the non - Communist
.
country use its resources to help
develop the underdeveloped areas
solid
long pullwv abeyond the Eastern Seaboard in
particularly in the heavy machine ^he process? They grew to be so
ery field.
The rest of the world successful that they are now genby contrast, is producing lessaifcatt* abetting most of their own capital,
enough to satisfy the elemedtafc
•
needs of its people.
It needs%% What Can U. S. Do to Help?
.
.
.
Briefly, he proposed that this
which ideas in this
the
.
.
his Inaugural Address last Jan. 20.
workers
what
...
ing Treasuries.
now enjoy.
happened to business¬
p&£ living today than they
prevails in the Government market witft
obligations, especially the early fagril
and the longest bank eligibles.
Savings banks, which still have
the 56/58's and 56/59's, are evidently being advised to dispose o£
these issues and to put the proceeds into the 1952 and 1953 eligifcde
tap bonds.
Commercial banks, mainly out of town institution®*
continue to move into the longest eligibles, particularly the 2%s due
9/15/67/72.
Investment demand for the taps and the long banks
has worked some of these issues into new high ground for the yeats.
Volume has increased, aided by switching, but is still not very
heavy.
There seems to be little doubt that a larger supply of ttofe
higher coupon eligibles would result in better prices for these oblige*
tions.
There is considerable talk of an early change in the re¬
famous Point Four,
the
it is possible zi<y And
merchandise within
tal
fiscal
A firm to strong tone
demand good for all Treasury
ing yet, but this will be taking place in the not distant future and
should assure a continuation of the demand for the higher yield-
productive power. of the naThe basic trouble in most -tion.
Had it not been for these
a
Governments
By JOHN T. CHIPPENDALE, JR. ^==
might move together toward this
goal in which has now become his
cently, on Aug. 17, Secretary Krug
had some very constructive things
countries
outside " the
United early savings on the Atlantic Coast to say in the fifth point of his ad¬
States is the inadequate output^of and their subsequent investment dress before the United Nations
goods and the high costs of pro- in factories and machinery be¬ about the kind of "climate" re¬
tluctiomr ^ •
v
yond the Eastern Seaboard, the quired for the full development of
natural resources in foreign coun¬
> So here is the V heart of^tt^ West and the South would have
I think the rapid rate at
problem which we must solve; a very much lower standard of tries.
duction
•
also
speech which he made last April.
broad
a
the
it meant
was
century or
two.
It's a job for hardy souls
with infinite perseverance but it's
a
has
before
made
on
of
production
permits
buy.
I've had a "dol¬
lar shortage" in my personal af¬
fairs many times in my life. All
that I
for
can
the. rest
their
was
be
can
this century
to
very
own
stage
goal. Enormous progress
our
be
outward
flow
basis
economic position with respect to
the rest of the world which is
to
The
level of world-wide pros¬
however, We could greatly shorten
the
decades necessary
to reach
could
bought in the United States than
they can afford — more than
them
a
private capital.
Nothing
could have been more significant.
Hopes rose that we were getting
ready to be ourselves in the con¬
duct of our foreign affairs.
Sec¬
retary Sawyer carried the idea
further in a very si gnif icant
run
really saying when they
are
success
a
be
swapped for goods at competitive
levels
make
to
,
reason
are
out
of it.
that
currencies
turn
can
second
most
-
gov¬
country.
More Production Needed
:
.
of
one
to
goods for more people. We
have the capital and the produc¬
more
vestment. The world can have more
cnly by producing more, and in¬
world
the
around
build the plants
we can
set for
on
25
to break down
the political, the economic and the
other
Reporter
^
it won't be easy
can
■
The
portant.
iung on free American gasoline ! as well as their farms. Our btxsirepresent industrial relief and not j nessmen can join hands with their
recovery.
The moment the relief
We
Our
The
sustain itself without vur^xoiF
with
in
built
(961)
CHRONICLE
Inc., of Boston.
.
Clemency
(Special to The Financial Chronicle)
BRIDGEPORT,
L. Nichols, III, is now
nor,
Clemenee
John Street.
&
'
CONN.—Henry
Co.,
with Gay*
Inc.,
1$$.
*
26
(962)
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
The
How to Make the "Point IV" 1 'rogram Work
(Continued from page 25)
relationships
the
long pull we shall be unable
to help other
people raise their
living standards unless they are
willing to count on competitive
enterprise for the biggest part of
the job.
/
Until responsible
people in
our
government make this unequivo¬
cal statement there will be
linger¬
ing
hopes
in
government
among
people
other
countries
that
assistance
can
in
after
we
work
can
well
own
in
The
way.
These
on
grants
the
period
emergency
following the
of
have
we
have certaintly
war
prevented disasters in many parts
of the world
tinue
them
remain
but
as
a
cannot
we
con¬
of life and
way
solvent.
This
does
that
mean
we
should
stop our present grants
overnight nor that we should run
out
Marshall Plan commit¬
our
on
ments.
But it does
that
mean
we
should tell the world in unmistak¬
able
terms
found
a
be
must
way
by like-minded peoples to
together to build^recovery
work
on
that
basis which can be self-sup¬
a
porting.
So
cerned, this
far
as
are
we
con¬
counting pri¬
private capital.
means
marily on
Many nations
may
cooperate
us
4
That
is
with
their
not want to
this
on
business
basis.
and
cer¬
oppor¬
industrial
government
people
States
being
visited.
done
with
from
and
com¬
is
mission
recently finished a survey
in Brazil. It was a joint report by
Brazilians
think it
and
was
Americans
for
in
covered
detail
the
It
a
program
up production within
set
headed
The
years.
considerable
outlines of
stepping
Brazil.
I
and
of the outstand¬
one
ing jobs of the last few
a
pattern for hard-
United
cooperation
States-Brazilian
for
generation
to
Following broad surveys of this
sort, smaller technical missions
working on narrow specific as¬
signments could make a real con¬
tribution
to
growth.
In
overall
economic
instances
some
abroad
in
all
grow
thus
earn
the
sary
for the
receiving
prosper and
and
tax
money
neces¬
of these
repayment
United States government credits.
fifth way in which
might be implemented
develop a much bolder
for
the
purchase
of
The
(5)
Point Four
is for
to
us
materials
cooperating with
their
from
from
nations
importance,
our
growing economy will re¬
quire all the lead, tin, zinc, copper
maganese, etc., which the world
can
produce and sell us for the
of
rest
this
nation
raise
century. Where any
working desperately to
is
the
living standards of its
people
through
providing
own
maximum opportunity for the in¬
dividual,
should be willing to
buy any strategic materials they
to
care
we
sell
us
that
so
they
can
their way in the world and
not be dependent on us for grants.
these
We
should
assure
have
signed
which
treaties
for
with
such
us
primary
government
all
nations
investment
stable
a
market
materials.
should
be
Our
willing to
enter into
long-term contracts for
purchase
with
escalator
either
missions would be sent abroad by
the International Bank or
their
the
Export-Import Bank in con¬
nection with loans being sought
clauses
also contain reasonable
price and quantities to
on
be delivered. The contracts should
tainly
we
shouldn't get provoked
by
when
we
encounter
they would go abroad on
assignments unconnected
with
countries
loans,
dustrialization
different from
are
ideas
our
which
Our
own.
policy should be to husband
for
resources
those
which do
want
ductivity
in
know
how
up
only
do
to
build
to
the
our
countries
pro¬
we
way
it—through
en¬
couraging the individual to en¬
gage
in
competitive enterprise
with the minimum amount of
gov¬
ernment
interference.
We'll
be
W being honest. The
waiting to hear the terms
respected
world is
which
upon
we
want
to
stay
in
the international game for
keeps.
other
governments.
In
other
cases
such
technical
those
as
assistance
of
in
fields of agriculture.
The chief technical
which
we
another
country,
actual
assistance
the
however,
will
establishment
plants in which
have
nessmen
many
render to people in
can
from
come
straight
the
busi¬
our
direct
a
of
interest.
United
when
treatment
States
it
private
abroad.
goes
for
capital
No
nation
which
discriminates unfairly
against our businessmen has any
long-term right to help from our
government which is supported by
taxes from a competitive enter¬
prise economy.
Businessmen from 32
countries
business which they
a
code
the
Fair
for
Treatment of Foreign Investments.
Our
own
well
to
government
this model code
use
basis for its
want
we
the
would
own
from
simple
as
a
negotiations. All
these
treaties
that
assurance
businessmen
do
will
be
treated
is
our
as
fairly when they go to another
country as the nationals of that
country are treated when they
come
gage
titled
ment
to the
United States to
in business. We
to
and
not
are
preferential
any
no
responsible
is suggesting it.
Unless
en¬
treat¬
person
we
treatment,
there is
en¬
a
get reciprocally fair
however, and unless
chance to make
commensurate
with
the
a
profit
risks
doing business abroad, we are
going to invest- our savings
of
not
in
factories in other lands. Business
without profits soon goes out of
business, which is hardly
to
either
customers.
that it's
the
service
a
employees
This
is
so
or
the
elemental
silly to pussy-foot
on
the
issue with other nations. While I
have confined my
observations to
United States
relationships with
another
country
simlicity, the
viously
for
same
apply to
the
sake
of
principles ob¬
the
investment
machinery they would need from
this country. It would be an enor¬
mous help
to their
their bal¬
of payments
ance
,blems while
the whole Point F
getting under
program was
and their
way
industries
new
**
own
being estab¬
were
on
profitable basis.
a
Now
to
sixth
my
point.
I
without
learn
which
h
the
skills
i(g her
living
impossible in any
country. Technical assistance can't
be
peddled like toothpaste but
it's
are
integral part of long-range
an
industrial
part
of
growth -and
therefore
well-rounded
any
Point
market
for
its
own
products. I would, therefore, like
to
selective
see
with
countries
evidence
of
tariff
which
tive
us
enterprise
have
on
basis.
these cuts
see
made
given
willingness to
their
cooperate with
cuts
competi¬
a
I'd
like
to
just as close
possible for prod¬
to free trade
ment, either public or private.
(4) There is a fourth area in the
carrying out of Point Four which
erating" country.
to
need
do
for
with
government-to-
credits.
these
There
is
a
where
they are
quite outside the scope of private
financing and where the use of
government
funds
in
carefully
selected fields definitely broadens
the
opportunity for private invest¬
ment—both for the United States
citizens
and
countries
for
nationals
in
the
receiving the loans. The
fact that it also broadens the
op¬
portunity for private investment
by businessmen from third
tries is
will
an
tend
vigorous,
coun¬
added dividend which
to
r
keep
competition
I am
thinking of United States
Government credits for the build¬
ing of roads, the improvement of
harbors
and
the
transportation
betterment
and
of
communica¬
tion facilities. Government credits
of this sort are also
appropriate in
the
fields
some
for
of
cases
sanitation
they'
are
and
in
appropriate
the
development of electric
It goes without saying that
loan applications should be
power.
the
This would
within
ment treaties with
with
us
Point
be
such
make
be
and
for
similar
each other.
I
should
We
many
own
use
of
government money for
these purposes in our
country and it enormously
improves the climate for private
of
same
have entered
we
with
B, the next step
countries
want
to
see
a
to
with
mul¬
tilateral world and I've stood for
one all
my life. But I've come to
reluctant
we
build
brick.
conclusion
to have
are
it
one
:■
.
(7) And
that
if
shall have
we
bilaterally,
brick
;
by
V,; ,1 f~
to
those
surance
This
tain
the
be¬
our
country
another, our own
might well sell in¬
of
to American businessmen
investing
in-
foreign
insurance
would
countries.
cover
cer¬
extraordinary risks, such as
inability to convert profits
a
foreign country
dollars, if the American firm
to
bring some of these
wished
profits home and pay U. S. taxes
them.
The
insurance might
risks of expropri¬
ation of property in another land.
on
also
cover
less ought to
cover
the
few
the
development abroad from public
to
under these
occur
need
this
private shoulders.
j
On
the
have
.!
/
government
already sent
technical
good
a
missions
side
we
many
abroad.
We
have extended
some credits which
chance of
repayment, and
have engaged in some modest
insurance; have
than the larger corporations.
There are over-all
reasons
fori
more
we
a
stockpiling of strategic materials.
encouraging them to set up part-! We have concluded some com¬
nership arrangements with busi¬ mercial treaties, the best of which
nessmen
in
other
countries.
I
was with
Italy.
But even this
feel that if this insurance were
treaty did not come to grips with
made available after all the other the crucial
problem of
elements
of
had
gram
would
Point
a
been
help
to
currency
Four
worked
pro¬
its
assure
convertibility.
it
total
out,
None
"Four-Basket
•These
in
ments
the
terprise in other countries which
key
seven
ele¬
imple¬
intelligent
mentation of Point Four
as
them.
come
an
It is vital that
agreement
we
I
our
government gives the business
firms
of
those
same
countries
here in the United States. None of
it has faced our
necessity as a
see
to
them country by
on
creditor
country through
bilaterial nego¬
These negotiations should
tiation.
take
the
of
form
nick-named
ferences."
what
These
sions in which
would
conference table two
another
from
country
the
baskets,
and
the
and
the
The
ap¬
want
no
all of them.
of these
sessions
plete
agreement
which
both
debt.
ders.
it
such
under
better
it
like to
the
see
no
States
conclude
one
or
such
with
were
as
a
of
sense
that
phrase.
Experience
with these could then guide us in
the intelligent
handling of this
kind of bilateral negotiation with
other
countries
later
on.*
We
should
put everything we have
making the first programs
into
work.
If
they
work, other na¬
seeking the same
tions would be
sorts
of
faster
with
arrangements
than
we
us
conclude
could
to them
up
has
been
This
is
the
to
answer
had
the
long-range
The
can
promise
the
moon
become
the
technical
as
result of
a
in
made
reason
goods.
Young
we
We
have
been
have
most
small
Numerous
nies
i
where
our
oil
of the
compa¬
guest corporations.
are
have gone up sharply,
housing has come in. A
Wages
and better
quality of medical service and a
of schooling have been in¬
troduced which were previously
level
unknown.
every
Surely the citizens of
country involved have prof¬
prospered as a result of
ited and
these investments.
said
And when all
the welfare of
people in a world at peace is all
that really matters.
In the merchandising field, Sears
and
done,
has
other
countries.
consumer
Prices to the
piecemeal basis for
But for that very
several
established
have been
in
stores
the
Variduo
have
not
achieved
the
we
approach to these
matters
of
foreign
commercial
policy reminds me of a man who
build
half
a
house
finished.
store
and
then
True,
only half the price of
a
it
fin¬
and
known
stores
been
wages
paid
to
employees have gone, up.
employee security bene¬
which
fits
to
were
those
in'; these
previously
who
un¬
worked
countries
established.
in
have
* ; '
Much of the merchandise which
was
United
being supplied from
sources.
.Sears has often
first supplied from the
States is now
local
timid
it
the
the nationals
by
reduced
of its separate parts.
leaves
run
countries
large
might
have, had we done the whole job
with completeness at one
time,
nation by nation.
The whole of
anything is always more than the
starts to
countries
handle
businesses have been started which
are
of the things already
under the Point Four
cumulative effect which
Our
to
one
have
foremen
and
managers.
other
jobs.
Roebuck
some
several years.
costs
trained
de¬
the United States
productive resources to
program on a
sum
been
has
only
liver
a
-
Commies
but
only
Communism.
of
nationals
have
Workers
foremen
from
is
them.
Now
source
the
countries
men
thap
begin¬
ning.
They
should
be
"show
piece" arrangements in the finest
re¬
her
to
developed.
greatest
generation.
have
more
no
two countries
of
set
a
gets
natural
value
no
important,
progress
short
any
United
of
her
these
become
would
in which
these investments. Enormous
agreement.
I
stream of
a
government
greatest
were
opened
would
into
a
a
stock¬
large number of opportunities
under
profit.
last, and
enter
to
bring
Her
Her
More
of
stand to
conditions
at
give
revenue.
com¬
a
one
will not
not
of
agreement
an
and
sides
Otherwise,
be
if
to
to
American
roughly half the profits of the oil
companies located within her bor¬
At the end
all, it must be
Venezuela
these
Vene¬
are
meeting
a
com¬
exter¬
nal
in
conference.
a
be
in
of
the countries
they
such
oil
zuela, for example, has
whatever.
sense
The
the petroleum was found.
before
want
to
they
emerges at
Four
East.
to
holders and
until
on
some
level has been
in
minds
are
Point
what
effect
return
dollars
elements of the Point
at
Investments
there
Middle
business
we
of
net
good
things
should
Oil
concentrated
ones
sources
detail
investment
panies of this country, for exam¬
ple, have large investments
throughout the world, with heavy
Four program should be discussed
There
of
tries is concerned.
chance to succeed
nations
seven
private
might be like insofar as American
private investment in other coun¬
should
"piecemeal"
a
return, makes
most
nations
proach of doing a little here and
little there and asking nothing
in return for what we give is cer¬
tain to fail.
Signing checks for
the
in
improve the
foretastes
a
other
to
Nevertheless,
The contents of all four baskets
should be spread on the table and
explored
objectively
by
both
sides.
This is the "package" ap¬
getting
effort
earnest
for
Example
other
what they want.
what
expan¬
within their borders.
one
bring two baskets, one con¬
taining what they are prepared to
give and the
other
containing
the
foreign
private in¬
industrial
countries
climate
also
proach. It has
have
for
Representatives
other
whereas
and
an
other
would be pre¬
we
to
us
Consequently, there has not
been
ses¬
to
wanted from
we
containing what
pared to give.
sion.
Con¬
be
nation
open
vestment
brought to the
we
containing what
areas
might be
"Four-Basket
these
the United States competitive en¬
Conferences"
the
are
of
government ac¬
tions has been openly conditioned
upon the kind of opportunity for
success.
suggested
tween the citizens of
shift part of the cost of economic
on
A nominal
Medium-sized businesses in
American
doing
and
us
but for all practical
foreign policy which has been'
lacking is a forthright program to
or
to
likely to
the last point.
Once this kind of commercial
re¬
government
and
favorable trade circumstances.
lationship has been achieved
now
into
them
the
ararngements
already made in
under
would,
to
those
expenditures
carefully audited.
phases of
arrangements
countries A
would
and working
program
entitled
treatment. After
into
us
ished house,
purposes it's not much better than
no house at all.
The half of our
^
coop¬
abandon¬
mean
all the other
on
Four
course,
the
adequate
agreements
not
carefully scrutinized and that" any
be
the
ing the principle of the "most
favored nation" clause. Any other
nation signing the same invest¬
to
;
as
produced
S.
and
us
come
Four program. It is most effective
when it is tied to capital invest¬
ucts
with
working closely with
losses
All
(6)
American
to
government
a
programs to earn
the dollars requisite for the
heavy
opportunity
has
completed
in¬
on
understand fully. It also gives the
of
other countries an
Chamber of Commerce
just
started
willing to go
this far in cooperation with us is
entitled to a bigger slice of the
working through the International
have
anti-dump¬
help
would
feel that any nation
standards
fair
getting
duction in
like-minded
guarantee
This
lished
nationals
which
provisions.
This gives our engineers and tech¬
nicians a chance to increase pro¬
(2) The second part of an in¬
telligent Point Four program is
the negotiation of treaties with
countries
ing
be
Quite aside
us.
military
U.
investment
treaties
premium of 1%
businesses
country
to
the
dozen other fronts.
a
count
help
the
them
signed
were
for
country
any
earn
v
come.
should
loans
program
which
to
States
primarily
upon
competitive enterprise for
its economic well-being. The facili¬
ties provided by these government
strategic
country
what was
credits
purposes
determined
the
both
Abbink
same
United
use
Government
the
as
the
This
the
commercial
as
well
as
ready
to
risks for
mized in countries which had al¬
investment. It is desirable in many
within
the
resources
the
and
for
missions should be
of
business
survey
not
nations
there
United
its
countries
agricultural development.
as
kind of world recovery which can
billions of dollars which
other
review the
to
those
posed
pay
as they can digest
period. Immediately
signing of investment
with
missions
partnership basis with the peo¬
ples of other countries to build the
made
we
next step should be at a technical
assistance level. We should set up
will continue
the earth before
as
and
the
treaties
tunities
a
is
given
of
hopes must be smashed to
we
much technical
as
other nations
to
spare
a
government-to-government grants
the United States Treasury
These
countries
\
(3) The third way in which
implement
Point
Four
through giving
actual
Treasury would be greatly mini¬
instances
other
can
from
indefinitely.
of
with each other.
Thursday, September 8, 1949
acted to bring American manufac¬
turers and foreign manufacturers
together
in
partnerships to
duce these goods.
underwritten
the
pro¬
It has partially
success
of these
joint undertakings by agreeing to
Volume
170
THE
Number 4836
take part of the output.
Started its Mexico
When it
City store, 90%
profits.,
knows
He
for labor
wages
COMMERCIAL
high- •volume.
that
better
mean
cus¬
would
&
If
FINANCIAL
the
make
rest
it
of
the
CHRONICLE
world
profitable for
us
(963)
personal freedom. But they know
that it also
produces high divorce
of the merchandise came from the
tomers
United
lieves in increasing wages just as
fast as the increasing productivity
this would give us a selfish reason
for being more free-trade minded.
stomach ulcers and tensions lead¬
of
The
deeper
the
ness"
rest
of
we
tive.
States;
80%
it
of
now
from Mexican sources.
Is
this imperialism or is it construc¬
tive economic progress?
Comes
At
the
agricultural level, Fire¬
stone
has
developed extensive
rubber plantations in Liberia and
United
Fruit
Company
has
done
an.
utterly outstanding job of pro¬
ducing truits in the Caribbean
which
area
in
the
the
marketed chiefly
States.
Wages on
are
United
United
Fruit
considerably
surrounding
areas.
his
returns
often
not well
are
and
screened
they all have
running water.
■
The workers and their families
enjoy a degree of medical care
^
and educational
opportunity which
represents very real progress for
people in the countries where "La
Frutera" operates. Its agricultural
school in Honduras for 150
boys
from
one
the
the
Caribbean
countries
ever
school
is
to
develop knowl¬
edge about diversified agriculture
in the tropics.
/
The
youngsters
thing
the
except
nanas—which
is
study -every¬
culture
the
of
ba¬
backbone of
United Fruit Company's business.
Is this "exploitation for profit"?
United Fruit is making money all
right, but if it weren't it couldn't
afford to give its workers
ard
of
stand¬
a
countries
same
for
other
workers. World recovery requires
more of this
kind of private ac¬
If Point Four. is
to succeed. American business will
need fair but more
vigorous diplo¬
matic support from
State De¬
our
partment than it has received in
the past.
Some
American
businesses
go
abroad with
wholly owned subsid¬
iaries. Others prefer minority in¬
terests in foreign companies and
still.others go in
50-50
basis
ten-year management
With
con¬
tracts.
all
a
rule
one
can
apply to
the business conditions
vary
as
from
cal
No
on
industry to industry and lo¬
capital, is
Some
kinds
interested in
more
business
of
than
in
others.
>
It's
thusiasm
work
for
for
climb
tendency
is
for
American
busi¬
to seek local partners in
nessmen
foreign lands.
They
putting a
behind the develop¬
lot of drive
are
ment of
the skills of workers in
the countries where they are liv¬
ing
of
guest corporations.
as
better
no
irre¬
American
of
business
in
a
It's
the
have
top
that
and
he
every
American to
on
in most other countries.
It's
faith
our
Neither
labor
in
1
•
•
competition.
nor
wanted.
we
know
they
Our
what
businessmen
living
in
a
new
Of
in
course
a
they are frying to
profit, but they are also,
their
to make
self-interest trying
genuine contribution to
own
a
people in the countries where they
make their living.
They are seek¬
ing joint ventures with the busi¬
nessmen
Eric
of other countries. What
Johnston
calls
capitalism"
can
"partnership
easily be the
greatest of all developments under
the Point Four program.
It may
yet prove to
men
have
be the best
weapon
found for destroy¬
ever
ing the evils of excessive nation¬
alism.
•
We
Americans
the fact that
lutionaries
the
most
we
of
make
the
mass-produce
to
are
are
this
count
margins
on
the true
planet.
knows
of
revo¬
-
Even
American
that the way
most
money
is to
things at low cost,
mass-distribute
unit
unaware
conservative
businessman
to
.
.
of
volume
them
profit,
for
at
low-
and
good
to
total
cer¬
United
.States,
keep ,it
it
of
here
in
the
but that doesn't
being one of the
from
truly
evil
forces
on
this
planet. Excessive nationalism is a
hydra-headed
throw
thousand
a
of
way
barriers
true
any
which
monster
afraid
are
of
price-cutting and their labor lead¬
ers
afraid that improved
are
chinery
will
out of their
terprise,
throw
jobs.
as
ma¬
workers
Competitive
en¬
it
here
in
been
tried
in
know
we
America has
the
never
much of the world.
Changing at¬
titudes is a tougher job than
building factories, but it's worth
trying. '
Four Hurdles
Point
Four as we have seen,
be developed to the advan¬
could
tage; of people in many countries.
It
would
be
to
the
of
self-interest
our
broader
which it would
give
markets
for con¬
us
tinuing industrial expansion.
creditor natioft,
a
beyond
As
need these
we
borders. It would
be to the self-interest of the na¬
our own
tionals of other countries because
of the
greater commercial activity,
the
rising living standards and the
greater total profits which would
in the wake of industrial
come
development in the less developed
areas.
There is every economic
reason
why this sort of partner¬
ship can succeed, but there are
real
psychological obstacles which
will
make
it very
difficult.,:;;.;,!
They have to be faced. Here at
home, one of our chief psychologi¬
hurdles
few of
bread
lies
in
have
us
butter
and
fact
the
that
made
ever
our
of
out
foreign
trade or foreign investment.
We
are
not a sophisticated people in
.
the
international
that
of
sense
re¬
covery.
way
to
go.
Another domestic hurdle has to
do
with
fact
the
that
while
have overcome much of
lationism
we
iso¬
our
groups
want any
large-scale economic de¬
velopment with its emerging mid¬
dle
be
There
are
politicians in other
ies'^who. are being kept in
by
United
States
cash
which, they are now handing out
to the citizens of their own lands.
If
put our primary emphasis
competitive enterprise and in¬
creasing private investment they
be
would
less
powerful.
They,
loudly about "interference with sovereignty"
too, will
when
scream
the
outflow
of
government
grants from us tapers off and we
begin to talk about a fairer break
for
American
business
re-kindled.
There
in
groups
in
not
privileged
foreign nations,
some
government
areas
for expansion
The
discriminates
against
psychological hurdle
here at home lies in the fact that
we
a
take fright much too
people when
naughty
some
names
one
easily
calls
tries,
tion
This
climate
enables
dlemen
bankers
world
for
is
to
them
to
that might
playhouses.
It's
of
break
part
of
their
a
thinking.
Events
thrust
this
leadership into our
lives.
Not having sought it, we
don't yet know what to do with
every-day
it.
I
suppose
wish
it
better than half of
had
happened.
through all
we
can
contribute
to
peoples
abroad while making a profit for
us
We
haven't
never
thought
ourselves in the
over
goods
is
our
from
we
hesitancy,
other
must
to
get
take
countries
in
their
up
little
effective
more
countries
own
Colossus of the North"
to
"Dollar
or
Diplomacy" when their schemes
of getting something for nothing
threatened.
are
other
peoples want
have
hard to save and
in
this
very
country
equipment which we
provide — then they
decide
to
whether
or
not
•
willing to take the bitter
for the
changes they'd like to see in the
American temperament. Over the
are
chance
I
don't
know
of
better way to meet these
thorny problems than to have as
many people in
as
many
coun¬
tries as possible bring them out
in the open and talk about them.
that
changed
There
also
are
hurdles
to
psychological
implementation of
the
from
the
lands which
little
people
themselves. They know by a sense
of smell that science can
raise
their
do
a
excellent
very
culture
our
be
will
improved
and
should
be
relative
fruitful
of
use
There is also
that
other
proved
leisure
will
im¬
be
with
contact
ours.
Leisure in many lands is now the
privilege
of
only the very few.
masses of people cannot pos¬
sibly have it without the tech¬
nological equipment which re¬
The
lieves
them
of
human
drudgery.
We have the power to free them
from that and they have the back¬
ground
to
teach
gracious living.
deal
which
cultural
about
great
a
might be gained in
well
as
from
sense
much
us
There is
as
the
a
material
a
intelligent
im¬
The hurdles
have been
we
con¬
sidering are real hurdles and the
job we've been talking about is a
very
long-term assignment. But
suppose
in
What's
don't get
we
mutual
our
the
with it
on-
self-interest?
realize
is
that
people
learn
this
have
work
skills
new
and
investment
for
machinery before it
can
in
be brought
Nor
do
a
mousr
broad
they
welfare
realize that ex¬
services cannot
long simply by
laws.
It takes
a
few
production
social
to
pass¬
enor-
support
welfare
a
rather
than
risk
police state.-
Can
Have
in
slavery
:
Century
of
Sustained
Prosperity
people themselves can
be
wrecked
by introducing too
ambitious a program before their
productivity permits it. So¬
welfare
services
are
the
re¬
sult of economic development, not
its cause.
All too many of these
won't
last
forever.
They
might
markets
the
the
and
resources
present for such
are
achievement.
better
The
we
easier
it
will
riers to
our
for
be
the
surmount
If
the
all
of
success.
world
would
the
of
work
which
are
as
strangling
now
Surely, this must
logical hurdle to the implementa¬
tion of Point Four in other coun¬
is
the
mistrust
American culture.
of
our
Other peoples
have
worth
world
a
One does not have to be
All
this
it
would
industrial
United
lish at
our
money,
are
we
borders
markets for
be
A
is
for
more
that
nothing
needs
Customers
are
es¬
prosperity and
is the hope of
sential to
our
our
prosperity
There
national
our
increase
heavy goods
our
search
hidden.
world.
shall
we
of in¬
area
beyond
be
can
no
the
inter¬
stability without it.
More importantly, we shall be
working with the citizens of other
countries
increase
to
production
and therefore the
living standards
of people.
They^will be learning
new skills, both with their hands
and
with
be
many
ments
their heads.
There will
partnership
between
those
of
There will be
other
countries.
helpful exchange
a
of ideas between
and those
arrange¬
businessmen
our
labor leaders
our
of other nations. These
closer
working associations of a
mutually- satisfactory nature can
furnish
"the tie that
The Western
"show
pieces"
action.
Our
of
democracy
children
on
need
world
a
they need
as
binds."
World needs these
our
in
this
scale
as
affection
in the
family circle. To move ih
this direction is to take the offen¬
sive
against communism rather
than
trying to
still
true
"contain
that
the
it." And
offensive
always wins.
we've
an
take
to
giant
econ¬
paralyze
is the
that
48 state lines the
to
a
people
exist
free
same
movement
and
between
eliminated
most
treaties
of the
the
of
that
goods,
countries
effectively
and
sort
other
we
by
ar¬
have
been
discussing. That is the busi¬
nesslike
way
to ultimate eco¬
„'
'
In any competition
the lot of people,
it
takes
for
what
got
Joins G. H. Walker & Co.
(Special
to
The
Financial
Chronicle)
HARTFORD, CONN.—Henry A.
Beers, III, is with G. H. Walker &
Co., 50 State Street.
Two With State
Bond &
(Special
NEW
Daoust
Mtg.
to
The
Financial
Chronicle)
ULM, MINN.—Robert D.
Leland
and
F.
Speedling
have become affiliated with State
Bond & Mortgage
Minnesota
Co., 26 Vz North
Street.
'
of the non-commounist world. No
With Brereton, Rice & Co.
(Spec'al
The
to
DENVER,
Financial
i
ChIionicle)
COLO. —Harry
G.
Ferguson, Jr., has been added to
the staff of Brereton, Rice & Co.,
Inc., First National Bank Build-
ing-
M. F. Lei<?hton Co. Adds :
(Special
ST.
to The
Financial
Chronicle)
MINN.—Arthur D.
White has been added to the staff
of M.
PAUL,
F. Leighton &
Co., Pioneer
Building.
Horatio Parker Dies
•
haven't got very
far
by piously setting up one
multilateral
organization
after
vestment broker, died at his home
another with
retirement be
Certainly
impossible.
if
we
standards with
a
"club"
high living
large amount of
expansion
customers
States would be to estab¬
obstacles
now
if
living in.
omist to know that.
know that it produces
a
a
wise
that the dream will
say
industries.
us
about
come
Point Four is to work—if
to
nomic union.
*
is
who
By broadening the
be gradually broken down.
bilateral
divide.
but
western
together
people to implement Point Four,
the present barriers to trade
rangements
Perhaps the most valid psycho¬
Rus¬
be realized?
dustrial
to
us
psychological bar¬
peoples
better have
wealth to
enough to
to
the
an
un¬
derstand these economic facts the
and
gone into new plant
machinery which could have
produced
more
goods
so
that
there might have been more real
to
we
should
we
victory.
skills,
eliminated. I feel that they can be
savings
1949
the
successful
These
in
for improving
ported by the savings of the more
citizens.
hearts
our
the
orbit
what
people. One World is only
dream
it's
ultimate recovery is possible un¬
til these barriers are substantially
welfare plans are now being sup¬
sian
of
some
Soviet
matter
Kremlin
; The economic basis for a cen¬
tury of sustained prosperity in the
western world exists. The capital,
program.
little
close
not
leadership
war
as
strong West¬
a
the
■
No
the
much
could
about.
of
western world will turn to atomic
a
the
West
ultimately become
draw
in
us.
Probably
that the Commies will pick
us
off
nation
by nation
until
in
desperation
what's
left
of
the
takes
to
to
to
think
alternative?
living standards. What they
not
closer
and
plementation of Point Four.
in¬
an
increase
of the
hope that
countries
the
time,
excellent chance
an
cultures
by
the
about
to
able
strength
magnet
a
own
learn
a
we
compared with the Soviet sphere.
have
to
make
work,
able to transfer
be
never
much
to
development from govern¬
to
private shoulders. We
eign
by
a
closer relationship with the cul¬
tures of other lands. We certainly
any
tries
bargain.
The fourth hurdle
program
long and loud about "The
scream
cial
our
mid¬
as
;
•
much
so
within
own
Non-Communist
yet
act
"fix
to
the \ merits
as
like "Yankee Im¬
the
not
have
they
coun¬
discrimina¬
of
things up." Na¬
turally, they aren't going to stick
us
perialists," We take it, and cringe,
because the fact of our destiny as
American
private investment in their
The
third
to
people in government, who
stand to profit by a climate which
ing
develop
close
but
top
We've got to learn that the best
abroad.
their
also
are
be had for
to avoid depressions at home
in
countries.
panded
is to
worked
we
on
We've go to learn to go to the far
of the earth and love it.
way
when
we
decades there is
Imperialism" once we
propose to do something about it.
a;l lot
to
But
what
boldly
program
creasing part of the cost of for¬
ment
with the sweet—and pray
save
of
indi¬
as
viduals.
class in their countries. They
aren't going to say
so, but they
are going to scream
loudly about
covery
not
should
Four
can
and
needs
lives
integrated
not
learned how
moving
By
World will
hard
venture
live
Point
does
success
have
we
run.
We
talk, that world re¬
be brought about by
and
that
trial
life
it.
want
I
new
our
ern
earlier in my
money
material
don't
But
capitalism wit*h us to give
foreign policy a good
ship
can
that
our
who
resources
expect more than enough
countries to establish a partner¬
and
time,
can
American way of
our
peoples
the
demands.
would
alone
still hope, as I said
we
in
are
have
their
meet
plant
many
spring
long,
blessing. We
sense
over
our
own
growing
pains. "We certainly shouldn't try
to
wouldn't
we
accumulate—when they want the
are
Point Four in other
We have made some prog¬
in the last ten years, but we
long,
realize
must
have to offer is not
we
unmixed
mean
only way that we know
play, it successfully. It
wouldn't expect the whole world
to join us at once and if they did
to
at the
There
ress
a
America
no
Our
the
in
how
to
in
that what
an
unattrac¬
who wanted to play ball with us
top in other nation's which don't
word.
have
We
can
in the
worldwide
power
businessmen
'
make
and
they find
•
on
corners
are
world.
worst
na¬
kind of excessive "busy¬
a
which
to force
Their
giving of
get
the
share
our
counti
ourselves. Our frontier love of ad¬
to
ing to
have
management
landed
marines
is
psy¬
overcome
Excessive
entertainment,
tawdry
tainly the most deadly of all. We
in most countries shares this faith.
foreign
lands at this time.
It's changed
mightily since the days when we
the
rates,
"Yankee
a filling station
You can't do that
run
any corner.
nations.
tionalism
belief that
our
chance to do
Its symbol is the right of any
so.
I know
the
to
answer
sponsible charges of "Yankee Im¬
perialism" than the actual record
and
have
our en¬
putting machines to
us.
to
should
so
In general, however, the present
to
individual should be able to
any
cal
Advantages of Local Partners
capital
also
tivity and fewer doles from the because
U.S, Treasury.
than
skills.
living several hundred
the
contribute
We
percent above the levels that exist
in
countries
to
other
few
abroad.
or
have more
real
some
in
"spirit" to contribute.
is
the most exciting places I
visited. The purpose of
of
have
more
chological hurdles to be
enough under¬
either here
also
are
are
tle peoples of other countries
is
There
not
"competitive
a
-
are
contribution to make to the lit¬
stood
pre¬
.
advantage." We businessmen have
a
which
houses
low
considered
the
to
workers'
the
wages
capital
on
and
uncommon
technical
The
world,
in
go
40%
stores
keep them close
roots
our
the
countries,
shall act like citizens of the world.
We
to
to build plants in other
communities of most foreign
countries.
In many of them 35 to
other
levels.
be¬
ness
prices
war
He
workers
have been subsidized at
plantation
Food
business.
permits.
This is rank heresy in the busi¬
are
plantations
above those in
all
for
27
a
charter
to
do
the
We might get further
set out
of
Horatio
we
consciously to build
like-minded
nations
at
the
P.
age
Parker,
of
76.
was a
retired
Prior
to
in¬
his
consultant for
Hoagland, Allum & Co. and was
senior partner of
& Co.
Parker, Robiiison
28
(964)
COMMERCIAL
THE
'
■
•
'
''
'
'
'
.
'
^
Australia,
as
Holds Sterling Devaluation Alone
Will Not Solve British Crisis
-
(Continued from page 13)
which supply the Indian
market,"
adding that they "absorb British
resources which ought to be em¬
effect
ployed
termediaries
the
elsewhere."
soundest
new
and
their
return
future.
of
even
desirable
investments
overseas
yield
Also,
most
and resold in the dollar
only
The
area.
dollar
proceeds
the sales have gone to the in¬
rather
than
of
the
Drain
Such
disclosed
erally improving picture that af¬
fairs took the sudden turn for the
this
worse
the
Spring. As shown by
below,
uciuWj
the
inc
olclull^
sterling
tduic:
table
area's
three
as
compared
with
preceding quarters.
the
in
mons
tative
As
1
dollar deficit
during the
April-June quarter of 1949 almost1
doubled
the
was
the Chancellor
It was in the midst of this
gen¬
>
school
is
of
the
to
the
which
Exchequer
House
of
Com¬
July, together with ten¬
plans
for
remedial
immediate
an
.,
situation
step
L
,
In
addition,
Sir
"There
(In Millions of £)
Reserves
Overall
..
,:-r.
.
1947
:
.
-
.
Deficit
(full year)
(end of
period)
1,024
512
to
say
if
147
552
Apr.-June
107
473
July-Sept.
76
437
1948:
'.Jan.-March
'
son
Oct.-Dec.
93
457
1949:
Jan.-March
-
82
Apr.-June
Source
471
157
British
406
Information
Services.
end
of
dollar
June,
Britain's
reserves
million,
and
the Finance
Commonwealth
the
countries agreed to recommend
a
similar cut in dollar
purchases, to
effect a possible further
saving of
$300 to $400 million annually.
In announcing these
measures,
Sir
Stafford
acknowledged
that
they represented "a purely nega¬
approach to the problem,"
and
tive
had fallen to £406
and
gold
offered
"no
solution
of
not
were
Of
the various factors
contrib¬
mental -measures/*
This brings us to the real heart
uting to this uiaiaf the lliUot 1X11— of the problem.
drain, txic most im-<
J
;
UVIMb
portant has been what Sir Stafford
Cripps
apparently
had
in
mind
mate."
Falling
sended
prices
demand
has
uuuiuiiu
dollar
nao
receipts
cut
nition
various
sterling area primary products.
Rubber, tin, cocoa, wool and dia¬
monds, which wereyielding dl UU11U
J AUAUing around
$120 million per quarter up to last
VV UAV.U
1-
.
W tl y
'
A
•
A
■%
-
<
m
March, are estimated to have
brought Jn only about half that
in the following
April-June quar¬
ter.
At the
same
time, with the
general shift in world
from sellers' to buyers'
markets
advantage,
British exporters, in common with
business
everywhere,
are
feeling
of the hot breath of
compe¬
more
tition.
United
United
Kingdom imports from the
States, and a substantial
loss
of
gold
to
Belgium
and
Switzerland. Finally, the situation
was
of
aggravated by apprehension
possible sterling devaluation.
It would be
a
of the widspread
the
miracle, in view
uncertainty and
ingenuity of speculators
and
traders,
leakage
if there were not some
in the admittedly tight
exchange controls.
For example,
Australian
'
wool; and
Malayan
rubber have been purchased
by
countries outside the sterling area
with
'
of
that
normal
the
known,
socialism
transferable and other ster¬
ling available in those countries,
i
i
are
—t
i
three main
s?h°oIs of thought as to the principles that ought to be followed
in
restoring British balance of
payments
t
equilibrium. One holds
7
a
,
lhat Britain's difficulties
4-1"*
•PnilD
/*
A
inconsiderate
ness
slump
British
no
nn
and
products.
doubt that
all
^
^
being
to have
as
are
L
the fault of America for
calls
for
Britain
the
so
stop
buying
While there is
large segment of
British opinion is at least
tinged
with this idea, the
theory finds
its
most
such
a
extreme
statements
as
expression
the
in
following
the
"Tribune," a British
weekly reflecting the Labor view¬
"The
>
uncontrolled
American
economy, with its growing cohorts
of
unemployed and its falling
internal purchasing power is be¬
coming more and more a threat¬
ening menace to our recovery ..."
The
left-wing weekly, the. "New
Statesman and
Nation," is even
more
ungenerous:
see a
"The
find
difficulties
ourselves
are
to the wilfulness of
in
which
we
primarily due
Congress
.
By seeking to cut allocations for
foreign spending and by econo¬
mizing on the stockpiling of
material,
it
is
exporting
raw
the
American slump to Europe and to
producers of raw materials
such
non-sterling area___
sterling area
Net change
Changes in external capital assets:
In the
non-sterling area______
In the sterling area
Net change
Jlet reduction in liabilities pius net
increase in
external assets
constituted,
the
the
nor
replace the dollar
the argument
past
submitted
to
the
the
of
is
annual
to
:•
Cutting Costs
But,
to
And
if
area.
says,
dertaken
ual
manager
worker finds
into
such
how
be
must
system, the
a
they
to
are
Survey for 1949..,
+
enter—who
will
freely
step in—a sterling area of which
the subscription is the obligation
to buy dear British goods instead
of ^cheap/goods from other
suppliers?"
y
/
- ;Z
only
a
third
school
of
omist"
calls
the
entitled
omy, a return to
ditions
of
is
budget
econ¬
competitive
planned
only effective way
costs down and effi¬
getting
ciency
up, and selling more
and services overseas.
A
exceed
—142
simple
must
be
the
test
of
all
whether
or
of
purpose
reducing
any
people in present
been seriously
After
having poured out
the
thing
like $23
of
end
the
some¬
war
billion in foreign
recovery grants and loans (much
of the latter unlikely to be re¬
paid), with Federal budget expen¬
ditures for foreign aid and recon¬
struction
running currently at a
exceeding $6^ billion annu¬
ally, and with the huge commit¬
the
under
Marshall
unfulfilled,
taxpayer, facing
Plan
the
American
a budget deficit
at home, is reaching the limit of
his desire to make further foreign
grants
enumerate
costs
economy is its very high costs of
It is not that British
.
British
market
too
high
itself.
To
a
it
above
any¬
it
—
range
could—
of strict
would
remove
.
.
//Z7;/7v/
.
"In every possible way, it would
make
businessmen
once
again
the
"It
would
money
abandon the cheap
fetish and let interest rates
find their level.
"It
would
bring
in
legislation
of
restrictive
practice. It would insist
standard
ment
the
war
and
objects,
now.
These
the results:
all
forms
council
pay¬
introduced.
house, weeks
Cheapest British car, weeks
Cheapest motor-cycle, weeks
Cheapest man's suit, days—
Average radio set, weeks
on
by results in every industry
where a scheme could possibly be
Britain
to
Great
evidently
war,
problems of the sterling
internal problems, and
temporary
expedients Z such
as
area
are
loans
the
the
not
are
problem.
is
Canada
real
answer
think
I
far
as
far
as
concerned
about
gone
way
to
as
we
have
as we can
in the
of loans.
"The
;
the
British
produc-^
tion
of
essence
down
and
raise
to
produc¬
tivity. The eventual solution must
from
the
action
British Government
-
of
As
was
in
ment
that
than
212
United
39
55
11V2
i
there
London
remedies
as
the
government
7
modities at
4i/2
etc..
Summer
be
sought
assistance
provided
by
the
and Canada."
sidies disguised as
iVz
agree¬
was
this
should
financial
that
States
are
of
itself."
pointed out at the outset
this article,
112
3%
the
rendered
aid
said this Summer:
such
/
has
shares this feeling. The Canadian
Finance
Minister,
Mr.
Abbott,
Now
5
which
financial
since
"other
Prewar
Standard
Canada,
generous
ffnmg
have to work for his wages (after
tax) to equal the price of five
against
..
assur¬
problem is to get costs of
work for their livings.
a
at¬
British wage-earner would
British-made
to
without
loans
and
of greater results.
ance
"The
possibly
narrow
competitively
~
an
production
necessaries
or
give
simple illustration of this,
proceeds
controls and allocation quotas and
allow
prices to be determined
.
for
are
then
other
"Wherever
in gen¬
they
of
outside
people exact for their production
is still higher
British costs
of production
are
too high not
.
re¬
thing else" would adopt:
productivity is not high, but that
the
general
a
key points in a
hypothetical policy that a govern¬
ment "that put the reduction of
production.
remuneration
way
of
"Economist"
*
the "Economist" says
(July 9):
7'The great defect of the British
are
more
still
to
outsiders
their
American
ments
the
com¬
rate
to
hold that
a
budget of
£3,300 million cannot be slashed
if there is a will to do it." The
it
hammering home this point
before
of
from
conduct
since
the
upon
British
costs "by cutting the
biggest item of national costs, the
burden of taxation, since it is ab¬
policy
not
tempt has been made to estimate
roughly how many weeks the av¬
—211
warns
consequences
are
from
surd
"The
erage
that
people
be protected
advice
to
shaken.
show
"Economist's" prescription,
follows:
the
and
expenditures
savings; and it
duction
in the
In
inflation
are
to
people in their own
They will rightfully resent
The "Economist/* in the July 9
issue, calls on the government to
philosophy of this last
school might well be epitomized
serves
policies
balance of payments.
The
now
credit
investment
adverse
goods
"Simple Test" of Sound Policy
as
and
promoting
con¬
the
the
S.
British
British
Primarily
policies has
Deflating While
Inflates?", cites authority
Britain
nation
t
is
article
for the view that present
over-
protected" domestic British
"U.
the
affairs,
attempt to ex¬
ert
pressure
toward
particular
policies.
1/ 7 \;; 7^'
>
V :.
At the same time, it must be
recognized that the confidence of
London
an
situ¬
calls for the
British
and still
policy
The
and
the community as a
Enterprise and incentive,
how
on
more."
in
Though the
of
the
gratuitous
the
as
the
upon
way.
avoiding something
even
the government.
"Statist" of June 4,
thought
and
responsible
means of
of
"over-planned
over-controlled
is
One of the factors involved
the overall fiscal and credit
holds that within what the "Econ¬
and
he
he dislikes
...
Still
eral,
—145
the
dividual pressure to cut costs for
which
will
Com
and
petitive ability is, of course, one
that will have to be resolved
by
in¬
under
be attracted if it is not attractive?
for the overseas markets
3
himself
of
Problem
individual
Who
merely for the dollar market,
1949
the
Staf¬
of
This problem of costs and
only when the individ¬
or
Sir
House
apparently, must go on contend¬
ing against a tax load that takes
40% of the national income.
radio speeches
coun¬
effort
continue to
bear
saying the national
interest requires it; it will be un¬
is that other
the
people.
whole.
■
cutting costs is a painful opera¬
tion; it will not be undertaken
"simply because Ministers make
neither
supplies
"Economist"
As
feeling individually, in any com¬
parable degree, the pressures that
Painful Process
a
the
as
to
is critical
mass
to
work
.
to
save, to increase production, and
to cut down costs, yet the great
be¬
..
entailed."
united
improved
an
living
as¬
prepared
the Labor Government and of the
ation
limit, and that
only hope for
standard
not
Cripps declared in his July 6
British
this
to
speech July 3
policy of
maintaining full employment and
protecting our present standard
of living."
This, then, is the dilemma of
The
year.
a
are
mons, "The government
nation are pledged to a
(July 16)
provide
can
markets
coop¬
the
Despite
harder.
"The sterling area, as at present
British
1947
Economic
their
promising solution:
"Economist"
be
ing taxed
along this line either
the
the
over
including
misery and loss of
happiness which the old
statement
holding
ized workers that business is
and financial agreements.
costs of production."
(In Millions of £)
on
It
expanding
sterling
trading
area/ held together by bilateral
does
ford
month, bluntly
tells the nation's 8,000,000
organ¬
point: 7
.Changes in sterling liabilities:
Based
to
an
not
in
to cut back
spending,
the
system
very
wage increases.
exceptions and an increas¬
convention
concentrate on developing
But
labor
some
"We
human
restiveness
steady
Com¬
tiny free from American aid.
trade
of
with
should be prepared
moderate amount
unemployment, and
tolerate
among the rank
and file of labor, the
average level
of wages has been held
remarkably
monwealth to work out their des¬
would
that
Britain
accept
ister Attlee in
leadership
of
Britain's
Trade
thought Union
Congress, in a frank report
of
and
for
interference
no
In apparent
serted,
reequipment
on
some
ing
subsidize it."
busi¬
a
TABLE 3
In the
line
accept
presumably some reduction in the
costly social services, Prime Min¬
pro¬
ity of his office to gain the
chaos years ago if American capi¬
talism had not been willing to
school
industrial
modernization
eration
ment would do well to remember
second
in
an¬
development of the "welfare
government
reducing
is
however, is
of
for im¬
government
this,
to
Sir Stafford Cripps has
used all the prestige and author¬
that their government would have
been out of office in collapse and
A
and
'
reply to sug¬
gestions that to meet the economic
inaccurate
need
of
state."
purpose.
Labor Members of Parlia¬
answer
Changes in Britain's Sterling Liabilities and
External Capital Assets
Iii the
if
adjust
as this,
itself to as minor a quaver
then it is too delicate for the real
world.
the
efficiency
The
ment
world
and
cannot
will
the
moting an ambitious (possibly too
ambitious)
program
of
invest¬
and
before
ever
good
attracted
the Longer-Term
on
Apparently there
i/
from
Besides the falling off in sales
to the dollar area, the accelerated
drain reflected some increase in
costs.
America is
above any defi¬
way
that
Labor
athema to British socialism
which,
while it wants to reduce
costs,
to convey the
impres¬
the Labor Government
insensible to
proving
activity in
long
a
Most
enable
as
and unfair
is
the
moderate
a
Government
crisis
both
for
value
welcome
of
Dilemma of the
/
buy their own goods,
they expect foreigners to
be
would
degree of unemployment."
to
would
otner
risen.
do so?"
It
no
give
right no
with prices
will
were
therapeutic effect
put
earn
mere
it
money,
fundamental
is
ix
way of persuading the unions and
their members to
as they did
before the
If the British
people cannot
can
XT.11U
■<
j
living
how
The level
demand and of
general
and
it
of
afford
the
is slumping.
of
real
a
has
tries—indeed, ; the whole non-dol¬
Problems
oiiaijjiy
from
wv
measures"?
Views
sharply
tut
be
to
living
merely
lar, non-Soviet world—are to be
mental
les-
and
should
,the nature of these "more funda-
when he spoke of the
"change in
the financial and commercial cli¬
the
What
r
for
"It is not true that the American
„
months.
a
war.
sion
our
being drawn I difficulties."
Beyond such stopupon at a rate which, if
continued,.1 gap action, there must be, he said,
would exhaust them in about
18, "longer-term
and
more
fundawere
used
is
—■
the British people to
have hap¬
never
that
juggling
exchange rates
and
a
it
economy
British
of
be
can
standard of
But
Until
amount
gas.
has
Ministers
the
something
is
ratio.
It is a smokescreen of poi¬
cuse.
program
July. Subsequently,
This
the
an
incorrigible instabil¬
ity of American capitalism. This
is an attempt to establish an ex¬
still
is expected to result in a
saving
of about $400 million
by next
thesis
whole
chronic and
both
imports of tobacco, cotton, sugar,
timber, paper and pulp, machin¬
ery, steely and nonferrous metals,
produce
tendency among
left-wing partisans
that it is an unnecessary
before the House
Deficits and Reserves
more
•
the
economic
Stafford, laid
'.
registers
is
of
new
a new
austerity
calling for a 25% cut in
British imports from the dollar
area
(including Canada). This
pruning, which is to affect largely
is
cure
'
impa¬
tient dissent in its issue of July 9:
pur-
9'0v<;rnment ordered its
chasing departments to pare
^0|^ar Purchases to the bone.
By the
Sterling Area Gold and Dollar
the
}/■/. Z/
this
With
action.
corrective
n
figures
that
the inverse way of saying that the
of this
argument
that
"Economist"
pened
Dollar
show
real cost of production—the num¬
ber of weeks' work
necessary to
the
crisis that need
Interim Measures to Save Dollars
Acceleration
"These
West
instability,
some
/.•*• .7
and
has,fallen.
mize these and other leakages.
the
Thursday, September 8, 1949
Since the theory is that the new
crisis is the product of capitalistic
the
to
CHRONICLE
/
sterling area pool. Controls have
been tightened further to mini¬
will
in
is that the
Malaya
Africa."
socialism.
,/
,<
,
FINANCIAL
&
'
Sub¬
"investments,"
purchases
of
com¬
artificially high prices,
likelv
to
be
eauallv
un-
Number 4836
170
Volume
palatable. There is neither justi¬
fication for, nor likelihood that
the American people would *favor
THE
Secretary of the Treasury Snyder
said explicitly
that no re¬
has
valuation
of
gold or similar ex¬
pedient to cheapen the dollar will
be resorted to in
the
British
connection with
problem.
Summary and Conclusion
Thus, in
again that
back
conclusion,
we
say
the
problem comes
largely to the British them¬
selves.
Broadly speaking it in¬
volves two things—
(1) Rectifying the dollar deficit
current account
on
by either sell¬
British and sterling area
goods and services to ''hard cur¬
ing
more
rency"
countries,
importing
less from such countries, and
(2) Controlling capital outflow,
now represented both by
leakages
or
in the
controls, and by releases of
sterling balances and build¬
old
ing
of
up
One
investments abroad.
new
suggested method of deal¬
ing with these problems is a de¬
valuation
of
the pound, which
;
would
have
the
effect
.across-the-board
price
of
cut
on
foreign markets, and might also,
temporarily at least, check pres¬
sures upon sterling resulting from
selling by holders who fear its
•depreciation.
1
this
method,
however,
CHRONICLE
$5.86
Industry
out of hand
and
it will take
some
is
plants are at
poised to get out
cool buying to hold them in line.
buyers feared when the market
precisely what big mill
collapsed early this year—that prices would go too low and that the
possibility of real buying would disorganize the market and sky¬
rocket prices. Advances in
Pittsburgh and Philadelphia moved "The
Iron Age" steel
scrap composite up again this week.
The increase
59c to
was
There
who
$23.92 per gross ton.
was
no
"
*
prevailing conditions.
Steel labor has been showing its
strength,
pulling an unusual number of wildcat strikes and stepping up the
number of grievances in the mills.
On
top of this is the fact that coal is heading slowly but def¬
initely toward a crisis. The steel industry is neither willing nor able
to operate
indefinitely at anything close to current levels on a threeday coal mine work week with an extra day off for
holidays, de¬
clares this trade authority. Its coal stocks are better than
the national
average at a number of big plants. With consumption
running ahead
of production, national coal stocks will be
at the critical reserve
level
within
ference
is
few
a
the
weeks.
cushion
Lewis' first strike threat.
a
lot
Steel
built
bigger two months
up
will
at
not
be
far
steel
many
behind.
plants
The
to
That cushion is going fast now.
dif¬
counter
It looked
when the steelmaking rate was in the
But higher operating rates since then have made the stock¬
piles smaller in terms of number of days' reserve.
Manufacturers of lockers and kitchen cabinets
list
of
industries
these people
whose
have orders
through November.
In
business
be added to
can
is
showing strength. Most of
their books assuring them of business
on
many
cases
the
number
creased but the overall
tonnage is less than it
concludes "The Iron Age."
' ■
was
of orders has in¬
in the first quarter,
f/rv^
239.26
motion
roads.
valuation
de¬
provides
no
lasting
accompanied by
solution
other
that
unless
to cut costs, in¬
efficiency, and expand the
production of goods and services
that can be offered abroad at
prices in line with those of com¬
petitors.
As regards transfers involved
in repayment of sterling liabili¬
ties or increase in new foreign in¬
measures
week in 1940, highest prewar year.
the
in
she
not
is
19.3% under the similar period in 1947.
to
sources
icit is
whether
when
the
need
in his Phila¬
delphia address Aug. 29 promised
to
the
distinguished
Britishers
and
Canadians
who
will visit
Washington
welcome
Mfj.fi
this
and
an
month
a
74,374,000
problems "in a spirit of
and helpfulness." He
laid down the principle that ef¬
forts to expand the exchange of
goods should be persisted in, and
he did much to allay misunder¬
standing by stating that "demo¬
cratic nations are not proposing to
interfere in
one
nal politics."
With all the difficult
prices
always have
in
their
mind the consciousness of the es¬
sential
unity of the three coun¬
tries
in
gone
through together, and their
the
struggle
they
have
joint responsibilities for maintain¬
ing
a
peaceful democratic world.
remained
creased
steady
somewhat
up
noticeable pick-up in
Cocoa
values
commission
„
William
with
J.
C.
ark, N. J., died at the age of 45.
He
was
a
member of the Munici¬
pal Bond Club of New York.
week
drew
lower
selling,
oats
conditions
to
a
close
there
and
was
a
in
the week, reflecting trade and
by reports indicating another
the Gold Coast of Africa.
induced
bumper crop is in prospect
on
Most cane sugar refiners have announced a
10-point rise in
the price of refined sugar, to become effective
Sept. 1.
There was a persistent
heavy demand for refined sugar, at¬
tributed largely to strength in the raw market and
uncertainty as
to future supplies at current prices.
Crude edible oils developed
considerable
as
weakness; cottonseed oil fell about four cents
buyers withdrew from a steadily declining market.
Live
hogs trended downward most of the
close to finish
only slightly below
a week ago.
per
pound
week but rallied at the
Cattle prices advanced
and
good demand for choice fed steers pushed values up above recent
peak levels. Sheep and lambs trended lower for the week.
Spot cotton prices held comparatively steady most of the week
dipped slightly toward the close under increasing hedge pres¬
sure.
Current values are only slightly above the
government loam
but
V'"K";'-
undertone
''i''■
'
•
the prospect of acreage and
was
of
some
Some
••
.7'
7
■
'
■.
A deterring influence
marketing
con¬
the uncertainty
was
prices
of the
mills
in
carded
gray cotton goods continued
popular constructions showing further
transactions into the first quarter
more
reported
„
AND
WHOLESALE
PAST
AND
WEEK
SPECIAL
TRADE
BY
AGAIN
COOLER
IMPROVED
"•
j
WEATHER
PROMOTIONS
-
Spurred by cool weather and numerous promotions, consumers
bought slightly more the past week than in the previous week*
The dollar volume of retail sales continued to be
moderately below
the high level of a year ago.
Total unit volume in many lines was
slightly above that of the similar week last year, states Dun & Brad¬
'
*■'
kwh.
1.4%
or
slightly
'>
surpassed
the
weather discouraged
increased noticeably last week andi
of a year ago when very warm
level
consumer
interest.
Promotions of back-to-school
.7
*
.
',j
"
7
clothing attracted the attention of
many shoppers.
Purchases of; women's dresses, sportswear
lingerie increased.
While the retail volume of men's wear
slightly, it continued to be moderately below that of a year ago.
OUTPUT CURTAILED
DUE TO
able
and
rose
The usual seasonal rise in the demand for food continued
during
The volume of purchases
slightly exceeded the compar¬
1948 level.
There was a noticeable rise in interest in
meat^
LABOR DAY
though
sumers
motor vehicle production for the United States and Canada
dropped
to an estimated 148,415 units from 155,367 units
(revised)
retail
The chief
in the
in
Day week-end, the
7
The total output for the current week was made up of 121,505
cars
and 19,875 trucks built in the U. S. and 4,669 cars and 2,366
trucks in Canada. '
was
—6;
Output a year ago "was 101,879 units and, in the like week of
1941, it was held down to 32,940 units due to model changeovers.
Present scheduling calls for car output at prevailing levels
throughout September and the rest of the year, with only brief
shutdowns for changeover and Inventory taking, Ward's states.
FAILURES
SHOW
LITTLE
CHANGE
and
industrial
failures
in
the
ended
Sept.
1
the comparable week of
Pacific
4.
'
as
1
remained
trade
and
construction
which
failures as in the corresponding week. All areas
except the Mountain and East South Central regions reported more
many
casualties than last year.
INDEX
OFF
SHARPLY
IN
LATEST
the
rather
Dun
&
Bradstreet
wholesale
sharp drop last week,
the lowest
in
five
weeks
and
food
The August
price index registered a
30
figure
,
East
'
•
very moderately
number of buyers
ended Aug. 27, 1949,
corresponding period
of
5%.
on
'
a
country-wide basis,
'
sales
a year
as
taken front
registered a decrease of 9% from tha^
ago and for the year to date a decline*"
'7
'v
>: ■
Here in New York last week
tail trade, but
sales volume
favorable weather spurred
at $5.78 was
represented a decline of 1.4% from
|
re-
notwithstanding this, estimates of department store
were
|
placed at about 3 to 5% under the like week
»
'
According to the
Federal
from the
Reserve
Board's index, department
weekly period to Aug. 27, 1949*
same period
last year.
In the preceding
registered below the similar
week of 1948.
For the four weeks ended Aug. 27, 1949, a decrease ot
10% was reported under that of last year.
For the year to data
week
a
decrease
NOTE—On
most
WEEK
The
and
below the
attending many wholesale market®
dropped moderately in the week, it continued to be slightly above the
comparable 1948 total.
;
While
increased by 7%
PRICE
—7
slightly iir
the Fall season*
high level of a year ago.
store sales in New York City for the
FOOD
to
of 1948.
Manufacturing and wholesaling accounted for the week's slight
While more concerns failed than last year in all lines, the
WHOLESALE
—3
t
,
1939.
retail
r
many buyers continued to seek goods for
sharpest increases appeared in
as
;
The total dollar volume of wholesale trade increased
the week
It
decline.
had twice
Coast
■;
v
.
dipped to 174 from 176 in the preceding week, Dun & Bradstreet,
Inc., reports. Although casualties were noticeably above those of
the corresponding weeks of 1948 and 1947 when 94 and 64 con¬
cerns succumbed, failures continued below the
prewar total of 229
in
on Wednesday of last
6% below a year ago. Re-
estimated to be from 2 to
Department store sales
IN
week
vegetables increased noticeably in
-' - 7',
• ■ i
7"
the Federal Reserve Board's index for the week ended
Aug. 27, 1949*
decreased by 1% from the like period of last year and
compared
with a decrease of 7% in the preceding week. For the four week®
LATEST WEEK
Commercial
■'
South, Northwest and
0 to
,
BUSINESS
and
7"-:
gional estimates varied from the levels of a year ago by the following percentages: New England, Midwest and Southwest —2 to
said.
agency
fresh fruit
of
Total retail volume in the period ended
week
for the drop is the cancellation of Saturday's
General Motors plants, because of the Labor
reason
especially
run,
many shoppers continued to buy inexpensive cuts.
Con¬
bought less canned goods than in the previous week.
The
volume
many areas.
previous period.
Rommel, associated
S. Rippel & Co. of New¬
and
corn
Weather
shipping directions.
worked
house
of
volume decreased by
William Rommel Dead
wheat,
the week.
last week as buyers showed more of a
their supplies.
Domestic flour bookings iir-
the
as
The demand for apparel
''if'''J1
fiv*
According to "Ward's Automotive Reports" for the past week,
technical consider¬
fairly assumed that the con¬
will
»
WEED-END
ations, it is to be hoped and may
sent,
-V
ended
AUTOMOTIVE
another's inter¬
ferees, and the peoples they repre¬
for
the
the week.
of
friendliness
be
\f *' **■'
higher than the figure reported for the
Sept. 4, 1948, and 823,254,000 kwh. in excess of the
output reported for the corresponding period two years ago.
week
warm
examination
mutual
economic and
+
• :
c
i',
■
,The amount of electrical energy distributed by the electric light
and power industry for the week ended
Sept. 3 was estimated at
5,543,913,600 kwh. according to the Edison Electric Institute. This
represented an increase of 20,597,000 kwh. above the preceding week,
available re¬
meeting the dollar def¬
urgent,
so
for
with
range
street, Inc., in its current trade review.
all
f President Truman
'
narrow
a
ideal
disposition to build
ELECTRIC OUTPUT TURNS UPWARD IN LATEST WEEK
too much
attempting
devoting
being
is
to
as
direction
this
in
for
question
Britain
vaised
be
to
THE
crease
vestment,
at
and
maturing of the new corn crop and
harvesting is expected to get under way earlier than usual. Flour
RETAIL
increase of 15,697 cars, or 2.1% above the preced¬
ing week.
It, however, represents a decrease of 144,754 cars, or
16.2% below the corresponding week in 1948, and a decrease of
or
said
were
of next year.
was an
178,800 cars,
in
moved
advances.
CARLOAD INGS CONTINUE MODEST IMPROVEMENT OF
PREVIOUS WEEK
This
>iv,'
...
Prices
the
universal
—
earlier
Grain markets on the Chicago Board of Trade were
unsettled
last week with trading activity down
sharply from the previous
week.
strong, with
Loadings of revenue freight for the week ended Aug. 27, 1949,
totaled 746,912 cars, according to the Association of American Rail¬
agreement
to
week
a
year ago.
a
surrounding the Administration's price support program. Volume of
trading in spot markets was seasonally slow.
^7, .' ;
Responding to good demand as the result of delayed Fall buying,
82.3% a month ago,
and 1,703,300 tons, or 94.5% of the old
capacity one year ago and
average
close
range
narrow
a
This compared with 238.54
the corresponding date
on
Another factor
holiday.
1,281,210 tons for the
Aug. 30.
on
trols for next year's crop.
offsetting wage-price
spiral at home. Secondly, no one
knows whether cheapening the
pound would promote enough in¬
crease in the volume of exports
ioy hard currency countries to
make up for the decrease in their
price.
Upon one point there is
an
Bradstreet, Inc., moved in
Continuing favorable reports from the textile market tended
This week's operating rate is equivalent to
1,552,200 tons of
steel ingots and castings for the entire
industry, compared to
1,591,000 tons a week ago, 1,517,200 tons, or
imports from non-sterling
•countries
(unless they too de¬
valued) thus tending to set in
&
with 279.46
for
cost of
1
to bolster prices.
steel-making capacity of the industry will be 84.2% of capacity
the week beginning Sept. 6, 1949, as against
86.3% in the
preceding week, or a decrease of 2.4%, or 2.1 points, due in part
derstandably,
strongly opposed.
For
one
thing, cheapening the
pound would increase the sterling
to the Labor Day
...
during the
index, compiled
by Dun
rate.
The American Iron and Steel Institute announced
this week
that the operating rate of steel companies
having 94% of the
un¬
the corresponding 194R
general level of prices edged slightly upward
past week.
The daily wholesale
commodity price
ago
mid 70s.
the
on
SLIGHT GAIN IN LATEST WEEK
showing moderate net advances
Labor
Day picnic for steel this Monday. Anyone
the matter much thought could only become upset over
gave
Compared with $6.90
16.2%.
-
was
The
Many mill bids on scrap from big manufacturing
least 50% above what
they were in June. Prices are
This
week ago.
a
20
WHOLESALE COMMODITY PRICE INDEX MAKES
FURTHER
few weeks ago.
a
(965)
date, the decrease
tonnages that deliver at prices that would have been
called fantastic
the
British authorities have been
FINANCIAL
(Continued from page 5)
districts for
,
To
6
-
an
British and sterling area goods in
&
The State oi Trade and
deliberate debasement of the dol¬
lar by raising the official buying
price of the U. S. Treasury for
gold. Within the past few days
COMMERCIAL
11%
(revised)
7%.
another page
comprehensive
was
of this issue the reader will find the
of business and industrial statistics
showing the latest week, previous week, latest month, previous year*
etc.. comparisons for determining the week -to-week trends cf con¬
ditions, by referring to "Indications of Current Business Activity," a
coverage
regular feature in every Thursday's issue of the "Chronicle.'^
^,
30
THE
(966)
stocks
Tomorrow's
better
I've
other
Whyte
I
stocks
that
CHRONICLE
Thursday, September 8, 1949 j
The Living Wage for Steel Investment
(Continued from page 6)
just as many crops are
sold through produce markets or
good. commodity exchanges.
look
the
But there is
Moreover,
times-earnings rates for
com¬
stocks mentioned just above,
which
are
vital in determining
so
how
high earnings must be to be
adequate, are much bigger than
By WALTER WHYTE;
for having made a mistake
highly technical and involved
ever,
Street,
mon
Says—
FINANCIAL
than
mention them here and
can
let it go at that.
one drawback.
&
noth¬
seen
ing in thfe past few days to
warrant changing that opin¬
ion.
There
are,
of course,
Markets
Walter
showed
market action.
COMMERCIAL
it
in
tions if
a
field.
It
would
be
hard
to
In
say
where they were told any better
in clear and sympathetic terms
by
careful
a
union
objec¬
/ '
data.
own
U.
on
S.
company's figures
about 1.6%.
was
applying the definition and
concepts given above, it is essen¬
draw
its
use
1939, the earnings
too low to
In
to
eliminate
we
Steel common stock in the Nathan
as well as
the
steel company statements.
tial
slfould
on
be
capital,
Since that is far
adequate return
an
all
the
union's
com¬
parisons of recent earnings with
1939 do not prove that the sub¬
sequent ones have been excessive.
distriction
Wall Street.
Recent
of
bad
Before
rally due mostly to
short covering.
Look for series older
immediate
in
news
of
are
many
news
by
a
days
series
events which I don't
think the market will be able
future.
Stocks
to take with
equanimity. The
climb
curtailing of a short interest
their
started
last week before the column,
written last
is
one
of the
...
column
the
appears
lows hold
in the face of bad
well and good.
If they
rally will be in full swing." don't
you'd be silly to load up.
*
*
*
'/■*>..
news,
.
It
comforting to see a
prediction come true, though
.it is perhaps more important
to recognize certain facts. The
rally before the recent break
attracted many longs. These
longs are now theoretically
out of the buying side of the
market. It isn't that they're
bearish.
there's
is
On
no
long.
the
bull
contrary,
like
Yet, the
who
one
hopes
such buying has
same
that
led to
now
strained the market to
point where
must
any new
from
come
a
buying
different
sources.
I
of
More next
is
of the belief that much
am
the
recent
buying
from shorts who
came
cover¬
were
Thursday.
—Walter
Whyte.
[The views expressed
article do not
time
coincide
Chronicle.
any
are
of the
presented as
only.]
the world.
Motives
Stockholders
Furthermore, the motives which
guide stockholders are the same
as guide any good union man with
keeping it available to the
at
saver
all
times
two
are
important features of
most
desirable
a
investment.
Only a definite hope
of an unusually high rate of earn¬
ings will warrant any investor's
running the risk of being able to
only
recover
fraction of his prin-
a
pectedly.
.
,
(i
,
unex¬
•
The principal of U.
savings
and other demand loans
bonds
be
in
recovered
cash
stocks
be
can
sell
them
other
to
investors.
unless the sales prices equal
into, the
share, the feller or
company per
experimental period of six
an
amended plan of the
New York Stock Exchange relat¬
ing to special offerings.
in
recovered
primarily through the ability
And
an
com¬
,
previous sellers of the shares will
have lost part of their
in
the
allotted
member
Yet those are the terms the CIO
is offering. A 5% ceiling on com¬
mon stock earnings would not be¬
of
the
securities
offered
involved
securities
in
the
required
to be allocated in
reasonably pro¬
portionate amounts.
Under
the
to
were
firms
on
a
firm basis must be allocated.
(2)
To permit members and member
firms to retain the special com¬
mission applicable to
securities
which had been received under a
firm
around
Right now neither of these
figures may look important.
My guess is that before long
we'll look back at these points
and consider them
"
so.
The question is what to do
about this. Well, last week I
suggested
every
day, and all holders
heirs
need
that
the
liquor
later.
half
were
unsuccessful.
are
Under
the
old
plan members and member firms
were
prohibited from retaining
any part of the special commission
in
connection with purchases for
their own account. This modifica¬
tion is designed to
supplement and
give effect to the provisions of the
amendment mentioned under (1)
above.
(3) To provide that the
special commission may not be
less than a regular
single nonper
commission based upon
share rate of 100 shares
which"
we
gin to
the
preserve
investors.
idea
such
of
ified
factors
be
taken
into
<Associate)
Exchange
Chicago Board of Trade
14 Wall Street
New York 5,
OOrtlandt 7-4150.
Private
Wfret
in
administrative
spec¬
con¬
to allow
its facilities to be used for
one
N. Y.
Teletype NY 1-928
Principal
a
;
the principal for
Accordingly,
a
ceiling
the
must
be
rejected.
It would cause
such losses to investors that they
-
;v
stock
but
to
accept new
keep
part
it.
The
total
surely provide far smaller
1939,
per-
is
omy
to
prosperous
and
in I additional
and
grow
levels
of
econ¬
maintain
production
employment.
With
we
can
this
discussion
in
on
definition of
a
stock
common
on
the
jus¬
market price for the stock
which equals the savings invested
a
This
amendment
month the period of the time
of
range and vol¬
transactions
in
company
tions.
ate
the
par¬
or
industry undjefr
rea¬
mark'et.gqndi-
The choice of an appropri¬
ratio is unfortunately subject
to
some uncertainty and change.
Speaking boldly, we have / al¬
ready submitted the proposition
that for companies in the basic
steel
industry, a price-earnings
ratio of 10 seems the highest rea¬
sonable figure
for the present.
That means earnings must be 10%
on
in
the
owners' investment before they
become
just double
the figure the ClO-Steel Worker
making the
officials
tion-
necessary determina-
*,iaa
adequate,
seem
to
or
have
in
mind.
of about
company,
we
1,
value
not try¬
were
earnings
become
adequate
re¬
quires measurement from the to¬
tal
savings put into the company
per
share,
common
duction
*
from
with no de¬
invested-sav¬
that
ings value for losses.
dends paid
neither
on
Cash divi¬
stock out
common
increasing nor reducing;
of surplus accumulated in prior
its capital. They occur, at widely
varying
market
however, and any return of
capital to the common stockhold¬
years,
prices.
of the definition of
essence
adequate
ers, should reduce the investedsavings value.)
'
"
'
in
In 1946,
we
used
about 3%.
was
Although demand
was
strong
that year, price con¬
still in effect for the
steel
for'
products
throughout
trols
were
first part of
it, there was a wage
increase, and strikes by the steel
apply our
concepts to the his¬
definition and
j
year
investment in U. S. Steel common
to
come
another base
by the union spokesmen for aupr
posedly damning comparisons, the
rate of earnings on the owners'
-Difficulties in Computing Profits
When
,
,
be
workers and mine workers halted
torical results of investment in the
production twice; Earnings should
steeil
about
be at least 300% of" that 3% rate
before reaching the average we
about
have defined
industry,
difficulties
what
we
of
actual
into
run
statistics
earnings
the
about
—
are,
owners'actual
and
come
investment,
companies to in¬
fair sample. Ac¬
one corporation
over an extended period of
years
is at best an approximation.
Im¬
clude
to
get
counting
portant
are
a
too-low years.
for
even
accounting
single
a
Here
shall
we
be
can
room
will
we
S.
And for that
invest¬
and
the figures
use
by
the
Associates.
For
Robert
^
„
company
the
share
.the
the'book
quence,
in
stock
common
values
rise
-
the
considerably
Nathan
higher
than those derived from the
pany's annual
reports.
com¬
However,
most
of
are a
disallowance of "accelerated
the
Nathan
depreciation
adjustments
charges"
taken
by
the
of
1; 1948). That
11.5% in 1948
1930 which
to our standard of 10%
for the long-run average.
Adding the retained earnings of
came
the
'
series
of Jan.
rate
only two years since
conse¬
of
(as
and around 11% in 1941 were the
reported
a
1948,
earnings
Nathan earnings figures are about
50% higher than those
by - .the - company.
As
••
the Nathan series
earnings of $20 a share and
book.' value of about
$174 a
For
a
decade, 1939-48
'
shows
Nathan
R.
averaged? just
/ figures
about the same."
pre¬
,
r
steeF prices and
steel profits as
Corporation, which the CIO
constantly uses as typical of the
earnings
1939-48, -the
attacking
grossly excessive.
For that
three-year period the
average ;rate of earnings on the
common
stock according to the
Nathan
figures was 7.9%. The
lower
Steel
company's
H
48, the CIO has been continuously
demanding wage increases and
year's
for a
U.
-
decade,
During the postwar years, 1946r
-
v .;
the
use
-
justed Nathan average is around
71/4%.— ' /' • f
/♦ *
changes - in
accounting
judgment and in economic condi¬
for
the
reported average earn¬
ings of around 5%, and the ad¬
reflect
Even
the .minimum for
company
made from time to time which
tions.
For
.
ad j ustments
~
aa
adequacy, and that level would
still fail To "make up fop other
the
union
high enough,
book
during the years of depression.
Strictly, our definition of when
pared for the ClO-Steel Workers
average over many yfears, to
same
which
Jan.
on
per-share capital which had been
buying shares from previous hold¬
ers—only transfers title to the
per-share capital already in the
company.
Such transfers do not
directly affect the company itself,
rough
un¬
figures,
lost
a
inadequate
are
V
to prevent argument about
figures by using the union's
data, we should use a value about
$20 higher. That $20 is the total
The second type of transaction
referred to just above-^-that of
ment,
valid economic di¬
shall
ing
moment.
a
paper we
the
stock. It is similar to the book
value but has certain differences,
the most important of which will
mind,
viding line between adequate and
inadequate profits: Earnings on a
the
by the
a
$100
decade
share. If
in
try to formulate
with
the
$110
basic steel industry.
Adequate and Inadequate Profits
out
in these three ways as of any
given date, we shall refer to as
the invested-savings value of a
wide difference of opinion,
year
stock capital if our
Nathan
start
up
earnings there
every
the
use
over
-
share common-stock capital built
be touched
1931, although
genuine in¬
savings of well
shown
vested
common
since
years
(Throughout this
v
services
or
stock, and only
paid in the
been
share.
a
minor method—
shares of its stock as
assets
had
the stock represented
a
payment for
furnished to
the
on
$1
vested
capital, and
totals of savings than must be in¬
ticular security are considered in
Monterey——Oakland—Sacramento
Fresno—Santa Rosa;
offering.
spe¬
reduces from six months to
during which price
Offices
San Francisco—Santa Barbara
•
also
a
discretion
determining whether
ume
to
share^
sonably good stock
cial
Exchange
Stock
each
accept such
the subject of'a special
offering.
This will give the
on
Curb Exchange
Francisco
savings
stock, per share, using a
price-earnings ratio typical of the
Members
York
the
sideration by the
Exchange, in de¬
termining whether a particular
block of securities may be made
Schwabacher & Co.
San
into
put
tify
mandatory that certain
certain
New
of
few investors would
less they are
Exchange
Stock
known
less
or
price of the special offering.
(4) To make it permissive rather
Pacific Coast Exchanges
York
were
the average they would
.to sell only at prices which
on
be able
than
Neva
If it
that
would
at the
Orders Executed
stocks
flatly
the
Securities
their
their
or
allotment for the bona fide
purpose of distribution if their ef¬
member
Pacific Coast
or
sell
to
sooner
forts to distribute such securities
177-178; the rails be¬
tween 44 and 45.
eight
by it; (b) allow it not to
all the earnings on its
of them as additional
lone
a
out
pay
paid
was
shares
new
selling
terms.\
base
pro¬
averaging
only those shares not
a
cash for
pay
starting-point would still be
high percentage increase.
1939, incidentally, no dividend
very
In
is
market at prices
market prices of the second type
50%
or
more lower
than he paid. Even though many QE transaction average fairly close
the : invested-savings
respects: (1) To permit the offerer stockholders except to hold their To
values
to allot on a firm basis, to mem¬ ^shares for
established by tbe first type,years, some individual
ber firms engaged in the distribut¬ holders find it
necessary to, rer
ii
ing business, not more than 50% cover their savings in cash almost
The SEC has amended its spe¬
cial offering plan in the following
amendment
stocks have established
issued
capital
sufficient, under reasonably good
market conditions, to make the
needs.
stopped
at a predetermined resistance
level before turning up, can¬
not be ignored. In doing that
(a)
stock
low
a
earnings submitted
this article is that they must
No sensible investor would put
common stocks if he
knew that they were going to be
offering. Up to this time when
buying orders in a special offer¬
ing exceeded the amount of the
offering the entire amount of the
fact that the market
which
company
savings into
ing their positions. The mar¬
ket is thin enough to run up
on such
participation. What
is perhaps important is that
the removal, or at least the
thinning out of these shorts,
has taken away a potent buy¬
ing power the market still
On the other hand the
tors
The
savings.
a
company when inves¬
a
(c)—usually
the total of savings put
months
vided for
ble and
mon
"Exchange
of
common
to
and
shares
furnishing
already outstanding.
$1,000 of savings. Keeping the
principal as fully intact as possi¬
cash
Commission has declared effective
i nvestors'
Common
Guiding
by the
investors from the debtors at
any
Offering Plan
for
a
own
time, but savings invested in
Revised Special
Securities
the
are
can
SEC Puts Info Effect
The
stocks
viduals and firms who
those
with
those of the author
Recovery to a modest and thor¬
oughly reasonable level from such
this cipal when he needs cash
in
necessarily at
They
capital for companies, on the one
hand, and on the other, investors'
buying from previous investors
or
brokers but by the orders to buy
or sell from the millions of indi¬
for this
reasons
Tuesday, August
opinion.
30th, was in readers' hands.
This possibility was pointed
So I suggest the exercise of
out
in last week's
column,
further patience. If the recent
".
before the next issue of
this
mined
throughout the United States and
we
we'll be hit
between
They are not deter¬
f controlled
by
the
up
1948 to the Nathan book value at
the
beginning of the year brings
about $189. That stock is
it up to
now
der
selling in the market for .un¬
a share. The prices now
$70
quoted have to be multiplied
by
company beginning
in 1941.
Consequently, if correctly main¬
three because of Hie 3-for-l split-
tained.
jup
the
Nathan
series
should
in the late spring of 1949. The
unsplit
stock
is
used
show higher depreciation charges
over
the course of future years
former,
than those
r
pany, and
reported by the com¬
in the long
run
the two
series should tend to draw closer
together.
fering
serves
two
On the other hand/dif¬
treatment
future
re¬
for pensions may make the
be
One should not blame them, how-well as
;\
;
The common stocks of the three
,
been
selling
in
about
xh.
to
values
as
shown
%
the
of
market -for'
their
the
in
book
compa¬
again. Much nies' accounts. (The higher .Na¬
series*-3S" than figure? on earnings and book,
are
for intermediate ones, but values >■ used above
hardly
series
could
of
throughout this article. ;
largest steel companies — U.
Bethlehem, and Republic — have
diverge
said
for both
-
Volume
relevant
to
Number 4836
170
the
evaluations,
»stock
since
THE
market's
the
Nathan
figures are not known to the pub¬
lic.) That pattern is fairly typical
the
of
relationship between the
savings put into steel stocks and
the
what
sell
could
savers
them
for today.
;^In
the
y
U.
of
case
S.
Steel, the
stock is selling for less than the
$74 per share of earnings which
the Nathan-CIO figures say have
been plowed back into the com¬
since 1939. Yet that $74 is
counted as over 60% of the "re¬
pany
turn"
owners'
on
the
1939-48
cited
investment
rates
above.
earnings
suggests how
This
little benefit the stockholders
count
from
on
the cash
in
of
anything
can
except
dividends.
All this evidence leads up to the
second major conclusion of this
article,
steel
namely that earnings
stocks
company
inadequate for
have
Than
The
lars today
more
dol¬
if they had liquidated
into
government
assumes
the -company
liquidated
the
bonds.
only that
could
so
have been,
to extricate for
as
stock just the actual
common
finished
from
the reward offered for capital in¬
vestment in the steel industry to
such
a low level that it is
strongly
against the investors' interest to
finance
....
If
it.
is
there
central
solid
merit
in
the
point of this
article, the
statesmanlike thing for the union
to
do
would
be
call
to
cash savings put into the company
off
the
strike threatened for Sept. 14 and
reconsider its demands. Their
to
dends
have
not
made
for the
up
loss of
principal that has had to
when selling the stock
during the years since 1930, with
^the possible exception of part of
be
Cash
dividends since
1929
government bonds;
price of the stock
up to its in-
failure,
he
If
war
foundation.
no
a
would; also
any
companies
or
The same thing was said about
Jones and Laughlin Steel Corpo¬
of
1.53%
(which is presumably cash divi¬
dends) on the average asset value
of the stock.
have
in
vested
"A stockholder could
better if he
done
government
had
bonds
in¬
at
Vh%? he said.
;
If
steel
6
investment
owners'
allowed to
to be
earn
is
only 5 or
7%, either
or
what
as an average or,
is worse, only in the pros¬
perous years, savers will not only
find it a losing proposition to put
savings
into
new
case
Pensions
Claim
the
ending, a brief comment
pensions claim might be
The union is asking for a
a
month for each
member who retires from the
em¬
ploy of the steel companies at
65
above.
or
workers
In
this
the
following the
are
age
steel
exam¬
ple of the United Mine Workers'
new
plan. The latter now pays
retiring coal miners $100 a month.
Since the actuarial value of such
a
pension is worth about $16,000 per
person at 65 years of age, the min¬
ers
and
steel
workers
naturally
Irish sweepstakes merely by
hold¬
65, and without paying
a
on
both sides of this ques¬
Instead, two comments
which
for
arguments
cut
from
both
seem
member
duce
its
company
interest
it
will
holders, if
friction
enormous
a
(a)
has to
re¬
workers,
(b)
company
number of
the
common
individual
an
deserves
to
irresistibly forced to stay in the
company or
preserve
the union in order to
his accumulated pension
rights worth thousands of dollars,
even though it might otherwise be
to everybody's advantages to have
him move into some other job.
•.
Pension
while member of
more
of
exhausted,
than the stock market
under
70.
4
still
'
be
left
for
the
There would
bonds, pre¬
ferred, and common stock the
productive facilities of the com¬
pany
which fought the war by
sound
This
seems to be a
strange way to employ
If what is meant is that for humanitarian
out of considerations
a
least
the funds thus
the
course
would
her to go under.
reduced
for
the
return may be reasonably
expected
placed, the reasoning which leads up to
What
strange perversion of reasoning
thought. It may, indeed it must,
be freely admitted that in
years past Britain has bought
heavily of our goods and we have profited substantially
and regularly therefrom. But it is not fate which has
seems
a
to underlie this
decreed
that this be so; neither is it to be taken for
granted that because she has in the past been our best
market, that she always will be or that she in the
Of
the amount of the pension
be
reasonable
a
/
j:
(4) Another is to the effect that "Britain is our best
market," and, accordingly, we can not afford to permit
union should
retirement age.
sums
the statement is
very queer.
if he leaves the company or
even
union before
or
lay out large
at
belong to the individual worker
years
nature of the
market for
case can
gets
be.
for
and
us
her
on
She will continue to be
a good
other people only if she
many
own
economic
feet
and
is
able
supply other people with gooc^s they want and will
buy at the prices asked. One thing is certain, namely,
that we can not keep our
"good market" there by pro¬
viding the British people with funds with which to buy
our goods.
.
is
Let
us
take
a
A World Problem?
few of these issues.
(5) It may soothe British feelings to keep saying that it
is an Empire problem —
or, better still, a world problem —
Cause and Effect
(1) There is the assertion often heard in so-called "lib¬
this
shortage of dollars. In
perhaps, it is
a sense,
that is,
—
in the sense that most of the
peoples of the world want
socialism, its "welfare
things which they have not the money to pay for, things
State," its high taxes and all the rest that go along with
which can be
bought only in the United States where pay¬
these are quite irrelevant to current discussions. Current
ment must be made in dollars.
But the easing of such a
conditions would have arisen no matter what type of gov¬
ernment had been in the saddle or what form of social or shortage of dollars elsewhere through investment or larger
economic organization had been adopted by the British in exports to the United States would be of help to Britain
recent years or recent decades. High taxes, so it is said, only in the degree she is able to export more freely or is
the recipient of aid from other lands.
are paid in sterling; what Britain is short of is dollars.
And
eral" circles to the effect that British
much
more
of the
same
order.
(6) The old argument that Britain "must" be "saved"
•
-
-
:
„
at all costs for
Of course, this is a complete non sequitur. If
British devote more of their energy to providing
the
this
and that to the average man (things he never dreamed
of having in years gone by) then there is left that much
less time and energy for making the things or perform¬
ing the services which could be sold for dollars. If taxes
unduly high, the cost (in sterling, if one insists) is
high, and since the price of sterling is fixed by fiat, the
price of the articles offered in the world markets is high,
no matter in what currency it is quoted.
!
.
have in
limits.
Whether in
depends, for
the British
sense.
(2) A second statement commonly heard is closely akin
to the first.
pect
ular
It is to the effect that it is "unrealistic" to
ex¬
can
upon
only in
a
what
may
be expected of
military but in
an
economic
hardly expect to gain by squandering
(7) Finally, there is merit in the complaint that
not
expect to succeed in
leadership (to
our
use
a
we can
self-imposed role of world
mild word)
long
so
as
eco¬
we
are
unwilling to face free and fair foreign competition in
our
domestic markets.
own
"government" to take steps which are quite unpop¬
with the great rank and file but which are necessary
under socialism to
things of life
istic" to
a
not
definite
very
existing circumstances it has merit
thing,
one
—
whatever merit
reasons,
circumstances, has
a
if the cost of
in
We
some
funds endlessly to keep a defunct British economy going.
nomic
"Unrealistic" Indeed!
purely military
it may
are
goods is to be reduced. It is in a sense un¬
i For example, if the U. S. Steel realistic to expect anything of the sort—and this is one of
Corporation had paid back to the the big reasons why a "managed economy," whether fully
common
stockholders the $800,and professedly socialistic or not, is not likely to be able
000.000
it has invested in new
to compete in world markets with other producers who are
plant and equipment since V-J
It is
Day, each share would have re¬ left to their own devices in running their business.
ceived about $92.
That is some one of the reasons why one need not expect peoples living
are
these make another
as
circles
on
applied to them.
present conditions in
preciation and depletion charges
as plants and machinery wear out
prire
should
(Continued from first page)
to pay back to themselves part of
;.$22
reasons,
rights accumulated
deal of difficulty if just plain, ordinary common sense
stock¬
capital already in the com¬
panies rather than reinvesting de¬
British
the term "invest."
be
As We See It
in
the
in
ment °and the like!
of withdrawal.
the basic steel industry continue,
and mines
(3) Facts such
heard
to
new
pay
m
somehow
machinery, and
improved products. Still further,
•
believe.
Other Absurdities
the
and
moment
one
of military strategy, we
of money in Britain, then the
discharged, or (c) when a term
"invest" appears
scarcely appropriate. If the term is
union is in a declining industry.
Still further, every man would be being employed in its ordinary connotation, implying that
when
and the companies.
issues of steel
their
do not for
now, we
union, as
The whip-hand
the individual through
of his pension should be
cause
the union
across
the
to
whenever
appraise the voluminous state¬
ments
be.
may
a
while working for a company or
cent.
We shall not try to summarize
or
while still
arrangement would be bound
to
ing onto his job till he reaches
They will also find it to
advantage not to iU
nance
expansion by leaving part
of their earnings in the business.
In this they may have to bring
strong pressure on the company
officials, who sometimes forget the
in
reason
over
control
useful.
on
stocks.
expansion,
wholly unrelated
suggestion often
just a little foolish. That
outlawed. No machinery for han¬ suggestion is that the people of the United States should
dling grievances could avoid all "invest" more freely in Britain in order that better
pro¬
the dangers.
Furthermore, such
ductivity might be achieved through more modern equip¬
an
union
their strong
stockholders
as
ically could hardly have been avoided; that all this need
have been as severe as is
today the case, or that the
outlook for real improvement should have been as
poor
(
his reaching retirement
age while still working for that
reported that its stockholders have
return
regarded
so¬
installed in Britain
was done;
hardships made the harder
of the lack of imagination and initiative and
willingness to do what is necessary to produce econom-
by
on
given
Ill
The
by its president. Admiral Moreell
net
now
regardless of what
the gov¬
ration during the recent hearings
a
moment be
convincing one—why
in any event;
problems as to how to keep going after
the losses they have had to suffer were
unavoidable
ernment's Social Security fund.
) Second,
no
man
should
be
chained to either a company or a
union by having his pension de¬
a
the economic crisis by which that
country is faced.
Postwar difficulties the British
people would have had
ployers for pensions should be
paid into separate funds, such as
insurance
conducive
are
to
em¬
or
a
31
'
reason—and
one
not for
can
pension
contribu¬
rights. Accordingly,
avoid it) conditions which
can
cialism and the welfare State
stand .to
tions from either workers
the
and to maintain¬
ing thd nation's, production.during
prosperous years, on the basis of a
charity or subsidy.
received
It is
a
in such
accumulated
his
lose
high productivity.
come
vested-sayings value. The stock¬
holders have furnished the coun¬
try with a third of its steel capac¬
ity, all of which was essential to
winning the
companies fail..
is to lose his job
man
permit (if it
to
in good standing in that
called
once
a
(967)
or
employer,
big corpora¬
company or
interest rate
has not
Some
his
try's profits being excessive, seems
tion.
and the market
if the latter is
of
to have
have averaged much less than the
on
liabilities
present case for increases, relying
almost exclusively on the indus¬
taken
1937.
up
and
tion.
CHRONICLE
man's pension should
in the general assets
no
tied
FINANCIAL
pend
by the common stockholders
think it is wonderful. Such prizes
mostly from retained earnings but are like
every member winning an
partly from cash subscribed at
i$140 a share. All the cash divi¬
First,
be
&
even
products
American prosperity cannot be
promoted by deliberately reducing
pension of $125
stockholders of U.
That statement
and thou¬
year
Before
the company at any time during
the last 25 years and put their
money
a
on
Liquidating Value
S. Steel would have far
of
tacks to tanks and tankers.
many years.,
common
nearly 30,000,000 tons
steel ingots
sands
been
U« S. Steel Common Stock Less.
~
producing
of
COMMERCIAL
as
be
as
well
country) to take such steps
and controls
as are necessary
in
Houston
HOUSTON, Tex.—Warren C. IIlick will engage in a securities
business from offices at 5209 Car¬
oline.
He
formerly connected
Upham & Co. and in
was
with Harris,
the
past did business
as
an
indi¬
vidual dealer in Houston.
Pitzer
provided for with the good
in really free countries—for it is "unreal¬
expect: government (which operates
socialistic
Warren Illtck
in
engaging
ness
from
in
a
Broadway Street.
The Financial Chronicle)
Wis. —John
C.
Naber has become associated with
Merrill
Lynch, Pierce, Fenner &
North Water Street.
Beane,
710
He was
formerly trader for Gard¬
F. Dalton &
Co.
-
•
'
Waddell & Reed Adds
Tyler
securities busi¬
offices at 221
(Special to
MILWAUKEE,
ner
TYLER, Tex.—Sidney A. Pitzer
is
Naber With Merrill Lynch
North
(Special
to The
Financial Chronicle)
FALLS CITY,
staff
Neb—William J.
been added to the
of Waddell & Reed, Incj
McEniry has
32
(968)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, September 8, -1949 *
Indications of Current Business
The following statistical tabulations
shown in first column
are
cover
production and other figures for the latest week
either for the week
month ended
or
Latest
AMERICAN
steel
STEEL
AND
IRON
Indicated
Week
INSTITUTE:
(percent of capacity).
operations
Previous
Week
that date,
on
Year
Month
;
■
It'Ago '
84.2
86,3
-Sept. 11
1,552,200
1,591,000
A
82.3
1,517,200
INCORPORATIONS,
UNITED
8TATES—DUN
of
'Mxtuux
94.5
month available (dates
or
of quotations,
cases
BU8IVFS8
Ago
J,
-Sept. 11
in
or,
are as
NEW
8c
IN
Year
Month
6,424
-—
:
Previous
■*,
Ago
Montb
BRADSTREF.T,
July—•
of that date)
Latest
THE
C.
\
" 7,260
7,690
Equivalent to—
Steel Ingots and
castings (net tons)
BUSINESS
1,703,300
INVENTORIES,
MERCE—Month
Crude oil
Crude
(bbls. of 42 gallons each).
output—daily average
Gasoline
stills—daily
to
runs
(bbls.)
output
Kerosene
—.
(bbls.)—
output
4,717.350
4,722,900
4,676,600
15,215,000
5,241,000
5,187,000
-Aug. 27
-Aug. 27
—
18,195,000
18,058,000
i—-—
—Aug. 27
1,634,000
1,585,000
1,478,000
27
6,491,000
6,042,000
6,293,000
7,597,000
7,496,000
7,205,000
27
106,280,000
107,612,000
109,964,000
95,504,000
fuel
oil
(bbls.)
27
25,804,000
25,822,000
24,547,000
27
74,718,000
75,312,000
70,878.000
68,157,000
67,166,000
BY
53,544,000
Aug. 27
Revenue freight received from connections
,
CONSTRUCTION
ENGINEERING
746,912
731,215
723,810
891,666
Aug. 27
(number of cars)
U.
of
581,829
571,474
564,852
695,445
credit
Total
Sept.
$147,684,000
$139,245,000
$146,801,000
59,014,000
79,788,000
100,250,000
65,466,000
Sept.
construction
$155,191,000
Sept.
..
,
96,177,000
67,896,000
138.995,000
81,335,000
Sept.
55,425,000
48,024,000
111.952,000
(U.
OUTPUT
Bituminous coal
S.
BUREAU
and
lignite
Pennsylvania
anthracite
Beehive
OF
coke
$51,317
$325,000,000
$496,100,000
$199,000
$284,000
*$15,853
$14,669
of
NEW
YORK—
OUTSTANDING—BOARD
OF
THE
of
as
FEDERAL
short-term
June
30:
40,752,000
19,872,000
27,043,000
DEPARTMENT
7,550,000
7,360,000
——
965,000
1,173,000
♦9,900
7,700
SALES
INDEX—FEDERAL
AVERAGE=100
RESERVE
♦252
000 kwh.)
credit
PRICE
All
Sept.
5,543,913
3
2,118
3,813
6,963
6,993
3,282
3,249
3,352
2,739
2,839
981
5,523,316
INDEX
FOR
IN
975
945
169.6
173.7
MODERATE
LARGE
of
As
—
,
—
FAMILIES
items
July
CITIES
15:
.
168.5
.
foods
..
Cereals
—
1.602
4,173
2,745
—
1935-1939=100
255
209
All
(in
—
2,331
4,255
7,008
.
credit
INCOME
252
Aug. 27
XDISON ELECTRIC INSTITUTE:
output
7,533
-3,720
,
144,900
Service
SYS-
„
2,336
2,371
credit
Single payment loans
12,218,000
794.000
9,900
—Aug
4,717
•
Other
Loan
♦8,890
2,507
—
Charge, accounts
7,910,000
921,000
-Aug.
(tons)
..Aug. 27
STORE
TEM—10(15-39
9,133
4,878
—
Automobile
6,778,000
}V
$16,141
credit
credit
CONSUMER
Electric
♦$52,646
DE¬
S.
Month
credit
consumer
Bale
MINES):
(tons)
(tons)
•„
OF
SYSTEM—Estimated
Noninstalment
*
BANK
millions
in
Instalment
74,557,000
..Sept.
COAL
13,637
OUTSTANDING—FED¬
GOVERNORS
OF
-V;> VS-.
/.
„
construction
Public
7,953
;
*13.831
$211,000
U.
—
—
(000'H omitted)—
29
July
CONSUMER CREDIT
NEWS-
construction—
8.
Private
ENGINEERING
$29,727
*7,912
j
(i
RECORD:
Total
—
7,827
13,380
REPORTED
—
COMMERCE
OF
PAPER
RESERVE
CIVIL
♦$30,903
$30,372
t,600,000
CORPORATIONS
RESERVE
ERAL
As
(number of cars)
S.
PUBLICLY
—
(000s omitted)
COMMERCIAL
»
freight loaded
U.
PARTMENT
ASSOCIATION OF AMERICAN RAILROADS:
Revenue
DIVIDENDS
July
61,814,00u
68,394,000
CASH
23,166,000
Aug. 27
at
$):
$51,579
9,196,000
Residual
of
———
v
7,422,000
27
(bbls.)
-Aug.
output (bbls.)
-Aug.
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
Finished and unfinished gasoline (bbls.) at—
Aug.
Kerosene
(bbls.) at—
Aug.
Gas, oil, and distillate fuel oil (bbls.) at
Aug.
(millions
—
-———————,
2,165,000
Gas, oil, and distillate fuel oil output
oil
COM¬
17,722,000
Residual
fuel
June
OF
5,739,000
18,180,000
-
Wholesale
5,528,850
-Aug. 27
(bble.)
average
of
Manufacturing
INSTITUTE:
PETROLEUM
AMERICAN
DEPT.
and
—
201.7
—
products
'V
169.5
...—
bakery
V:
204.3
>
>
171.0
261.3
Meats
5,469,539
238.0
240.6
Dairy products
Eggs
5,466,004
216.8
169.7
-
182.2
182.0
*
FAILURES'
(COMMERCIAL
STREET,
AND
INDUSTRIAL)- -DUN
&
BRAD-
INC.
Fruits
Sept.
1
176
174
171
94
Fats
IRON AGE
COMPOSITE PRICES:
Pig
Aug. 30
t3.705c
steel
Finished
Aug. 30
$45.91
$45.91
Aug. 30
$23.33
$21.92
Iron
(per lb.)
(per
Scrap steel
ton)
gross
(per
Sugar
$44.61
$19.92
$43.16
Fuel,
Lead
refinery
refinery
tin
(New
(New
Lead
(St.
Zinc
J.
St.
Aug. 31
at
at—
17.325c
17.325c
U.
8.
17.550c
17.550C
BOND
103.000c
103.000c
103.000c
103 000c
15.125C
15.125c
14.500c
Aaa
PRICES
.1
Aa
19.500c
14.925c
14.925c
14.300c
DAILY
10.000c
10.000C
10.000c
15.00s,c
94.4
139.9
140.0
136.5
136.3
187.3
154.3
154.2
150.8
$53.66
$53.68
$53.01
103.99
103.75
103.54
114.85
114.85
114.27
6
Sept.
,
—
121.04
!
120.84
Group
114.08
113.50
6
106.21
■
106.21
105.34
6
109.42
f
109.42
108.70
Sept.
YIELD
Sept.
DAILY
corporate :
6
2.91
6
-2.60"
2.61
6
2.69
2.70
2.95
2.95
3.38
3.38
3.20
3.20
-
Aa
A
Utilities
MOODY'S
Orders
received
Unfilled
of
INDEX
sales
REPORTER
,
2.94
2.45
3.43
2.87
SPECIALISTS
by dealers
of
ON
EXCHANGE
2.88
421.0
Member
188,028
162,831
183,835
87
80
93
294,327
310,125
268,530
344,469
166,039
Customers' short
sales
129.3
Cash
128.2
Customers' other sales
j
~
Number of shares—Customers'
Customers' short sales
total
sales—III
Other
II—"
IIII"
PRICES
NEW
SERIES—U.
commodities
S.
DEPT.
OF
"
^
other than farm and
|
^
Building
441,561
401,383
6.604
metal
products
$16,102,928
$17,485,755
$13,898,415
191,590
141.010
■;'
191~590
,r
;
;v.f
175,520
206,550
June
A
152.4
151.9
,-152.6
...
J
161.6
30
161.9
3n
144.9
144.9
144.9
139.7
139.5
130.0
130.2
159.8
164.3
160.6
187.7
167.9
qn
~Zl lo
167.9
167.9
188.8
189.6
190.0
124.2
124.0
Other
Net
Aug. 30
152.9
,
149.1
181.4
206.6
203.4
210.5
269.3
225.7
224.8
222.2
273.6
—Aug. 30
194.3
191.0
184.9
—
to
skins.
date
The
weiahfc*
to 1948 inclusive.
Z
Iorf>gn cruae ""W0n
;.
for
*The weighted finished steel composite
»irerag® product shipments for the 7 years 1937 to
was
213.1
revised for the
1940
inclusive and
16.7
•20.5
18.8
20.5
2.3
-
income
Income
ITEMS
and
47.2
dividends
'A-
17.5
2.2
2.0
46.7
51.8
•17.3
15.9
12.1
S.
for
fixed
$64,763,030
15,932,521
$90,178,066
80,695,551'
105.826.631
3,186,305
3,271,650
€9,629.578
CLASS
11.2
188.4
$57,595,234
U.
12.0
•192.3
•77.423,901
35,189,721
OF
42,960.853
I
Commission)
.
income
from
fixed
income
•_
charges
charges
2.980.682
15,648.565
4,249,721101,576,910
67.241,593"
&
structures
defense
income
&
projects
3,177.855
39,988,869
64,063,743
33.818.847
equip.)
2,971,984
32.209,039
income
33,137.131
31,090,411
1,373.441
1,374,616
1,362.073
20.565.848
25,478,684
28,136,690
28,478,263
2,968,177
27,176,522
9,516.454
taxes
529.233
12,053,517
2.02
2.25
2.96
appropriations:
common
stock
stock
income
\
2.2
2.1
'
192.3
Commerce
available
after
•
2.2
-
deductions
preferred
UNITED
60.1
39.1
*17.3
social
deductions
i',i.
134.7
*40.9
72,815,883
of
♦
132.5
•58.3
15,220.599
to
-i
.
—Aug. 30
Meats
1941
interest
On
:
152.6
213.4
♦137.0
58.4
income
of
•212.9
♦134.8
40.8
-
rental
(way
Ratio
.Aug. 30
213.5
industries
income
Amortization
W
'
259,987
136.8
l
and
On
,w
$115,115
531,322
STATES
-
contributions
INCOME
Dividend
78.2%
$164,763
134.5
UNITED
total
disbursements
(Interstate
Federal
135.0
71,055,687
131,644,996
371,332
receipts,
—,U—•
Depreciation
204.5
63,921,054
131,685,658
$17(1383
transfer payments
nonagricultural income
Income
171.9
-
124.0
*
Hides and
issues
industries
Miscellaneous
188.5
161.3
345,443
COMMERCE)—Month
-—Month of May:
Net
railway operating
Grains
Livestock
Govt,
Income
labor
Income
577,077
17.1
IN THE
OF
salary
insurance
SELECTED
136.7
Ana
——
U.
other collateral
S.
73.614
281,072
531,661
67.0%
on
employee
Personal
-
530,254
Total
8pecial Indexes—
years
* ;
Total
148.7
130.0
™
A„„
$608,151
80,192
j:,
132,812,944
on
employer
Proprietors'
153.4
140.1
aiJ'
~
_
balances-
industries
Other
168.9
qn
-
$682,409
281,841
67,279,033
Government
181,940
Allff
^
foods.
17,871
$689,611
S
—
producing
Less
\
U.
Total income
"~Ana
♦16,303
billions):
Service
3,630
111*270
185,550
(in
personal
Other
-
$29,727
76,619
in
credit
Distributive
111,270
lTi'oio
free
Commodity
LABOR
materials
Sll other
188,550
15,878
♦$30,903
12-31-24=100
borrowings
borrowings
Total
$14,629,584
188,550
_
;
index,
Wage and
397,753
v
$13,349
*15,985
of
shares
14,872
:
434,957
-
As
balances
bonds
93
r
7,537
In
lighting materials
customers'
banks
listed
*
536,855
products
and
188
15,793
544,392
-
198
19.081
,
in
listed
14,965
Au*
Poods
-twuuo.
and
15,981
5,355
Aug. 20
products
Textile
19,279
'
.Aug. 20
V;'1' '' ■::"1;
and
of
RYS.
1926=100:
*A11 commodities
of
price
$18,665,784
484,824
Aug. 20
Metals
$17,148,809
Aug. 20
sales
Puel
$21,453,998
.Aug. 20
shares—Total sales——
sales
Farm
$18,312,782
:
♦$14,918
accounts—
debit
of
440,204
147
1.242
.
June
customers
value
15.553
Aug. 20
Round-lot purchases by dealers—
'!• Number
of shares
All
16.16?
462.012
Aug. 20
8hort
WHOLESALE
19.296
567,437
490,179
Round-lot sales by dealers—
Number of
16.043
.———Aug. 20
value
hand
on
Member
144.6
470,419
18,020
of
—
margin
net
to
(DEPARTMENT
Aug. 20
Customers' other sales
Dollar
carrying
i Market value
of
18,167
1.365
1.291
,,
SALES
&
EXCHANGE
customers'
PERSONAL INCOME
Aug. 20
-Aug. 20
|
INVENTORIES
extended
Member
—Aug. 20
purchases by dealers (customers' sales).
Number of orders—Customers'
total sales
'
15,826
firms
Market
161,429
Total
3
1.465
'
dollars):
STOCK
of
Total
86
186,039
(customers' purchases)—
I
39.8
$1,318
$1,380
16,479
orders
value
40.5
$30,372
YORK
184,605
AUg.
:
1.300
Sales
NEW
173,980
Aug. 20
40.2
July 30 (000's omitted):
342.3
ACCOUNT OF ODD-
~
T
•:"
38.4
1.467
,
.:
Total
THE
N. Y. STOCK
COMMISSION:
shares
;
,
goods
3.06
2.72
339.0
129.1
39.3
v
$1,333
.
Durable
Credit
2
1
Nondurable
3.31
2.86
2.63
346.1
33.9
39.0
38.7
$14,546
V
3.44
3.24
56.33
49.50
33.8
:
3.13
,,
57.57
49.57
Inventories:
2.93
2.98
57.21
COMMERCE)—Month
of
2.83
2.64
2.72
j
—;
50.31
goods
OF
3.08
v
OF
goods
; Nondurable
(millions
INDEX —1926-36
Odd-lot
1946
;
Stock
PRICE
FOR THE ODD-LOT
AND
of
Dollar
,
;v
2.25
2.91
2.85
6
Sept.
Number
•
.
Aug. 27
at
DRUG
Number
'j
.
Aug. 27
EXCHANGE—SECURITIES
Odd-lot
2.23
DEPT.
;
manufacturing
Aug: 27
(STOCK TRANSACTIONS
DEALERS
115.43
..
S.
goods
goods
Durable
Total
AVERAGE;--! 00
LOT
AH
112.00
„
U.
Hourly earnings—
107.44
-
HOURS—WEEKLY
—
manufacturing
goods i„
Aug. 27
(tons)
AND
2.21
2.67
Sept.
activity
195.9
^
Nondurable
ASSOCIATION:
(tons)
orders
PAINT
-
6
(tons)
Percentage
"
6
PAPERBOARD
Production
OIL,
Group
Group
COMMODITY
NATIONAL
114.46
r
(DEPT.
Baa
Public
;
MANUFACTURERS'
Aaa
Industrials
115.63
118.60
•
>
AVERAGES:
Government Bonds.
Average
6
6
BOND
119.41
6
S.
115.32
119.61
6
U.
116.02
6
Sept.
MOODY'S
6
Sept.
•
>
July:
Durable
105.17
'.'.'118.60
AND
ESTIMATE
manufacturing
All
110.70
j
Sept.
Group
•
Hours—
116 4)
119.00 :%:
114.08
;
Sept.'
Industrials
120.22
119.20
6
Sept.
Group
*r
-
Nondurab.e
~
6
Sept.
Sept.
1
.
:
„——
EARNINGS
Earnings—
111.62
Sept.
Baa
-
LABOR—Month of
100.72
6
—
:
Durable
G
.Sept.
-2-.
Utilities
134.8
185.0
AVERAGES:
Bonds
:
Public
135.6
96.9
:
AVERAGE
>
19.300c
Aug. 31
,
Railroad
135.6
170.9
183.0
FACTORY
'
Aug. 31
at
Average corporate
A
.,117.3
23,425c
Aug. 31
at—
Government
197.1
120.6
96.9
Ail
MOODY'S
200.8
.
176.5
190.3
Miscellaneous
23.200c
17.550c
Aug. 31
.
17.325c
Aug. 31
Louis)
142.9
176.2
120.7
refrigerators
electricity
fuels
Ice
at
York)
Louis)
205.2
183.1
QUOTATIONS):
at
York)
(East
213.4
188.5
,
electricity and
and
204.3
v
217.9
Housefurnlshings
M.
&
copper—
Domestic
Export
Straits
(E.
141.0
-
.
;
Other
Electrolytic
,
^
209.0
207.6
208.2
sweets
Rent
Gas
METAL PRICES
oils
and
198.0
'v
210.2
——
Clothing^;
3.705c
204.1
vegetables
and
3.720c
$45.91
3.705c
ton).
gross
and
Beverages
V
:
STATES
•
fixed
'»',
BUREAU
OF CENSUS
(000's omitted):
Imports
;
.
EXPORTS
Exports
charges
AND
—
IMPORTS-
Month
of
July
$898,600'
455,500
$1,104,200
$1,019,500:
526,700
563,40Q,
♦Revised figure.
tj
JJ
(969)
then
Monetary Management-No
Substitute For Sound Fiscal Policy!
will
(Continued from page 8)
have little to do with that
expansion. A
favorable
more
eco¬
nomic climate and more favorable
prospects for business
requisites
mand
to
for
the pre¬
increase in de¬
an
credit
are
Sensible
and
equitable changes in tax policies
are the most important
steps that
should be taken.
But from the
standpoint of the
Treasury, easier rates present
a
considerable
advantage from the
The Treasury is fac¬
ing very substantial refunding
problems, and the fiscal policy of
fiscal angle.
the
Administration
based
the deliberate
upon
tion of
ter of
is apparently
crea¬
period has taught—not only here
but in
where—that when
balanced budget
under these conditions.
Long-Term Effects of New Policy
The
long-range effects of the
easy credit pronouncement are a
little harder to prophesy. /The
wording has been interpreted as
announcing a greater flexibility
Federal
Reserve
policy.
One
whether this, is to
wonders
be a
two-way flexibility and whether
political considerations will per¬
mit
reversal
the
of
the
easy
policy when circumstances
money
indicate
the
wisdom
-
that
of
Probably the Open Mar¬
deliberately left
a degree of ambiguity in the state¬
ment. It would perhaps be un¬
fair to expect them to be more
precise than they were.
course.
ket
Committee
As
of
matter
a
of
nouncement
June 28
improperly called
the
fact
is
* an¬
really
"new" policy.
In the pre-war era the Federal
Reserve
open
market
policies
were presumed
to be established
a
Section 12A of the Federal Re¬
Act
relative
this language
contains
to
market
open
opera¬
tions:
"The
time, character, and volupurchases and sales
shall be governed^ with a view to
accommodating
commerce
and
business and with regard to their
of all
time
the general credit
situation of the country."
This is the language of the Fed¬
bearing
Reserve
eral
time
which
was
upon
1933
since
Act
at
statutory recognition
Open
given to the "Federal
Market Committee."
its
In
1949 letter, the
National City Bank of New York
August,
the following:
says
"The
orderly conditions in the govern¬
market/ restated
with secondary emphasis in the
new
policy
statement,
has no
foundation in statute, though the
Reserve System has always been
attentive
to
the
problems
of
Treasury financing and
in the
ment
two
to
security
World Wars made assistance
the
vast
loan
drives
its
pre¬
by
a
of you,
substitute
very
ance
poor
fiscal
sound
for
management.
certainly
the
life,
mem¬
of
this country, and to provide a sys¬
under which the reserves of
tem
the
freedom would
eral
the
serve
word
and
would be
available to
made
implied in the
purpose
"reserves."
-
Original Policy
function of these banks
V So the
"new" policy is
really a
restatement of the original pur¬
intentions of the Federal
poses and
Reserve Act.
It
to
seems
the
me
significance is that conditions have
changed to an extent that the
wartime deviation from these
original purposes can now be cor¬
rected and the System can revert
to its original objectives.
In view of the
for
more
the
frequent requests
and controls by
powers
of
Board
Federal
Governors
Reserve
of
System,
the
which
requests many of us have felt un¬
and unwise, it seems
pertinent to add a few comments
necessary
by people identified with the Sys¬
tem in its earlier days.
The other
day I read the pro¬
ceedings of the American Bank¬
ers
Association convention of 1915,
the
following the inception
year
of the Federate Reserve
which
System—
by coincidence
convention
held here in Seattle.
was
In an address by Mr.
"These central
created
banks
not
were
to transact business with
the
public but primarily, as their
name implies, for the purpose of
holding the reserve deposits' of
their owning banks.
Among the
important services which they
may render
to their'member
banks the most important is the
right to rediscount their paper
issue
and
bank
notes
it.
great
against
then, the first
creating twelve banks
to bind together all the
Manifestly,
result
of
has been
national banks of the country
into
twelve strong regiments, thereby
creating
"Reference
the
fact
solidarity. '«
effective
an
has
that
made
been
the
under
old
to
sys¬
the
chief
the
.
.
.
"
'
proceedings of the con¬
vention
the
results
of
deposits led
practices, such
not
legislative
a
tions
its func¬
body;
administrative.
are
Occa¬
sionally it has quasi-judicial func¬
tions to perform, biit in the main
duties
its
nificance
administrative.
are
"Section
shrinks
16
into
compared
as
insig¬
with
the
underlying principles of the Fed¬
eral Reserve Act, the utilizing of
the
cash
of this
resources
coun¬
try, the care of the gold, the ul¬
timate monetary redemption, the
only international money.
"That, gentlemen, is the highest
province of the Federal Reserve
Bank, which is to regulate and
stabilize our
currency,
so
that
those of you who hold any form
of paper money, issued through
governmental agency, may be
sure
of your redeemer—and that
you can get the gold when the
At that same
meeting in the ad¬
Warburg, Vice-
of Paul M.
dress
Governor of the
Federal Reserve
Board, I found the following:
j
"I believe it is safe to say that,
those laws have
best which put into
general,
in
the
proved
rates of
the outbreak of the war in Europe
to
of
these
practice.
published a tentative
entitled, 'A United Reserve
"In 1910 I
plan
Bank of the United States.'
on
interest or granting spe¬
no
existing
exaggera¬
literally noth¬
earth more important than
the preservation of the fiscal in¬
tegrity of the Federal Govern¬
on
ment of the United States and the
proposed, 'A National
Association'; and, finally
Owen-Glass committees1 de¬
tem that he
Reserve
the
the
vised
'Federal
Reserve
Sys¬
enacted into
law. The word 'reserve' has been
which
tem/
at the fantastic level of some
even
billions
40
Political
parties
are built on promises and assur¬
ances to the people that govern¬
per.
platforms of
continue
will
ment
year.
,
all political
and
increase
the
outpouring of contributions
grants for every imaginable
The President has an¬
nounced a policy of deficit financ¬
ing to permit the continuance and
expansion of this welfare state of
and
market operation^*!
the
circumstances,
was
never
seriously questioned. But the eas¬
ing of an unexpected shock: is
quite a different sort of thing
than the detailed control of prices
and trading
which has been' ln.
effect since the 'pattern of rates'
technique was adopted in 1942:
The experience of the postwar
gency open
companies to take a place
equity financing to some ex<*
tent, and several other ideas.
surance
was
in
all
these
varying
"Reserve is, as the name im¬
plies, what one holds back. It gen¬
able to take care of an increased
olish
profits surer, but to accomit
in
such
that the
investor, the manufacturer, the
merchant, each and all, could
count
on
a
way
1948
In
ours.
over
one-fourth of
the national income went to Fed¬
eral, state and local government,
the
double
amount
the
In
nancial
study Senator Boyd con¬
cluded:
"I
-
•
.
.
convinced
am
coming
..
his recent fi¬
of
course
went in
that
that direction in 1929.
■
-
in
that
the
shall extend our
stability to
extremes where it may be unable
year we
economic
and
withstand
to
sures
which
fiscal
year
cal
are
1951.
additional
pres¬
unavoidable
When
p™
of
where you can count on
The
reserves
reserve
u«ed
note
the
in
the
(cen¬
bank of the district
exoansivelv
issues,
so
as
the basis
are
even
requested
of us who feel
additional powers
many
the
so
frequently
Board of Governors could
serve
"The new plan seeks to put
tral)
There
that
no
of
by the
at best
great purpose in the ab¬
a
sound overall1 fiscal
policy in this country. I believe
it was Mr. Allan Sproul, Presi¬
dent
of the New York Federal
Reserve
Senate
the
Reserve
most
encouraging
Board is
important and
pronouncements
recent years.
in
Some months ago I
compliment for¬
had
occasion, to
mer
Chairman
the
Marriner
Eccles
and forthrright manner in which he opposed
upon
courageous
of the unsound proposals
presented to the special session,
many
of the
Congress last year. I think
his position in respect to the pro¬
posed housing legislation, for one
example, was one of the most con¬
structive contributions the Fed¬
eral
Reserve
have made.
to
the
note
a
people could
pleasure now
wh$c#L
contribution
Chairman
toward
its
or
It is
McCabe
has
made*
better
understanding and
clearer thinking in respect to ouar
national economy., *
The Federal Reserve System
creature of the
Congress of the
was created by
the Congress and is required to
report to the Congress. It seems to¬
a
United
States.
that
me
it
It
best
can
the
serve
of the United States by
stating clearly and unequivocally
that its own monetary policies can
at best do very little to create the
people
right economic climate unless ac¬
companied by a sound taxation
and debt management and budget
policy, which in the final an¬
alysis rests with the Congress and
thus with the people of the United
States.
.
fis¬
our
there is certain to be a de¬
moralizing domestic crisis which
ens,
i
Reports Decline in
Consumers- Prices
probably would be disastrous to
private enterprise system and,
therefore, to our form of govern¬
from June to July. 1949,
to the National Industrial Confer¬
Bank,
Banking
wrong
ence
of National Fiscal
Policy
£•/;''
Importance
*
'
would
It
that
it
is
Board.
were
reported
cities
In
according
decreased
July
in
of the 62
the
Board's
52
in
included
high
time
for
us
to
quit worrying
about relatively unimportant pro¬
posals and concentrate upon the
monthly
survey
of
consumer
prices.
The index showed few
creases in nine cities during July,
while one city (Syracuse, N. Y.)
all-important problem of national
It, therefore, seems
year
seem
fiscal policy.
to
me
that the additional controls
requested by the Board of Gover¬
nors are relatively trivial in
im¬
that the attention
the highest authorities in gov¬
and
portance
of
ernment should be directed to the
real
problem. When an emer¬
operation is urgently neces¬
sary, the doctor doesn't waste too
much
time
smoothing down a
broken finger nail on the patient.
gency
I do that the tax and
fiscal questions are the important
ones, I
note with pleasure and
pride that the Chairman of the
Board of Governors of the Fed¬
eral Reserve System has within
Feeling
as
the status of
whole economic struc¬
our
remained
the
toward
ture,
tion
of
suggested that the
the
committee
The
sharpest increase
was rec¬
Dallas, Texas, where the
was
up
3.1%
over
the
index
month. The largest decreases were
registered in Seattle/Wash, (daw*
1.2%) and Philadelphia, Pa. (dowa
1.1%).
Purchasing Value of the Dollar
The
purchasing value of fee
dollar /January, 1939ae
cents) was 62.1 cents in July*
consumer
100
This represents an increase
1949.
of
3.3%
over
its
level
of
July*
;"'.y"'v.
1948.
Index Number Changes
The Board's index for
stood
at
161.1.
1948)
(July,
A
July, IMfr
year
index
1939
as
/
100.
ago,
fee
166,-4*
was
Base date of the series is
January*
\
,
Changes by Index Component
particular considera¬
lowered
surtax
rates
in
the upper brackets, more liberal
carry-back
tax
provisions
for
said to the
corporations, elimination,of
and Currency
"double taxation" of corporate in¬
come, more
From
June.
and
Congress
be
directed
changes in the tax struc¬
with
of
the
June-July, 1949
Mr. McCabe
of
Over
orded in
ture rests.
attention
uncha^ppd.
(July. 1948-July, 1949) com*
sumers' prices dropped 3.2%.
equity financing, on
who
everywhere else and
nrices dipped 0.3%
Consumers'
our
Committee, "We cannot do every¬
that instead of thing
of
one
in
economic stability weak¬
and
which
sence
bility of interest rates.
reserves
Powers Needed
fair sta¬
a
Federal Reserve
Additional
banking facilities in good
times and bad and also
them.
No
of the Federal
purpose.
Later
Senator Aldrich called the sys¬
erally means an extra supply of
something kept idle for the pur¬
high pose of being immediately avail¬
objects of this new law was
make banking less hazardous,
b3te^»make
emer.?
exemptions from,
presenty exempted state and local
securities, consideration for ii*~
ment."
legal form existing usages already
recognized by actual experience
as
sound
both in principle and
competition
paying
Under
it is
Com¬
to
tion to say there is
ing
fiscal
need for it arrives."
to many vicious
as
abroad.
circumstances
there
and
deterent
following year,. financial
stability of our free en¬
1916, Governor Harding of the
terprise system."
Federal Reserve Board, in his ad¬
We are being told today that
dress, said this:
our
budget cannot be balanced
"The Federal Reserve Board is
embodied
active
for
no -
the
of
fifty years, there
had been developed a system of names, and this is significant be¬
cause the adoption of the prin¬
depositing reserves of smaller
banks with other and larger ciple of co-operative reserves is
the characteristic feature of each
banks. This had led not only to
of these plans.
serious
duplication
of
reserves
which rapidly evaporated in times
of stress but in addition to this,
home
at
be
munism
is
Bank
Reserve
In
disappear
would
Delano added:
Mr.
!
;
full
the
"The rediscounting of commer¬
cial paper of member banks by
the
Restatement of Federal Reserve
;
for
notes
Reserve
amount."
banking structure
mobilized
the
wisdom
suggested the possible*
removal of tax
*
for
currency
the market to soften the impact of
"The
also
our.
w
September, 1939. and the
He
continu¬
The 'orderly cial facilities or favors.
Banks demand in excess of normal re¬
market' language was first used kept reciprocal balances with each quirements."
publicly in the Spring of 1937 other and by a system which
It would seem from these ex¬
when
reserve
requirement in¬ might be likened to the time hon¬ cerpts that the primary purposes
the past few days expressed him¬
creases, invoked to cut down ex¬ ored plan
of 'you tickle me, I of the Reserve System were clear¬ self clearly and convincingly in
cess
reserves,
threw the TSbnd tickle you', they got ahead, at
ly
and completely
understood. answering a question posed to him
market into turmoil. The Federate ^east on
paper.
However, these And at this point I again com¬ by Chairman Maybank of the Sen¬
Reserve entered the market ed
aftethods
were
not
conducive mend to you Dr. Burgess' discus¬ ate Banking Committee. Chair¬
with $200 million purchases 3?
ther to safe banking or to low sion of the proper scope of Fed¬ man Thomas B. McCabe was
long-term governments, restore'
and stable interest rates for the eral Reserve operations.
asked to express his views as to
order.
They again intervened wf^ublic>
Hence it was that one of
what should be done to improve
in
changes in.
some
He said among other things:
ability to help out
"To realize our potential sus¬
ber banks to bring around their in the survival of representative
tained expansion, we need to be
trol credit..
The two things are commercial paper and, provided it
governments: abroad, hinges on the
concerned with assuring a steady
incompatible."
complies with the not onerous solvency of this country and the
and adequate flow of savings inte
The same authority points out provisions of the law and rules of soundness of its fiscal policy. Re¬
equity ownership."
that the primary purpose of the the Federal Reserve Board, you cently Senator Byrd said:
It seems to me that such a state¬
Federal Reserve System was to are given a credit on the books of
"Without
American
solvency
ment coming from the Chairman
the bank or, at your option, Fed¬ our Constitutional
provide an elastic
consists in allowing
possessing concern.
of Pearl Harbor in December, 1941.
and
in
The survival of our way of
most
lowances,
the capital gains tax provisional.
;
monetary management would
be
and
tem in effect for
objective of 'maintaining
best
available to the fullest extent. Tne
F. A. De¬
lano, Vice-Governor of the Fed¬
with "primary regard to the gen¬
eral Reserve Board, I found the
eral business and. credit situa¬
following:
tion."
serve
they are at once
'
yet it would seem that the
and
operation, simple enough to most
budget deficit. As a mat¬
fact, the President recently
a
in time of need
a
central bank¬
a
a
folly" to try for
unavailable!
being
reserves
things
cure
Monetary management occupies
field of tremendous importance
ing system devotes itself to con¬
trolling government security
prices it reduces its power to con¬
stated that it would be "economic
©f
England, Sweden and else¬
these
to
expect
bank controls.'"
as
rapid depreciation al¬
housing
was
1949 to July,
the only component
which registered an
0.4%).
house
increase (ujr
Decreases were
furnishing
noted
(down;
i*
l.i%);?
clothing (down 0.7%); food (down
0.6%);
and
fuel, including elee»
tricity and gas (down 0.1%). Sus*»
dries remained
unchanged....
i
34
THE1 COMMERCIAL
(970)
&
FINANCIAL
CHRONICLE
;
^
Thursday, September 8, 1949
-
—
securities
•
•
American Gas & Electric
Sept.
7 filed
Offering—To
shares
498,081
be
olfered
stockholders at rate of
one
($10 pay) common stock.
lor
subscription by present
new share tor each nine held.
Underwriter—Competitive
INDICATES ADDITIONS
March
30
ment.
& Co.
York.
be
(jointly). Tne shares will fiist be offered about
for subscription by company's stockholders, in
the ratio of
one
share for each nine held.
new
Mining Co., Tonopah, Nev.
(letter of notification) 1,500,000 shares (50
par) common stock. Price—200 per share. Underwriter
1948
of company and to exercise option to purchase processing
and move and erect such mill on the company's
mill
property and for working capital.
Canam Mining Corp., Ltd., Vancouver, B. C.
Aug. 29 filed l,00u,000 snaies ot no par value common
stock. Price—800,000 shares to be offered publicly at 80
cents per share; the remainder are registered as "bonus
Co., New York, N. Y.
Proceeds—To develop mineral resources.
•
Capital Reserve Corp., Washington, D. C.
r
Aug. 30 (letter of notification) 2,o00 shares of 5% cumu¬
lative preferred stock ($10 par) and 2,500 shares (100
par) common stock, together with rights to buy an addi¬
tional 2,500 shares of common at $1 a share within two
years from Sept. 5, 1949.
Securities are to be offered
in
a
units of
10 shares
warrant
for
$101
to
buy
unit.
per
"Potomac plan"
an
of
preferred, 10 of common and
additional 10 shares of common
No underwriter.
To operate
of periodic payment trusts.
the
Carnegie Mines Ltd'., Montreal, Canada
April 27 filed 500,000 shares of common. Price—60 cents
per share.
Underwriters — Name by amendment. Pro¬
ceeds
—
For working
capital, exploration, development
and other purposes.
Carolina Power & Light Co.
(9/20)
'
Aug. 23 filed 30,000 shares of $5 preferred stock (no
par value) and 200,000 shares of common stock (no par
value). Offering — Terms to be filed by amendment.
Underwriters—Merrill Lynch, Pierce, Fenner & Beane,
R. S. Dickson & Co., Inc., Charlotte,
N. C. Proceeds—For construction.
Coca-Cola Co.,
Aug.
New York
notification)
31 .(letter of
822 shares (no par)
common stock, to be issued to 52 stockholders of La Salle
Coca
Cola
ratio
of
Bottling Co. in exchange for their stock in
Coca-Cola
one
share
for
each
2.028
$1
share for invest¬
per
Underwriter—William
Proceeds—To
Emerson
L. Burton & Co., New
develop mining properties.
Tem¬
shares
of
La Salle.
Radio
&
'
Gas Service Co., Kansas City, Mo.
(9/19)
Aug. 12 filed $18,000,000 25-year first mortgage bonds
due 1974.
Underwriters—Competitive bidding.
Prob-;
able bidders: Halsey, Stuart & Co.
Inc.; Union Securities
Corp. and Harriman Ripley & Co. (jointly); Merrill
Lynch, Pierce, Fenner & Beane and White, Weld & Co.
(jointly); Blyth & Co., Inc. and Kidder, Peabody & Co.
(jointly); Lehman Brothers and Stone & Webster Se¬
curities Corp. (jointly); First Boston
Corp. Proceeds—To
be used to repay $13,800,000 of 2V2% to 3%
notes, due
1950-56, and $1,000,000 of 2% notes due 1950, and the
balance for the company's construction program.
Gulf Atlantic
Transportation Co.. Jacksonville.
Florida
Offering—135,000 shares of
common
will be offered for
stibsfcription <by holders on the basis of one-for-two at
25 cents per share. Underwriters—Names
by amendment,
and may include John J.
Bergen & Co. and A. M. Kidder
Colombia (Republic of)
Aug. 15 filed $40,824,720 30-year 3% sinking fund bonds,
dated July 1, 1948 and due
July 1, 1978, to be issued as
follows: $14,833,920 by the Department of
Antioquia;
$5,534,400 by the Department of Caldas; $5,928,000 by
the
Co.
shares
Underwriters
plus
will
unsubscribed
buy
shares
the
of
remaining
the
new
135,000
Offering price of class A $5. Proceeds—To complete
ocean ferry, to finance dock and terminal
facilities,
to pay current
obligations, and to provide working
an
capital.
Hartford Electric Light Co. (9/13)
Aug. 25 filed 160,000 shares of cumulative preferred stock
(par $50). Price—By amendment. Underwriter—Putnam
issued in amounts equal to 120% of the
amendment.
principal
and
interest)
made instead of
Trust
Co.
York
agent
of
cash
adjustments
issuing fractional bonds.
New
for
with
principal amount
(in settlement of unpaid
York
the
has
new
been
bonds
named
which
to
be
The Schroder
as
will
the
New
bear
the
guarantee of the Republic.
The outstanding bonds (with
unpaid coupons) affected follow: Antioquia 7s,
July 1,
due 1945; Antioquia
7s, due Oct. 1, 1957; Caldas 7V2s,
due Jan. 1, 1946; Cundinamarca
6V2S, due Nov. 1, 1959;
Santander 7s, due Oct.
1, 1948; Tolima 7s, due Nov. 1,
1947; Valle del Cauca 7%s,^ due Oct. 1, 1946; Valle del
Cauca 7s, due June
1, 1948; Cali 7s, due May 1, 1947;
Medellin 7s, due Dec.
1, 1951; and Medellin 6V2s, due
Dec. 1, 1954.
Sinking funds are to be created for each
issue of
new
bonds.
The offer is made
tiations
Inc.
with Foreign Bondholders'
Underwriters—None.
following
Protective
nego¬
Council,
•
Colorado Oil & Gas Co.,
Alamosa, Colo.
Aug. 30 (letter of notification) 250,000 shares
($1 par)
common
stock, of which 200,000 will be sold for com¬
pany and 50,000 shares for N. O.
stockholder, at $1 each.
Yeakley,
a
controlling
Underwriter—W. C. Hitchman
&
Co.,
Hartford,
Conn.,
and
others
to
be
named
by
Haskelite Manufacturing Corp./ Grand Rapids/
Michigan
Aug. 25 (letter of notification) 1,000 shares of $5 par
value common Stock.
Price—$2.62% per share.
Under¬
writer—F. S. Yantis & Co., Inc., Chicago.
Proceeds—
To go to James T.
Wilson, the selling stockholder.
',
•
Hawaiian Electric Co., Ltd., Honolulu
June 21 filed 150,000 shares of series E cumulative
($20
par) preferred and 50,000 shares of ($20 par) common.
Offering—Preferred will be offered to preferred holders
at l-for-3 rate and
common
will be offered to
common
stockholders at l-for-9 rate.
& Co. Inc. and Dean
Underwriters—Dillon, Read
Witter & Co. will buy unsubscribed
preferred; unsubscribed
common
will
be sold either at
public auction or to the underwriters. Proceeds—To
pay
off short-term
promissory notes and to carry merchan¬
dise inventories and receivables or to
replenish treasury
funds. The tplance would be used for other
corporate
purposes
or
Price—$98.50
pre¬
per
working capital.
Office, 806 Simmons National Building,
■ ;
-/
"v/
No underwriter.
To pay $218,000 for all the assets of Larkin Lectro Prod¬
ucts Corp. (N. Y.j and the remainder will be used for
Pine Bluff, Ark.
Lexa Oil Corp., Denver, Colo.
(9/12-16)
Aug. 19 (letter of notification) 1,200,000 shares (par one^
cent). Price—25 cents per share. Underwriter—Tellier
& Co., New York, N. Y.
Proceeds—For drilling wells
for
and
working capital,
v/a;,/!
•
Libbey-Owens-Ford Glass Co., Toledo, Ohio
Aug. 29 (letter of notification) 3,734 shares of series D
common stock.
Price, $26.25. To be sold under options
issued to 282 employees.
No underwriters.
For general
corporate purposes.
Liberty Loan Corp. (9/21)
Aug. 31 filed 100,000 shares of cumulative convertible
preferred stock.
Price—At not more than $15 per share.
Underwriter—Riter & Co., New York. Price—By amend¬
ment. Proceeds—For general funds and
working
well
•
reduction of
as
Lone
outstanding bank loans.
Star
Brewing Co., San Antonio, Texas
shares ($1 par) common stock
owned by the George Muehlebach Brewing Co. of Kan¬
sas City, Mo.
Offering—Of the total, 45,000 shares will
Sept.
filed
2
213,000
be sold to officers and directors of Lone
share
a
the
and
remainder
will
be
Star at $9.66%
offered
publicly at
Underwriters—Russ & Co.; Dewar, Robertson &
Pancoast; Dittmar & Co. and Rauscher, Pierce & Co.,
$11.25.
San Antonio.
Louisville Gas & Electric Co.
(Ky.)
(9/12)
Aug. 4 filed 250,000 shares (no par) common stock, to be
sold by Standard Gas & Electric Co.
Underwriters—
Names
to
be
determined
through competitive bidding.
Lynch, Pierce, Fenner &
Beane, Union Securities Corp. and White, Weld & Co.
(jointly); Lehman Brothers and Blyth & Co., Inc.
(jointly); Otis & Co.; Glore, Forgan & Co. and W. C
Langley & Co. (jointly).
Proceeds—To
be
applied
toward Standard's corporate indebtedness.
Bids—Bids
Probable
bidders:
for purchase of
Merrill
the stock will be received by Standard
Gas & Electric Co., at Room 1338, 15 Broad Street, New
York,
to
up
(EDT) Sept. 12.
noon
MacFarlane's
July
18
(letter
stock.
common
Candies, Oakland, Calif.
notification) 9,545 shares ($1 par)
Price—$9 per share. Underwriter—Ste¬
of
ital.
SEC held hearing June 6 to determine whether
slop order should be issued suspending the effective¬
ness of the registration statement.
\
* r..r
a
National Exhibitors Film Corp., N. Y. City
19 filed 100,000 shares of no par value common
Aug.
stock.
Price—at
$100
per
share.
Underwriter—None,
Proceeds—To finance production of motion pictures by
others and to provide materials and talent services.
New England Gas & Electric
Association/
;
Cambridge, Mass.
Aug. 10 filed 124,601 common shares of beneficial inter¬
est ($8 par).
Offering—To be offered present stock¬
holders at rate of
new share for each 10 held, with
oversubscription privilege on a shareOffering price to be filed by amendment.
Underwriter
A dealer-managers'
group
headed
by
Townsend, Dabney & Tyson; A. C. Allyn & Co., Inc.;
Draper, Sears & Co.; F. S. Moseley & Co.; Putnam- &
Co.; Smith, Ramsey & Co.; G. H. Walker & Co.
Pro¬
holders allowed
one
an
for-share basis.
—
ceeds—To
pay
additional
common
$1,125,000 of short-term notes and make
stock investments in subsidiaries.
through competitive Vidding. Probable bidders: Kidder,
Peabody & Co.; Smith, Barney & Co.; W. C. Langley &
Co.; Lehman Brothers.
Proceeds—Will be applied to the
payment of the cost of, or in reimbursement of payments
made
for, construction of additions and betterments sub¬
sequent to April 30, 1949.
Enterprises,
Inc.,
Pittsburgh,
Pa.
June 25 filed 5,000 shares of class B common stock
(pai
$100). Price—$100 per share. Underwriter—None. Pro¬
Sale deferred until later this
New York & Cuba Mail Steamship, New York
;
June 17 filed 190,125 shares of 5.6% cumulative
preferred
ceeds—$600,000 to be used for spectator grandstand and
balance for related purposes.
v
-
,
vX-.-x-Xv:-:-:: v:-:*x vXv:":-:\v:v:v:-x%-::v:*x-:v:-xv£-v"^v:r
.
'
'
'
,
¥
'■
""nil'''11''
Keller
Motors Corp., Huntsville, Ala.
May 10 filed 5,000,000 shares (30 par) common. Under¬
writer—Greenfield, Lax & Co., Inc., New York. Price—
$1 per share. Proceeds — To purchase additional plant
facilities, tools, dies, jigs, etc.; the balance for working
capital.
/
•
Kinter Brothers, Inc.,
Willoughby, Ohio
Aug. 29 (letter of notification) 10,000 shares of 4%%
preferred stock ($10 par). Price, par. No underwriter.
New York
Boston
Philadelphia
Pittsburgh
San Francisco
Private Wires
to
all
offices
Chicago
Cleveland
To
open
new
retail outlets to sell food.
Office, 2 Erie
Street, Willoughby, Ohio.
•
Larkin
■
New Jersey Power & Light Co.
June 9 filed 20,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriters—Names to be determined
year.
construction.
Heidelberg Sports
Maumee Oil Corp., Toledo, Ohio
May 12 filed 8,000 shares (no par) common, of which
only about 2,614 shares will be offered publicly at $100
per share.
No underwriter. For general working cap¬
common.
Department of Cundinamarca; $1,080,000 by the De¬
partment of Tolima; $5,190,600 by the Department of'
Valle del Cauca; $1,491,600
by the Department of Santander; $1,260,600 by the Municipality of Cali, and $5,505,600 by the Municipality of Medellin. They will be
of the bonds to be surrendered
stock.
common
phenson, Leydecker & Co., Oakland, Calif.
May 31 filed 620,000 shares of class A participating ($1
par) stock and 270,000 shares (25c par) common stock.
&
($1 par)
$1 per common share.
as
offering have not yet been determined, but the stock
will not be sold below the market price on the New York
Stock Exchange at the time of the offering. Proceeds—
The shares to be sold are from holdings of Mrs. Benjamin
Abrams, Mrs. Max Abrams and Mrs. Louis Abrams, wives
of principal officers and directors of the
company, and
do not involve new financing by the
company. Following
sale of the shares, the Abrams family will own approxi¬
mately 25% of the company's 800,000 shares of common
stock.
shares
ferred share and
capital;
Phonograph Corp.
June 7 filed 235,000 shares of capital stock. Underwriter
—F. Eberstadt & Co., Inc. The terms and price of the
of New York, and
•
underwriter at
Douglas Oil Co. of California
Aug. 12 (letter of notification) 10,000 shares of common
stock.
Price—$3.30 per share. Proceeds—To Woodrow
G.
Krieger, President (selling stockholder).
Under¬
writer—Shearson, Hammill & Co., Los Angeles.
To repair and renovate mine
and
the
376,250 shares (no par) common stock.
share. An additional 50,000 shares will
Convertible Television, Inc., N. Y. C. (9/12-16)
Aug. 19 (letter of notification) 300,000 share of common
stock (par 10 cents). Price—$1 per share. Underwriter
—George J. Martin Co., New York City. Proceeds—To
pay debt, for additional equipment, etc. and for working
capital.
Bradshaw
shares." Underwriter—Israel
sold to
per
Inc.
porarily postponed.
funds, to be invested in subsidiary oper¬
ating companies, including Appalachian Electric Co.
Expected about Oct. 6.
—catkin & Co., New
ISSUE
Proceeds
—For general
Oct. 8,
filed
Price—$2.50
Securities Corp.; the Firs* Boston Corp.; Dillon,
Read & Co. Inc.; Blyth & Co., Inc. and Goldman, Sachs
1
PREVIOUS
SINCE
Consolidated Caribou Silver Mines,
Union
Oct.
Registration
.
bidders:
Probable
bidding.
in
Co., New York. To lease properties, drill wells, and for
working capital.
^
(10/6)
Co.
Now
Lectro Products Corp./'Piite
Bluff, Ark.
Aug. 29 (letter of notification) 2,994 shares of $5 cumula¬
tive non-convertible preferred stock
($50 par) and 4,494
z<-/4
BROKERS
DEALERS
UNDERWRITERS
L.
-
/
~
...
<.""
wn}
Volume
Number 4836
170
<:^ ,THEf COMMERCIAL
working
&
FINANCIAL
in connection with the
capital
CHRONICLE
company's air
cruise service.
NEW ISSUE CALENDAR
September 8,
1949
Chicago Rock Island & Pacific RR.,
Noon (CDT)
Equip. Trust Ctfs.
Rochester Gas & Electric Corp.__.
September 12,
Television, Inc
Convertible
...^..Common
Common
Denver, Colo.
July 27 (letter of notification) 20,000 shares of capital
stock to be offered by Edward G. O'Brien and 20,000 by
Eugene J. Nord. Price—$1.10 each. Underwriter—E. W.
& R. C. Miller & Co., Philadelphia.
14, 1949
Indiana Harbor Belt RR., Noon (EDT)_Eq. Tr. Ctfs.
Van camp Sea Food Co., Inc
Common
September 19,
•
Southern
Insurance, Inc., Atlanta, Ga.
(letter of notification) 30,000 shares ($10 par)
stock.
Price, par. No underwriter.
To pur¬
chase from Southern Life Insurance Co. 15,060 shares
1949
Aug. 29
Bonds
common
September 20, 1949
Carolina Power & Light Co
Resort Airlines, Inc.__
...Preferred
___
West
Penn
Electric
Co.____
September 21,
Liberty Loan Corp
Central
York
stock.
____Bonds
•
1949
'
Equip. Trust Ctfs.
6, 1949
Farnham
Fund,
shares ($25
/
'77-'
'
77".
7-7:7' 7■ ' ';;
_____Bonds
11, 1949
Light Co
Bonds
•
Tennessee
Transmission
Gas
Atlantic
Underwriters—Stone
in cash.
mulative
New York Telecofn :Corp«, N. Y. City
Aug. 26 (letter of notification)
Price—At par (5£) to
ers of record Sept. 1, 1949, on
basis.
Rights expire Sept.
be
Proceeds—To
added
to
30.
capital.
working
Office—12
•
North
American
will
transfer
12,844 class A shares of the accept-*
corporation to North American Discount Corp. and
a loan of $19,000 to the discount corporation in
retirement of outstanding preferred and common stock
ance
cancel
of North Finance
Co.
whicfy is owned by the Discount
Corporation.
The latter will offer to its preferred hold¬
ers two shares of class A stock of the Acceptance Corp..
for each share of preferred stock of the Discount Cor¬
poration. '
Oklahoma Gas & Electric Co.
(9/12)
Aug. 4 filed 200,000 shares ($20 par) common stock, to
be sold by Standard Gas & Electric Co. Underwriters—
Names
be
to
determined
through competitive bidding.
Lynch, Pierce, Fenner &
Corp. (jointly); Lehman
Brothers and Blyth & Co., Inc.; Otis & Co.; Smith, Barnew & Co.
Proceeds—To be applied toward Standard's
corporate indebtedness. Bids—Bids for purchase of the
Probable
Beane
Merrill
bidders:
The
and
First
Boston
will be received by
stock
at Room
Standard Gas & Electric Co.,
1338, 15 Broad Street, New York, up to noon
Sept. 12.,
(EDT)
Pacific
'
-
Telephone & Telegraph Co., San Fran♦
Sept. 2 filed 828,920 shares
to
sold
be
stockholders
to
,
($100 par)
at
par.
common
stock
Underwriter^Mbne.
Proceeds—To be used to pay indebtedness incurred by
the
company's construction
program.
Palestine Cotton Mills,
Ltd., Tel Aviv, Israel
ordinary (common) shares, one
(Israeli) pound par value. Underwriter—The First Guar¬
dian Securities Corp., New York. Price—$5 each. Pro¬
ceeds—To expand weaving facilities.
June
filed
29
Power
300,000
Petroleum
Ltd.,
Toronto Canada
April 25 filed 1,150,000 shares ($1 par)
1,000,000
on
Price—50
Ltd.
Co.,
behalf of
common of which
and 150,000 by New York
per share.
Underwriters—
company
cents
S. G. Cranwell & Co., New York.
istration
expenses
June 27.
7,
-'7
and
Proceeds—For admin¬
drilling.
Statement effective
'7
'•
■
'
7'-' '■
Renaissance Films Distribution, Inc.,
.77
V
Oct.
77
filed
40,000
shares
$25)
convertible class B preferred stock and
5%
cumulative
10,000 shares of
Underwriting—None. Offering—Class
preferred will be offered at $25 per share with one
share of class C given as a bonus with each 4 shares of
class B purchased.
Proceeds—To pay balance of current
B
liabilities and working capital.
27
common
pany
Airlines, Inc.
(9/20-23)
(letter of notification) 54,000 shares ($1 par)
stock, of which 50,000 shares offered by com¬
and 4,000 shares by George B. Wilkinson, Charlotte,
Underwriter—Marx & Co., INew York.
Price—
N.
C.
$5
per
share.
.
To be used for equipment and additional
Consolidated
Electric
&
Gas
Co.
and
Middle
West
Corp. will sell 120,000 shares and 34,000 shares, re¬
spectively.
,
Utah Power & Light Co.
(9/13)
July 28 filed 148,155 shares of common stock (no par).
Offering—To be offered for subscription by stockholders
of record Sept. 13 at rate of one new for each eight
Unsubscribed shares will be sold at compe¬
titive bidding.
Rights will expire Oct. 5.- Probable bid¬
Harriman, Ripley & Co.; W. C. Langley & Co., and
Glore, Forgan & Co. (jointly); Kidder, Peabody & Co.
and Merrill Lynch, Pierce, Fenner & Beane (jointly);
Blyth & Co., Inc. Proceeds—For construction purposes.
ders:
Bids—Bids for unsubscribed
shares will be received
by
the company
to
noon
at Room 2033, 2 Rector Street, New York,
(EDT) Sept. 13.
Utah Power & Light Co. (10/10)
July 28 filed $5,000,000 first mortgage bonds, due 1979.
Probable
bidders:
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Salo¬
mon
Bros.
&
Hutzler; Lehman Brothers and Bear,
Stearns & Co, (jointly); Kidder, Peabody & Co.; Equi¬
table Securities Corp.; Union Securities Corp. and Smith,
Barney & Co. (jointly); Carl M. Loeb, Rhodes & Co., and
E. H. Rollins & Sons (jointly). Proceeds—For construc¬
tion purposes.
Expected about Oct. 10.
Underwriters—Competitive
bidding.
Van Camp Sea Food Co., Inc. (9/14)
Aug. 22 filed 125,000 shares of common stock (par $2).
Offering—Of the total, 25,000 shares are to be sold by
the company to stockholders at the rate of one new share
for each 16 now held, and 100,000 shares are to be offerrea by five stockholders.
Underwriters—White, Weld
&
Co., New York, and William R. Staats Co., Los An¬
geles.
Proceeds—From sale by company to be added to
general funds. Expected Sept. 14.
West
Penn
stock
not
offered
pre¬
under
the
11,975 shares ($10 par) common stock.
Underwriter—To be named by amend¬
Proceeds—To
ment.
qualify the
to sell life In¬
company
in any state.
Western
Arkansas Telephone Co.,
Russellville, Ark.
(letter of notification) 1,000 shares of 6% cu¬
non-participating preferred stock (par $100
share). Underwriter—Lewis W. Cherry Co., Little
Aug. 16
Electric Co.
per
Rock, Ark. Proceeds—To
ment and supplies.
indebtedness for equip¬
pay
Western Oil Fields, Inc., Denver, Colo.
May 19 (letter of notification) 800,000 shares of common
capital.
Price, 250 per share.
Underwriter—John G.
Public
Wisconsin
For working capital and
Colo.
Perry & Co.,, Denver,
drilling of wells.
Service
Corp.
(9/20)
Aug. 19 filed $4,000,000 first mortgage bonds, series due
1, 1979. Underwriters—Names to be determined
competitive
bidding.
Probable
bidders: Halsey,
Stuart & Co. Inc.; The First Boston Corp.; Blyth & Co.,
Sept.
by
Inc., and Wisconsin Co. (jointly); Union Securities
Corp.; Goldman, Sachs & Co. and Salomon Bros. &
(jointly); Glore, Forgan & Co. and Central Re¬
public Co. (jointly); Shields & Co.; Kidder, Peabody
& Co.; Harris, Hall & Co. (Inc.); Harriman Ripley &
Co., Inc. and White, Weld & .Co. (jointly); Merrill
Lynch, Pierce, Fenner & Beane. Proceeds—To repay
bank loans and for construction.
Bids—Bids for pur¬
chase of the bonds will be received by company at
1100, 231 So. La Salle Street, Chicago, 111., some
Room
time in September.
7 77^777-77.7.\
Prospective Offerings
Arkansas Power
&
Light Co.
(10/11)
Sept. 6 reported company plans sale of about $8,700,000
bonds- in the near future.
Probable bidders:
Halsey,
Inc.; The First Boston Corp.; White, Weld
Stuart & Co.
Lehman Brothers and Stone & Webster Securities
Corp. (jointly); Equitable Securities Corp. and Central
Republic Co. (jointly); Union Securities Corp. Expected
about Oct. 11.
7
& Co.;
•
Central
Maine
Power Co.
Sept. 6 reported company expects to raise construction
funds this Fall through sale of additional common stock.
are that the number of shares to be in¬
the offering will range between 150,000 and
Probable underwriters: The First Boston Corp.;
Blyth & Co. Inc. and Kidder, Peabody & Co. (jointly);,
Harriman, Ripley & Co.
volved in
Underwriters—SEC has granted exemption from com¬
petitive bidding.
An investment banking group man¬
aged by Kidder, Peabody & Co.; Merrill Lynch, Pierce,
Fenner & Beane, and Paine, Webber, Jackson & Curtis,
may be underwriters. Proceeds—Will go to selling stock¬
shares held.
A
Expectations
Upper Peninsula Power Co.
(9/20)
300,000.
•
Central
Power &. Light Co.
•
Sept. 2 announced that some form of permanent
ing
to
was
financ¬
planned this year by company to raise money
short-term borrowings of $2,500,000 as of
Probable underwriters: Glo e, Forgan & Co.;
refund
June
30.
Lehman
Brothers
and Dewar, Robertson
& Pancoast.
Central & South West Corp.
Aug. 31, John S. Osborne, President, said: "If market
conditions are favorable, this corporation is planning to
make an offering ^f common stock to its stockholders
prior to the end of the year, on the basis of not more
one share for each ten shares presently outstand¬
than
The net proceeds will be invested in the equity
subsidiary operating companies for the
ing."
of certain of the
purpose of furnishing additional funds to meet future
construction requirements.
Probable bidders: Lehman
Brothers
Lazard
and
Freres
&
Co.
(jointly); Blyth &
Co.; Smith, Barney & Co. and Harriman
Ripley & Co.
(jointly); Carl M. Loeb, Rhoades & Co.
Rock Island & Pacific RR. (9/8)
will receive bids up to noon (CDT) on
Sept. 8, Room 1136, La Salle Street Station, Chicago, 111.,
for the purchase from it of $3,552,000 equipment trust
certificates, series F, to be dated Oct. 1, 1949, and
mature in 24 equal semi-annual instalments of $148,000
each, beginning April 1, 1950, and ending Oct. 1, 1961.
Probable bidders:
Halsey, Stuart & Cot Inc.; Salomon
Bros. & Hutzler; Harris, Hall & Co. (Inc.); Harriman
Ripley & Co. and Lehman Brothers (jointly).
Chicago,
The
company
El
Natural Gas Co.
Paso
12 stockholders will vote on authorizing a rew
issue of 200,000 shares of second preferred stock (no par)
issuable in .series.
Of this total, 65,000 shares will be
Sept.
issued
as
$4.25 convertible
second preferred stock.
Of
these, 50,000 will be offered to holders of $5,000,000 of the
company's convertible debentures. The remaining 15,000
shares would be sold for about $100 a share. Traditional
underwriters:
White, Weld & Co. and Stone & Webster
Securities Corp.
Gulf
States
Utilities
Co.
bonds, due 1974, and 856,895 shares of no par value com¬
mon
stock. Underwriters—Bonds to be offered under
Aug. 23 reported company may issue within the next few
months $10,000,000 "new money" first mortgage bonds
competitive bidding; 468,621 shares to be offered present
common stockholders at the rate of one new share for
(instead of between $6,000,000 and $7,000,000 previously
reported). Probable bidders: Halsey, Stuart & Co. Inc.;
Salomon Bros. & Hutzler and Union Securities Corp.
each five held, and
offered
be
in
the remainder (388,274 shares) will
for outstanding 6% and 7%
exchange
stocks and class A stock, on terms
in an amendment. Stock exempted from
competitive bidding and any unsubscribed shares will
be underwritten.
Probable bidders for bonds:
Hal¬
cumulative preferred
to
Resort
cu¬
common
Sept. 28 filed 154,000 shares of "common sto6k(par; $9);
holders.
filed
30
Price—$40 each.
Aug. 25 filed $31,000,000 of sinking fund collateral trust
(par
C stock (no par).
July
into
July 27 (letter of notification) 270,000 shares of common
stock. Price—$1 each. Underwriter—Edward W. Ackley
& Co., Boston. For development of mining properties.
7
Montreal, Que.
29
(convertible
Sqpt. 12.
up
cisco
;
stock
United Minerals Reserve Corp., Chicago
Acceptance Corp.
Sept. 2 (letter of notification) 12,844 shares of class A
stock (par $1). To be issued to North Finance Co. in
cancellation of loan of $12,844 for latter. North Finance
Co.
preferred
on or before Aug. 1, 1959). Price
($5- per share). Underwriter—Graham & Co.,
Pittsburgh, Pa., and New York. Purpose—To pay bank
loans, etc., and for additional working capital. Expected
East 44th Street, New York, N. Y.
Co., and to redeem outstanding
class
Western American Life Insurance Co., Reno
•
—At par
rata share-for-share
Underwriter—None.
buy 583,999> 23/25
exchange.
Proceeds—To be added
stock, share for share,
1,100,000 shares of class B
Telecoin Corp. stockhold¬
a pro
&
Trion, Inc., McKees Rocks, Pa.
Aug. 19 (letter of notification) 40,000 shares of 5%
No underwriting.
stock.
cumulative pre¬
shares ($5 par) common stock.
Webster Securities Corp. and
White, Weld & Co., New York.
to general funds for expansion.
share for three shares of Cuba Mail pre¬
ferred plus $25
Co.
100,000 shares ($100 par)
ferred stock and 400,000
($25 par) stock, which Atlantic Gulf and West Indies
Steamship Lines is offering in exchange for its own
preferred (5% non-cumulative $100 par) at the rate of
to
stock of Monongahela Power Co. from
Hutzler
:
June 7 filed 375,000
Sept. 1 filed
one
Inc., Chicago
par)
capital stock.
per
Utah Power & Light Co
Arkansas Power &
&
Ltd., Toronto, Canadashares of common stock. Price—$1^
share (U. S. funds). Underwriting—None. Proceeds
—Funds will be apolied to the purchase of equipment,
road construction, exploration and development.
Common
10, 1949
October
Roe
Sudore Gold Mines
American Gas & Electric Co
October
Office, 1197 Peachtree Street, N. E., Atlanta, Ga.
Stein
pany.
October
purchase from others 100 shares of the same
Sept. 6 filed 77,900
Business—Open-end management type investment com-
Preferred
RR
stock of Southern Fire & Marine Insurance
common
Co. and to
__.Bonds
Wisconsin Public Service Corp._,
New
of
Common
and
105%;
at
35
mulative
Silver Bell Mines Co.,
September
Co
Co., and in other subsidiaries, and to
retire bank loans.
13, 1949
Hartford Electric Light Co
..Preferred
Utah Power & Light Co., Noon (EDT)___Common
Service
Corp., Wertheim
Associated Electric
September
Gas
one
2030,
Power
stocks
surance
of
rate
at
due
common
Penn
March
8
& Co., Lehman Brothers, and<
Merrill Lynch, Pierce, Fenner & Beane. Proceeds—GPU
will increase its capital investment in its subsidiary,
Louisville Gas & Elec. Co., Noon (EDT)__Common
Oklahoma Gas & Elec. Co., Noon (EDT)__Common
1
West
ferred
Boston
Common
_
835,000
Rochester Gas share for eacht
10 shares of GPU stock held.
Rights expire Sept. 30.
Price—By amendment.
Dealer
Managers—The First
Sept.
1949
Oil Corp
Lexa
(N.. Y.)
Gas & Electric Corp. (9/8)
shares of no par value common
stock.
Offering—Offered by parent, General Public
Utilities Corp. to GPU common stockholders of record-
— *
debentures,
shares of
Rochester
Aug.. 15 filed
(971)
be supplied
sey,
Stuart & Co. Inc.; The First Boston Corp. and W. C.
Langley & Co. (jointly); Lehman Brothers and Goldman,
(jointly). Public offering expected around
20. Proceeds—To redeem $5,000,000 of 5% gold
Sachs & Co.
Sept.
(jointly); Lehman Brothers; Merrill Lynch, Pierce, Fen¬
& Beane; Kidder, Peabody & Co. and White Weld &
Co.
(jointly); Stone & Webster Securities Corp.; First
Boston Corp.
ner
Indiana
Harbor
The company will
Belt
(9/14)
RR.
receive bids
up
tember 14 at its New York office
(Continued
on
to noon (EDT) on Sep¬
(466 Lexington Ave.)
page
36)
36
THE
(972)
■
(Continued" from
35)
page
c°.
of 1949. to
able bidders: Halsey,
Hutzler; Harris, Hall & Co. (Inc.); Harriman, Ripley &
/
Co., and Lehman Brothers (jointly);
Indianapolis Power & Light Co.
July 23 reported company may be in market in Sep¬
tember with a $32,000,000 bond issue, the proceeds to
Lynch, Pierce, Fenner & Beane; Smith, Barney
Co.
&
Electric
&
Gas
Iowa-Illinois
Aug. 8 reported company may be in market in Septemwith $10,000,000 bonds.
Probable bidders:
&
Power
Iowa
-
& Co.
Light Co.
company
Gas Service
That
bids
it
York
is
it
Pacific
earliest
before
things be¬
gin to pickup in the investment
underwriting field. Things appear
■destined
to
the
drums
the
this
of
rest
it
though
in
remain
dol¬
week, al¬
indicated
was
that
bapkers would begin seeking sub¬
scriptions ■ from shareholders of
General Public Utilities
Corp., to¬
of 2%%
will
be
be
wages
banking
1937
to
of
report
Policy
used
by the
$13,800,000
liquidate
of
notes
The balance will
for
funds
to
2%
construc¬
Week
Operations
for
holding
companies to conform with pro¬
visions of the Public Utility Hold¬
company,
of
GPU,
parent
one
share
for
each
of
ten
their
held, the rights expiring onSept. 30 next.
own
M
But aside from
small
of
vival
sions.
to
municipals
there
fact
the
On
instances
seller
the
Monday
the
for
shares
250,000
value
par
Gas
firms having
interest
in
same
consensus
of
of
Co.,
the
seller will decide the
suc¬
of
what
develops at the Wash¬
i
ington monetary conference, be¬
substantial
fore
new
emissions
; The days when institutional in¬
vestors,
the
insurance
chiefly
course,
were
a
source
of sizeable business of this
nature
seem
bond men, naturally, bemoan
"new
toese
®bie
big
era"
which
reservoirs
funds
are
selling side
more,
any
particularly
"switches."
•other hand
It
a
finds
invest-
of
seldom
on
the
and
in
on
the
goodly flow of
new
issues to allow them to do little
more
than
In
toward
keep fully invested.
addition
sales
will
to
First of
tive
issues
these
on
several
likely
to
List
prospec¬
reach
the
marketing stage is $18,000,000 of
of
age
mon
Utah
Power
fered
in
no
Light
v
;.
reach
But
to
holders
of
will
148,155
to be of¬
record
one
new
Sept.
share
eight shares held to
funds for
new
midweek
Hartford
Electric Light Co. is expected to
offer 160,000 shares of
par
preferred
stock
new
to
$50
secure
funds for its needs through 1951.
Stockholders last week author¬
300,000 shares of the pre¬
ferred, but the management has
no
immediate
maining
time.
plans
140,000
.
...
County (Pa.) Gas Co.
Sept. 6 Pennsylvania Gas & Electric Co. (parent) filed
a
proposal with the SEC to sell its entire interest in
and sell $400,000 of 3%% first
mortgage bonds,
1979, to the Travelers Insurance Co. and to sell an
additional 6,000 newly authorized
($20 par) common
shares to its
..
,
•,
•;
for
shares
the
13,
same
the
and
on
the
5.5%)
and
worth
net
fell
in
common
foul.
a
to
rising
dollars.
table
The
worth
in
understated
was
profits
And
in
Mr.
proves
percentage
bottom
a
in
again
rose
rose
of
gently
1934
to
and
normal
until
1945
controlled and
were
after
a
price
decontrol,
peak in the second half
when
commodity
reached their peak
prices
and declining
since along with the decline
of
commodity prices.
But
the
of profits to sales was
fairly constant from 1940 to 1949,
percent
unrelated
and
not
to
commodity
Nathan
Mr.
quackery, and in sports
re¬
at .this
the
its
developed
rules
of
are
not confirmed by any
wages
Thus
presents
table
a
young
His absurd conclusions
of
or
profits
no
as
other
and
profits
of
sales.
increase is justified.
comparisons of
wage
in
com¬
wages,
percent of
percent
a
Similarly,
stockholders at $50
a
share.
his
1948
and
1946
in
the
tries
is
both
ingless.
Mr.
unsound
Nathan
the
and
mean¬
have
could
opposite
if
results
picked the early stage of
the boom when the consumers in¬
dustries
already prosperous
and the steel industry lagged in
were
.its rise.
Mr.
•///'•'.•
„
Nathan
might
well
ing throttled by powerful unions.
H. E. Jones, Executive Secretary
of
the
Bureau
of
Information
Eastern
Railways, wrote a report
Wages and Labor Relations in
on
the Railroad Industry.
how
slight
demands
ment
in
to
the
Mr.
moderation
have
would
stockholder
He showed
sufficient
retain
an
in
wage
given
the
parallel columns
(b)
profits
worth and (c) profits on
he could himself have ex¬
net
on
of
that
declining
Mr. Nathan
material
raw
prices
low,
finished
goods
prices stay high and profit mar¬
gin remain unchanged.
This is
academic
tom-foolery.
Ask the
will
stay
steel executives
or the
consulting
engineers who reorganized bank¬
rupt-steel plants.
Besides, wage
rates
be
cannot
tied
to
raw
ma¬
terials.
Wage rates are relatively
permanent,
rigid
and
monop¬
olistic. > Raw material prices are
temporary,
to
sensitive
and
flexible and subject
trading, both spots
futures.- A
obviously
ground.
interest
not
wage increase is
justified on this
'
the memorable words of Louis D.
the
to
increase
in
but
produc¬
per annum
only 3% per annum. Because
increased considerably
wages
than
more
his
productivity, the con¬
bill, even though
wages have not increased
foots the
sumer
own
workers'.
justified
No
on
with
wage
the
steel
is
increase
productivity grounds.
(6) Purchasing Power Theory—
Mr.
of
Nathan
the
ture
both
high
avoid
wage
He
because
and
faces
that
on
also
a
both sides
would
profits will be
industry
raise
argues
fence.
wages
were
to
might well ponder
Labor Union in
annual
tivity would be not 5%
past
increase
profits
because
low
fu¬
and the
depression. To
he would
depression
He
argues
that a
increase in the steel indus¬
wages.
try "will help restore prosperity
industry.
Nathan
the
encourage¬
active
Boston
Central*
1905, "It is absdk
try
set in
PLS Price Index
forerunner
assumes
of
lutely essential
(a)
the
business and deficits.
correspondingly
study
the relations of wages and profits
in another industry which is be¬
"Wholesale and Consumers Prices
Index" (Table 20, p. 46).
—BLS
is
steel, industry and in other indus¬
(5) Productivity — Mr. Nathan
tries is likewise statistically un¬
claims that wage rates have not
sound. * Steel always finishes off risen with
productivity. To prove
a boom,
in production, in profits his point he takes as a base 1939,
and in stock prices.
This lag is a depression year, to prove that
used
in
market
forecasting. productivity increased about 45%.
Therefore,
the
comparison
of But wage rates increased 94%
profits in a still-prosperous steel and weekly
earnings 116%. How¬
industry in 1948 with the already ever, if he had taken comparable
declining consumers goods indus¬ years of the same operating rates,
Brandeis
prices.
in¬
collective bargaining has
yet
parison
it
net worth declined from
on
to
1948
net
prices
the
on
Apparently
"proved"
the
own
1940,
of
of
worth
wartime
1941
return
Such method in medicine would
constitute
he had
depreciated
sharply
striking
net
on
as
relation
1930
the
over¬
•
dollars
Nathan's
of
was
percentage
faster
after
profit
worth
sales.'
on
power.
decline
the
rand
have
year
purchasing
net
fell
dollars
any
price
and
the
If he had
by competitive bidding.
About
to
Sales
the
prewar
pro¬
construction.
Any unsubscribed stock would be
sold
Net
practically
(about
dollars in
in
ever
Co.
on
of
(Table
worth
both
obvious.
in
to
par common
the ratio of
for each
vide
&
subscription books
shares of
the
equity securities
or
Bros. & Hutzler.
York
either per ton or as a
net
profits
gradually
aforemen¬
slated
on
ing prices after 1930 the percent^
its
offerings, two other
are
table
again in 1940 (about 4.6%) How¬
ever, during the period of fall¬
7
the
Sales."
1929
of
ized
Gas Service Co. First
in
&
reduction
which
.
were
same
Gas
offering stage next week.
open
yet on
take
may
reported
dash.
first
Economic
his
.
on
beautifully.
~
tioned equity
similar issues
not
interested
requires,
of
Two Other Equities Due '
13
to have passed,
•
while prices
the
proportions.
the
both
Standard
by
indebtedness.
decidedly limited
of
stock
common
from
applied
Electric
V Meanwhile day by day trading
in the seasoned market, particu¬
larly from a point of institutional
business, appears to have sim¬
companies,
par
Proceeds
be
could be expected.
mered down to
$20
his
Percent
a
of
Similarly,
Oklahoma Gas & Electric Co.
appraisal
an
29)
'
of
affording time for
P
than
cessful bidder for 200,000 shares
perhaps
In
figures
See
as
and
profit
probably
pass,
"Profits
Worth
stated
day
same
compared
himself fur¬
ethics.
already indicated
the
on
a
field of
1930s
banking
offering.
cites
rise.
about the
■
seemed to be that several weeks
would
financing,- which
of
being greater than the
increase in hourly earnings by
12 times or 25 times, depending
on
his dates, is sheerest balder¬
prices
rose
And
he
on
fell
he
National
on
profits
no
Electric
&
the
re¬
of
stock
common
number
a
circum¬
if
reached
Diego Gas & Electric Co.
31
vestment
show plainly that the concept of
"net worth" is meaningless when
is
company
is scheduled to open competing
bids
dimen¬
consequential
In
Co.
with
was
suggest immediate
of
both
wilt be standard Gas & Electric
Louisville
that prospec¬
tive operation and a smattering
•little
In
But
than
and
in
crease
consistently below the percentage
of profits on sales. The reason
stocks to market.
of record today have the
right to subscribe for the Roches¬
ter utility's stock in the ratio of
less
1939
profits
sales
Stocks.
utility
by
2)
page
refutation.
a*
Profits
large blocks of operating company
Shareholders
base,
nishes
ing Company Act, will bring two
*
the
has been
due
rose
since
even
wages.
the
opens
Profits
wrong.
to,
stock.
of
issued
be
may
decision
company contemplates sale in near
$8,000,000 bonds.
Probable bidders: Blyth &
Co.; White, Weld & Co. and Shields & Co. (jointly);
The First Boston Corp.; Halsey, Stuart & Co.
Inc.; Mer¬
rill Lynch, Pierce, Fenner &
Beane; Union Securities
Corp.; Lehman Brothers and Bear, Stearns & Co.; Salo¬
1, 1950-Oct.
that Nathan's calculation must be
r >:?
Brisk
prior to March,
Union's Rebuttal In Steel Wage Case
involve
be
year.
added
tion.;
San
(9/21)
(Continued from
in
of
$1,000,000
next
No
loans, the sale of debt
combination of these methods.
a
•
plans issuance about Oct. 17
$7,000,000 additional first mortgage
for
and 3% notes, due 1950-
plus
56,
due
larger amount
a
warrant.
remainder
Aug.
Light Co.
,,
up
day, for 835,000 shares of common
stock of. Rochester Gas & Electric
common
or
company
approximately
not
does
will
to
company
time
some
form of bank
future
instalments from Oct.
bidders:
Power &
Sept. 6 reported
of
larger numbers
to
Proceeds
at
issue
•
groups
aggregations
middle of next week
the
be
shares, but
stances
the
stock
common
Present plans call for the sale of
120,000 common
bidding. Pennsylvania will use the proceeds, with other
cash, to retire debentures. The SEC authorized York to
syndicates.
the
1950.
Hutzler; The First Boston Corp.; Harri¬
Ripley & Co. and Lehman Brothers (jointly).
expected that at least
that
bidding
will
additional
Salomon Bros. &
man
capital and therefore
at
Corp.
Co.
&
this company, consisting of 4,506 shares of
capital stock
(par $20). The stock will be offered at competitive
annual
Probable
running. The offering is of
huge
its
finance
to
Rochester Gas & Electric Corp.
•
RR.
and
Sept. 2 reported that the $33,000,000 construction pro¬
gram planned by corporation in the period
1949-1951
is expected to require $17,000,000 in new
money.
Part
of the new financing will take the form of the sale of
Light Co.
Central
of next week
Tuesday
size
a
-
•
Light Co.
&
notes
Co., Kansas City, 25-
banking
the
precedent,
Weld
outstanding
Halsey, Stuart & Co. Inc.;
1,1964.
financing will be
on
and
six
with
Power
mature in
to
first mortgage bonds.
year
keeping
Securities
White,
retire
Co.; W. C. Langley & Co. and The First Boston Corp.
(jointly); Union Securities Corp., Equitable Securities
Corp. and Salomon Bros. & Hutzler (jointly).
(jointly).
New
year
In
Union
and
to
Halsey, Stuart
Kidder, Peabody &
Company will receive bids up to Sept. 21 for the pur¬
chase from it of $9,120,000 equipment trust certificates
may be in the market this
with $7,500,000 first mortgage bonds and $3,000,0Uij
common stock, the latter to be sold to United Light &
Rys. Co. (parent).
Bidders for bonds may include
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kidder, Peabody & Co.; Lehman Brothers; Blyth & Co.,
Inc.; W. C. Langley & Co., and Union Securities Corp.
(jointly); The First' Boston Corp.; Glore, Forgan & Co.
reported
4
bonds
Aug. 9 reported the company will probably sell a small
issue of bonds later this year. Probable bidders—Halsey,
Stuart & Co. Inc.; First Boston Corp.;
Blyth & Co., Inc.;
Glore, Forgan & Co.; White, Weld & Co., and Shields
Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.; Glore, For¬
gan & Co.; Harris, Hall & Co. (Inc.); Lehman Brothers;
Harriman Ripley & Co., Union Securities Corp.; and
White, Weld & Co. (jointly); Equitable Securities Corp.;
The First Boston Corp.
*
Power &
Missouri
Co.
ber-Octooer
Aug.
Hutzler
&
Thursday, September 8, 1949
construction program.
Probable bidders:
& Co.
Inc.; Blyth & Co., Inc.;
Inc.; Union Securities Corp. and Merrill Lynch, Pierce,
Fenner & Beane
(jointly); Harriman Ripley & Co.;
White, Weld & Co.; Blyth & Co., Inc.; Glore, Forgan &
Co.; Equitable Securities Corp.
Aug. 30 reported company plans sale of additional se¬
curities, probably common stock.
Probable bidders:
Merrill
(jointly); Harriman Ripley &
Aug. 8 reported company possibly will raise additional
funds this Fall through sale of $5,000,000 bonds. Probable
bidders: The First Boston Corp.; Halsey, Stuart & Co.
Power Co.
Interstate
Bros.
Kansas
(jointly).
•
CHRONICLE
;■</'/':'v. /v'-
(jointly); Shields & Co. and
(jointly); Smith, Barney & Co.
3Vas.
outstanding
/' /'■,
Salomon
Probable bidders include:
Halsey, Stuart & Co. Inc.; Lehman Brothers; Goldman,
Sachs & Co. and The First Boston Corp. (jointly); Blytb
& Co., Inc.; W. C. Langley & Co. and White, Weld & Co.
xefund
FINANCIAL
Kansas City Power & Light Co.
Aug. 8 reported company probably will be in market later
this year or early in 1950 with $12,000,000 bonds. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; The First Boston
Corp.; Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Lehman Brothers and Bear, Stearns & Co.
(jointly); Equitable Securities Corp.; Kuhn, Loeb & Co.;
Sept. 15 from 1950 to 1964, inclusive. Prob¬
Stuart & Co. Inc.; Salomon Bros. &
on
&
G. Becker & Co.
and A.
\
trust certificates, second series
be dated Sept. 15, 1949 and to mature $198,000
for $2,970,000 equipment
annually
COMMERCIAL
upon any scheme
of division of the fruits of indifls-
all
industries" (p. 71 Rebuttal).
not his argument be more
Would
effective if he suggested raising
the wages in the depressed texindustry so as to give their
ofrkfers purchasing power for
goods in the steel industry?
among
employer and
etatSk%^_
ployee that the business shoukF
Nathan s theory is rejected
be profitable
and that theleading economists. Dr. H. G.
.
.
,
,
with falling and rising commod¬
ity prices—down with the decline
willing -to jy£oulton, the head of the Brook¬
ings Institution, in his book "Con.kolling Factors of Economic De¬
investment where there is sup¬ velopment" (May, 1949) takes the
opposite view, "A wage increase
posed to be no risk."
in one industry becomes the pat¬
of
with
Nathan
Thus
creased
sales,
posed his fallacy, for the percent¬
age of falling and rising
profits
net
on
worth
correlated
prices in the '30s and
closely
up
the rise of prices in the '40s.
Mr.
Nathan's; statement
Rebuttal
(p.
14)
about
of the capital is
owner
risk its capital in the business.
Otherwise money will be put into
.
(4)
in
his
prices
the
in¬
in
Raw
raw
Material
asks
that
because
fell.
Costs
wages
like
.
Mr.
in¬
material
raw
However,
materials
—
be
.
a
decline
steel
tern for increases throughout all
-industry. The result is a general
rise in prices
scrap^to^: demands
which, in turn, leads
:
for
compensating
170
Volume
Number 4836
increases and then under
parity principle, to a
corresponding increase in agricul¬
tural
prices.
The
result
is
to
THE
wage
the
farm
the
weaken
The American system produces,
when there is
and
is
that
ing
and
fixed incomes who suffer
on
reduction
a
Moulton's
in
real
income."
alternative
reduction
to
is
generate
Dr.
"price
general
a
expansion of demand and to
tain employment."
sus¬
(pp. 298-9)
wages
Unless steel
—
raised,
are
Mr.
determine,
whether
shall be satisfied
Mr. Nathan's
or
are
These
were
tried out in the Soviet Union but
economic system broke down
the
in
Then
1922.
the
Nathan
payment
need"
Lenin
realist
This
NEP, under which
not "according to
"according to service."
was
but
notion
new
introduced
was
threatens "ravages of uncontrolled
in the Soviet Constitution of 1936.
fluctuation."
Article
As
remedy, he of¬
a
fers the panacea of raising wages
for
his
clients.
But
Professor
tity
be
shall
Moulton
in
curring
the
chapter
Business
"Re¬
on
Depressions"
118
need
states
formed
by
workers
years
we
learn
Russia's
or
is
must
America suffer also.'
Mr.
Nathan's
generally accepted by professional
recurring
error
dates
Errors—A
produce
unanimity with respect to reme¬
seeks.
dies
stant
reflect
which
of
types
the
diagnosis.
all students of
.
varying
„
Nearly
.
depressions
business cycle search for
cause.
valid
There
.
.
reason
there
must
lying
cause.
delicate
•one
single
a
appears
no
for
assuming that
be
a
single under¬
In so complex and
mechanism, why should
a
that
assume
disturbance
the
of
source
Mr.
Nathan
purchasing
power)
sole
and
iremedy for depressions (increased
his
by
supported
bureau.
any
not
are
overlooks
in
increasing
its
credit
policy
tight¬
ening installment regulations ap¬
ducer,
a
reserves
and
theory of parities,
with its
the Presi¬
nor
dent's Economic Advisers
Congressional
nor
the
Committee
Economic Report.
Nor do
authorities that
Jiave written on this subject, ineluding Professors Burns and
^Mitchell of Columbia, Schumpeter of Harvard or* Jan Timbergen
great
Haberle
G.
who
the
wrote
League of Nations study
busi¬
ness cycles, not to mention other
•competent authorities on business
eycles. Thus,
not justified.
are
Union
"The
determination
its
"that sustained high levels of eco¬
nomic
basic ob¬
jective (p. 15) . . . The union
persistently supports policies de¬
signed to bring about prosperity
^nd
full
employment." (p. 76)
MPerhaps the best way to realize
activity
is
aims
these
the
is
to
"keep
the
his
out of the red." Certainly, shout¬
effective in avoid¬
as
depressions
business
ing
incantations
-medieval
<of
talks about
Nathan
Mr.
were
as
in
depressions.
♦curing mental
exam¬
to
cost
a
the
pro¬
Streeta rise
but he would reject any
people." (p. 45) But he
.-seems to forget that needs can be
•satisfied only out of production.
our
by
declining productivity or
material prices. Again
raw
Nathan states
(p. 7 Rebuttal)
steel workers earn less
that many
the
than
average
and, therefore,
the
sub-average wages should be
raised.
Would he agree that for
who
those
earn
:■■■
than
more
should
wages
average,
ered?
be
tioned
portant.
of
them
to
the
mentions
low
living of the Chinese
Arab
the
or
mention
to
can
never men¬
compare
Nathan
standard
fails
of
pages
"dividends,"
word
fellaheen,
that the
he
Ameri¬
under Point IV aims
their standard of living
program
raise
by investment.
The inventor, the
engineer, the manager and
investor jointly increase the
ductivity of labor.
steel
The
less
worker
today
the
pro¬
uses
effort but has
and
energy
a
higher income and buying power.
Contrast the former physical labor
required
red-hot
workers
by
slab
back
prevailing.
forth in
a
a
process
now
Their productivity in¬
four
creased
fold
decreased
labor
push
with the new auto¬
continuous
matic
to
and
Mr.
vs.
but
human
substantially.
a blind spot for
tal
When he says that
confusion.
profits
"fantastic, huge, un¬
etc.," he fails to
are
conscionable,
the
mention
shaip rise in wages,
in
sales, in national income, bank
deposits, currency in circulation
since
union
steel
with
the
public.
of
clients
wages
will
future
ahead."
is
the
tactics of
The
unions
a
dark
these
political dema¬
(p. 19 and p. 77 Re¬
and
Nathan is certain that it* is
Mr.
good to raise the wages promptly
steel workers.
But
for
as
"raising the wages of lower paid
workers"
in
sawmills,
logging
camps, textiles and manufactures,
and "to narrow the disparity be¬
them
tween
work¬
Nathan thinks "that
is good or bad, eco¬
Mr.
whether
steel
the
and
it
nomically or socially is a sub¬
ject for long and serious thought."
(p. 10 Rebuttal) What would the
unions
economist for
textiles
sawmills
in
say?
decision
that he has
thinks
Nathan
after
that
grant¬
ing the wage demand, substantial
profits will be earned even at
moderately high levels of produc¬
tion under current price and cost
conditions."
not
funds
the
leaders
the
in
invested
thus
prove
union
funds
personal
be
and
stocks
this, why does
that
suggest
and
Rebuttal)
24
(p.
But if he believes
of
steel
that
con¬
tention and profit out of such in¬
information.
side
Again,
has "a deep concern
business the opportunity
to make
in and year out."
(p. 24 Rebuttal) This is usurping
good profits
the
year
of
function
management
without responsibility
for the
re¬
The stockholders put up the
sults.
take the risks and elect
managers, who hire workers.
If
funds,
union
the
wishes
it
to
buy
manage
a
steel
the bargain counter
exercise the functions
of management with the attend¬
ant risks and responsibilities.
Mr.
(they
are
now)
and
on
Katanga can satisfy their "needs"
the investor has
given
because
"them
increase their
tools to
ductivity.
pro¬
Murray can suc¬
in mechan¬
Mr.
.
ceed in raising wages
ized
are
United
States
furnished
whom
he
unionize
exploit. Let him
coolie, the
Chinese
Mexican
savage
see
peon,
or -the
African
in their native lands and
how much
wage
where
he
can
first
there
to
of
the
Mr.
red.
Na¬
seemingly high
profits of 1941 to 1948 but ignores
the
low
profits
prior to
1939
which is the opening date of his
and
tables
charts.
Similarly, he
ignores the 1949 second-quarter
profits which declined so dras¬
tically.
uge."
British
Union
Trade
Policy
different is the
Wages—How
on
at¬
titude of the British labor leaders
who
now
responsible for the
are
results of their
policies. The Gen¬
days.
Congress
that
recommends
now
British "workers continue to show
is
there
demands, that
wage
their
and restraint in
moderation
no
practical alternative to that policy
departure from
it
would be disastrous." The General
and
that
a
"that
that
recommends
Council
Mr.
It
of
Mr.
Fairless
chinery and later to exploit**-* >
the
srn&ii
he
with
that
might
of
stockholders
just
a
who
con¬
stitute about 80% of the total.
A
forgotten,
made
Oregon,
even
him
Senator
from.
though he refused
campaign contribution from the
unions
because
uncommitted.
he
wished
May
his
to
be
tribe
in¬
crease!
Custom-Made
is
all
in
and
are
and motiva¬
obvious. The CIO, not to
outdone
by
and
inconsistent
argu¬
ments. His misstatements of facts
errors
to
Board.
of
the
If
the
method
are
intelligence
union
and continues to
an
of
has its
page)
scarcely be absorbed by
line of business. The con¬
can
many a
tion.
levels.
wages
have
to
do
Furthermore,
been
ords and
close
cent
a
below
not
level only a few per
all-time wartime
the
disturbing picture.
the further prospect
a
only
raises doubts.
The
that
rec¬
On the whole, therefore, it
peak.
is
yields
crop
all-time
to
have maintained farm
so
income at
the
existed
Our
It is
that
,
of
causes
has
find.
uncertainty
not
are
hard
to
domestic
political situ¬
ation, with its suggestion of heav¬
ier corporate taxation, has been
significant
headaches.
current
in
business
of
cause
The
moves
threatened
and
organized labor
of
seeking fourth-round
has
creases
been
wage in¬
close second,
a
if not the prime cause.
The
con¬
must
sequence
further
a
The
be higher prices*
filip toward infla¬
union,
as
a
matter of
denies that an increase in,
will lead to such an end.
course,
But the
record is against the un¬
Besides, it cannot be denied
ion.
that for every round of increasesi
demanded the union has offered
different
reasons—the meeting of
"high living costs," "ability of the
industry to pay," and "mainte¬
nance
of
purchasing power" to
keep the economy going in higlt
gear.
And every increase granted
has been followed by an upward
tendency in prices.
That is not a pleasing prospect
for
either the industry
or
the
whole
economy.
Of course, it
might be offset either by a de¬
crease
in profits or by increased
technical
efficiency which would
production per worker.
probably be demon¬
increase
it
tinued overall threat of war, now
But
seemingly diminishing, has added
its share to the uncertainty.
And
strated that the industry needs the
the year has worn on, the un¬
it may create reserves for deprec i a t i o n,
obsolescence, and re¬
as
crisis in
Britain's economy has fed the fire
happy development of
of
One
doubt.
a
other factor that
has created much business
for many
nent
misgiv¬
commodities. No promi¬
has yet called it a
strike,'.i but that it had
of the earmarks of such
some
strike
a
would
one
no
quickly
search; and the increase of tech¬
nical efficiency is usually a rather
slow process. On the whole, there¬
fore, it would appear that the in¬
crease cannot be justified without
the acceptance of more inflation.
It would be
of
i
#:
■.
still
for
with
us,
fourth
a
and
creases
importance are
namely, the move
round of wage in¬
crisis.
the
The
British economic
others,
buying
tremendous
power
getting back
particularly
when some honest attempt Ms
made to offer commodities at at¬
and
apparently
are
into the marketplace,
at
is domestic in its im¬
course,
significance; the other
worldwide implications, but
mediate
has
has
a
the
course
direct bearing also on
very
of
our
own
economy.
At
the
moment
the
spearhead
of
increases is to be found in
the case of the steel industry.
Be
sure to
mark that word "spear¬
wage
head."
a
It
is
metaphor.
not used merely as
It represents the lit¬
automobile
and others
are
workers'
union
watchfully waiting
to
get the results of present nego¬
tiations in steel before deciding
on their own courses of action. If
the
of
the
are
outcome
the
of the
deliberations
fact-finding group favors
union, then we
steelworkers'
almost inevitably faced with a
nationwide fourth round, with all
that this implies.
higher
costs
for
.
for
'• f"
.
-
-
'
moment
a
vertf pointedly.
much loose talk
can
about its
deny that the
gaged in this century have weak¬
ened her economy in a tremen¬
dous degree.
No one can deny
that it has been going downhill
for a quarter of a century or more.
No one who knows the facts will
try to deny that Britain has
even
done
a
magnificent job of trying
get back on her productive feet.
to
again, no one acquainted
with the details would even sug¬
And
gest that she has not done a great
deal toward putting Europe back:
its present ascending
economic
Furthermore, any banker
about the use of re¬
knows
who
serves
could
not
admiring
the
help
what the British have done in
financing of their world trade on
a
comparatively small reserve of
gold.
It has been a feat prob¬
ably unparalleled in economic
history.
may
that
be true, on the other
in the domestic field
have
they
just
tried
do too
to
time.
they have
tried to make Britain a country
"fit for heroes to live in." This
time it seems obvious that the
much in too short a space of
After both war efforts
Labor
Government
has
overshot
by its schemes of na¬
tionalization, its policy of social se¬
the
mark
curity, and its provision of
public
services for the benefit of
all its
people at costs that are now prov¬
ing to be an unbearable burden on
struggling postwar economy.
word they have forgotten is
a
The
"patience"; it does not seem to
appear
in the lexicon of Labor
politicians.
Ec
•
costs
said
be
No one
causes.
And it implies
business,
i
•
two wars in which Britain has en¬
hand,
of the drive for a fourth round
'..
♦
look
we
to
far too
It
Wage Increases
•
One of these is that there Has been
Round of
The Fourth
.■
British crisis, some things*
the
need
level.
So, let us first take a look at
these two important elements in
current economic conditions. One,
<
When
on
tractive prices.
•
-
The British Crisis
uncertainty,
two of very great
about the job of helping
instead'
and to go
to stabilize the economy
••
causes
stroke of economic
a
statesmanship for the leadership
recognize that fact
of the union to
deny. The testimony of thousands
of businessmen would verify that!
Of these
can
profits it is making in order that
person
"buyers'
had
in¬
way
that
so, since no prices,
possible exception of
lumber, went so far above prewar
the
exploit the stock¬
holder, the outlook is dark for a
first
»m
the
the
sion of labor leaders with that of
worker,
be
prewar
tion
stock-
steel
not
can
in
eral truth about the situation. For
sult
ma-
record
statistics
When
Mr.
Murray
the salary and pension
of
the union's procedure
and
the
adverse effect on the
Nathan's
Brief—The
as
no
difficulties
our
general standard of living."
well compare the salary and pen¬
is
an
wages
money
compares
even
courage
a
afford
that "a substan¬
in
intensify
and have
raise their
furnish
and stated
increase
would
be
unions in several
and
of
mentioned.
Yet the stockholder is not
dreamed
Trades Union
Council of the
eral
tial
its
the fiat to
was
issued
moreover, that while
farm prices
have slipped a bit, they could well
have
the coal union,
gave
Mr. Nathan
an
order to
"Justify an increase in wages."
He
proceeded
to
collect false
f
holder
out
stresses the
than
by the investor
can
the
tools
where
ployer
the
on
out."
in so far as
they were important, have re¬
Nathan's
gratuitous
advice
is
cently sunk in significance. The
cheap and without responsibility.
tax structure seems to be set for
Union leaders' policy on wages
another year or so; Russia is hav¬
recall Goethe's epigram, "Nothing
ing its own troubles with its satel¬
is
more
frightening than igno¬
lites, and that will keep it busy
rance in action." Or do they, like
for a while without leaving time
the leaders of the Ancient Regime
for thought
about a possible
in France say, "After us, the del¬
"shooting war"; consumers still
fore"
employees
it
(Continued fr<
anything
a
mill
Yet
keep
shoot
the
says
job it is necessary to keep the em¬
to
we'll
us
ing has been the widespread re¬
labor sistance of consumers to the high
for giving to orices that have still been asked
Nathan
Mr.
in the airplane factories
of our Southwest and primitive
.African tribes in the copper mines
of British Rhodesia
or
Belgian
peons
table before the court
or
rescind
union
Economic and Ii illation Outlook
a
Mr.
"demonstrated
chinery produces little. But Mexi¬
can
strike date
a
virtually said, "Give
with
buttal)
the stockholder and for dividends.
Lis economic system without ma¬
fixed
four days after the Board's deci¬
sion is expected. They put their
guns on the
the
not
important cases
by
an
arbitrator
with,
courage—Wayne L. Morse. That
the rest."
do
country
not
Are
the
heaven too."
its
will
Should
strike order? That
my
who promises "All this and
gogue
he
govern¬
D.
"Time and arith¬
collapse, stated:
general
"Raise
and the
otherwise
prosper,
and
free
37
1939.
welfare
the
and
Louis
As
Brandeis, ac¬
curately predicting a corporation's
He identifies the selfish ends of
the
(973)
economy
ment.
policy
be
pursued
with
even
greater /determination than be¬
Mr. Nathan has
'The Chinese coolie has needs but
7
free
metic
business,, let
Yet the investor is im¬
He creates jobs. When
wages.
coolie
200
rebuttal, he
less
much
to
almost
the
low¬
Stqpjt-
,
brief and
the
■;;
Mr, Nathan Ignores the
holders—In
Fairless
Mr.
or
a
declining cost of living, declining
rolling mill
"needs
justified
reduction,
wage
holder
and
payee
arguments support
in wages
boss
ing about prosperity and full em¬
ployment is
For
Mr. Nathan's One-Way
All
Mr.
?
says,
in
adamant
as
on
increases
wage
Nathan
Mr.
other.
but
employee and the average stock¬
ers,"
side and
one
that regardless of the per¬
centage
of
operations
selling
prices will remain high and scrap
remain low.
But profit margins
fell very rapidly, while sales fell
slightly from the first to the sec¬
ond quarter of 1949.
Mr.
and
case
same,
partment of Agriculture
many
his
Again, Mr. Nathan assumes that
profit margin will be the
rising
the
con¬
1937,
credit to the
a
INathan theory. Nor does the De¬
"the
one
debit to the payor.
profit,
*on
the
consumer
parently did not subscribe to the
-Joint
used
ple, wages are income to the em¬
ployee but expense to the em¬
ployer; purchasing power to the
government
Certainly the Federal Re¬
Board
serve
•of
clients)
for
wages
is to shift his base
the results he
had
the
indulges in
Jong-winded
theoretical
discus¬
sions resembling medieval meta¬
physics. His sole diagnosis (lack
♦of
he
Again, he stresses
should always be the
.-same?'.' (pp. 53-4)
Yet
If
date, like
would collapse.
the
or
to
income and
the average
be
Murray.
for the
Basic
students. Nor is there any greater
•
or
27
Shall
suffering
Mr.
brawn.
behind the times.
from
per¬
brain
of
Nathan
to
the quan¬
of service"
quality
and
"The
;
according
but "according to
(pp. 39-53) rejects this reasoning.
striking impression in this
summary of depression theories is
one
of divergence, conflict,
and
confusion.
No
single theory is
payment
that
not
made
of
CHRONICLE
Mr. Nathan's brief reflects men¬
of "needs"
power"
concepts.
FINANCIAL
&
fair comparison
pensions would
not.
notions
"purchasing
Marxian
needs
introduced the
(7) Business Cycle Theories and
Full Employment
prospect of profit
a
stops producing, when there
prospect of loss. It is profits
a
position of unorgan¬
ized workers, of salaried and professional classes and persons liv¬
.
COMMERCIAL
'
these
things
as
they may*
(Continued on page
&2)
(
38
THE
(974)
COMMERCIAL
Much
Economic and Inflation Outlook
come
(Continued from page 37)
that
of
CHRONICLE
FINANCIAL
&
investment
has
some
T
on
A.
t*
.
._
^
_
_
in Washington fail
to find at
stop-gap method of meet¬
ing that crisis, the effects on our
least
a
own
going to be far-
economy are
reaching.
Our exports of cotton,
tobacco, food stuffs and many
commodities
other
decline at the
want
bound
are
to
time when we
very
support possible to
business activity at a
every
keep our
high and prosperous level.
effect
could
might be less
there
for misgiving.
cause
But it cannot
If the
localized
be
be localized
if the
has been suggested
many times,
are
facing bank¬
ruptcy.
They are world traders,
and their collapse will inevitably
British,
as
i
«
A
««trl
It is already evident, of course,
that the government of the United
is
the
of
aware
tainty that lies within
situation.
uncer¬
present
our
We have about 4,000,-
000
unemployed now. Steps have
already been taken to shore up
activity of some com¬
munities, and plans are afoot to
this point clear let
To make
it
embarrassment all be emphasized that there is some
world, including the slight evidence that the Admini¬
United States.
stration is lending its approval to
The
answer may
eventually lie
in the granting of a huge
long-
term loan to Britain, partially in
terms of gold for their reserves,
in fact—has been
in
banks
one
supplied by the
or
another.
way
Chiefly, it has been in the form
short-term
loans,
many
of
of
which
have
re-financed
been
by
industry
during
the
past
two
years
through
the issuance of
long-term securities. But, the job
of rehabilitation is nearing com¬
the
for
demand
that
it
the
wage
succeeded
has
to
Congress
increases;
in
getting
legislation
pass
pletion.
There
much money spent
the
More
Wage Increases and
Inflation
the
over
stored-
will not be so
for capital im¬
provement this year as last, and
take more of them.
But the dis¬
the prospect is for still less of it
turbing thing about these steps in 1950.
What will replace it?
is their inherent character. Nearly
Will it be still greater expendi¬
all of them are inflationary.
tures by an open-handed govern¬
ment?
If so, then we have seen
Does Administration Support
the limping
serious
mean
widely
,
.
States
the
past earnings of industry. But
of it—a considerable amount,
up
the crisis is here, for them and for any banker to keep his eye on
'
U
1a
illM
ff
this possible turn in our affairs.
us. If the negotiations now going
...
of
out
reduction
debt
of
end
for
a
period of years ahead, and we
again face the possibility of an¬
other force working in the direc¬
tion of further inflation.
in
field
the
tion,
of
to the first.
It is
private construc¬
allied
closely
country
which the banks
have derived a
raising the national minimum
huge volume of mortgage loans
that will enable them to meet not wage; that it insists on the con¬
in the past three years or so.
tinuation of high and rigid price
only their short-term balance of
A
sizeable
dent
has
already
■payments but also put them in a supports for farm commodities
been made in the housing short¬
position to become once again a even though our farmers were
age.
In some areas housing ac¬
powerful and a very important never so well off, and even though
factor in worldwide economic sta¬
bility.
their
of
some
leaders
most
against
are
responsible
policy;
this
They know the "tricks" of
that it has, with remarkable po¬
as do no other people
on earth.
And it is just possible litical acumen, provided for the
that it would be to our own last¬ payment of dividends on wartime
world trade
ing interest to see to it that a
large measure of their importance
in the world scheme of economics
And the
lie also in
expansion of American invest¬
ment throughout British industry,
provided the British will make
answer
may
attractive
investment
such
.safe.'
and
i
.
money
A
vide the spark to worldwide eco¬
nomic depression.
We shall see!
All of these
to
armament
on
the
to
those
aid fo
In
addition
which
on
expenditures
to those
home,
economic
continued
European nations,
and
to
the recently
authorized outlays on
public housing lead in only one
is
That
-
toward
more
";V'V'
No banker can afford to be in¬
these
to
two
important considerations there
others
at
inflation.
Incomplete
r
But
things, when added
Military Assistance Pact,
on
attention
are
must
different to
such
a
situation.
If
he
is, he may say, "Why should
1 worry?
AH I have to handle is
'counters,' and it makes no differ¬
be focused. For example, we have
done very weir in meeting some
ence to me
ment from
of the factors in our own adjust¬
a wartime to .a peace¬
worthy of the name Of banker if
time economy. But the necessary
and ihevitable
adjustments are
he said so.
still far from complete.
Supply
ond demand in many lines are
worth."-
But
he
would
be
not
For he would be for¬
getting that the history of all in¬
flationary movements shows that
eventually most of his customers
fairly well in balance.
there
are
these
few
a
areas
very
this is
lies in the automobile
industry. The war-created short¬
age has not been fully made up.
But the leaders within the indus¬
not
reas¬
for
markets
Meantime,
perts
her
own
exports.
agricultural ex¬
our
teaching
are
American
farmers how to produce more and
products which, barring dis¬
more
are
many more automotive
use now than ever be¬
fore in
our
history; and they will
But
out.
wear
that
call for operations
level.
on
Somewhere
market
must
veloped.
It
be
would
a
an
found
might
be
not
capacity
enlarged
and
done
de¬
by
millions of
men
and women who
have
put their lifetime savings
into insurance, annuities, and
even United States Savings Bonds
The banker
just has to be afraid
of inflation.
He cannot
self
score.
that
on
the risk of
help him¬
And
even
being "a voice crying
its
direction and use every effort of
which he is capable to see that it
against
policies
lead
that
.
fakes,
facing the possibil¬
considerable shrinkage of
we,are
at
in the wilderness" he must speak
in
placing on the market a "utility" does not become a fact. We
car, stripped of all the customary had enough of it already!
expensive gadgets. But it is also
likely to be found in an expand¬
ing world market.
Yet, regard¬
less of which form the movement
have
It
cannot,
without effect in
our
of
course,
other areas
be
of
economy, because steel, rub¬
ber, glass, textiles, lead, and many
another commodity enters into
the production of these vehicles.
Ji turndown in auto
manufacture,
therefore,
w li a
f
may well mean someextensive u nemployment
not only in the
industry itself, but
in those that are its natural sup¬
ply
sources. r It would be well for
of the same.'
retary
yet
nor
Congressmen* It
the
economic
convince
the
on
vote-minded
"facts
them,
road
to
be that only
may
of
and
life"
we
will
may
be
to
aster, will add to the surplus, but
are
not teaching the farmers to
find the needed markets for them.
outcome.
It's
Here, then, are a few of the im¬
portant elements in our economic
a
pretty
The
outcome
Lower
isn't it?
certain.
seems
prices must come! The fall
be
can
mess,
cushioned,
about all that
can
that
but
is
be done unless
can be induced to accept
policy of restricting produc¬
outlook.
list,
a
of them
can
in
with forecasts
accordance
and "suggestions" from a central
authority
in
Washington.
And
one
again,
produce only
result, namely the continua¬
once
can
extended discussion
more
farmers
tion
They do not exhaust the
the limitations of time
and
make
the
impossible. Your speaker
do
no
more
than
indicate
their nature, make a few sugges¬
tions as to ways of dealing with
them, and let it
"knew all the
be
a
at that. If he
go
answers," he would
superman.
j
■
.
,
has
already
Analyzes Experience of
.Sidney M. Robbins in "Harvard Business Refurnishes statis¬
been
surplus" by the action
of the market, though not by the
fiat of any Washington official.
As this year's construction awards
move
toward
completion
there
will be more of the same thing.
tical survey
and
of results of competitive bidding in sale of securities,
as blanket method, it does not stand up when tested
by facts and figures.
'
concludes,
The
for competitive bidding,
securities, does not stand
case
corporate
as a
up
required method for selling
when tested by facts and
figures now, available for the first time, according to Sidney M.
Robbins, writing in the September issue of the "Harvard Business
Review" on "Competitive Bidding^
booms, justifies that assertion.
in Sale of Securities."
writing "spreads" ,are .reduced,
But here again is where gov¬
The battle lines are still firmly Mr. Robbins points out, "While
ernment policy steps in. Legis¬
the general assumption is that the
lation has placed upon govern¬ drawn, says Mr. Robbins, between
the principal proponents of com¬ corporation receives an improved
ment the obligation of
creating
conditions favorable to "full em¬ petitive bidding—the SEC, ICC, price, rather than that the buyers
various state regulatory agencies, pay a lower price, no statistical
ployment." What, then, could be
and Halsey Stuart & Co. Inc., and studies have yet been published
more
logical than for that gov¬
Otis & Co., the leading dissenters purporting to determine empiri¬
ernment to see a great "social"
from
the
investment
banking cally who is the beneficiary ,of
need for housing? Slums must be
narrower spreads under competi¬
eliminated!
That will maintain fraternity—on the one side; and
favor
managements tive bidding. Unless this is estab¬
the construction industry and so those i who
lished as a fact, it is impassible
provide employment.
And the being allowed to use negotiation
in selling their securities—the In¬ to say that competitive bidding
next step .is the simple one of
really results in more 'reasonable'
moving upward to the next eco¬ vestment Bankers Association of
"
*
nomic level, or even the next America, the National Association prices."
of Securities Dealers, and. various
To settle this point Mr. Robbins
above that, to provide housing,
subsidized
by
government
for large institutional investors—on makes a comparison of yields of
those who want or should have the other side. In .Mr. Robbins'- securities sold by competitive bid¬
and; by, negotiation,
better houses.
See!
It's all very opinion, however, the emergence ding
and
of
competitive
bidding' as the comes to the conclusion that "the
simple! But it will be bought at
regulatory device for marketing reduced 'spread' probably repre¬
a price, and the price, once again,
during the sents a more 'reasonable', fee from
is further inflationary pressure. • corporate -securities
past 10 years has afforded a large the point of view of the corpora¬
Agricultural Problem
body of valuable experience. "It is tion and a less 'reasonable' fee
now possible," he says, "to meas¬
from the point of view of the in¬
The third element on which the
Whether
the
banker, and especially the coun- ure some of the results of using vestment banker.
trybanker, needs to keep a watch^ the mechanism of sealed, competi¬ lowered 'spread' is more or less
The
history
of
construction
the
peace
.
and in postwar
.
4
.
ful
t
developing agri¬
For, in spite of
all the legislation that has thus
far been passed, in spite of price
support policies now in effect or
in prospect, a crisis is in the mak¬
ing in this area of our economic
eye
in
our
cultural problem.
tive
bids
and
reexamine
the
reasonable in consideration of the
competitive bidding."
In examining the subject that
competitive bidding reduces the
services performed by the invest¬
ment banker and in comparison
with the returns of other types of
concentration
of firms handling
underwriting management of
new
utility issues, Mr. Robbins'
statistical analysis indicates that
enterprises
the
determine."
"substantial
ding
to
for
case
concentration
still
exists in the underwriting of cor¬
issues. While
porate
some
tend¬
already are burdened with sur¬
plus agricultural products.
The
government is presently holding
toward
ency
amount of
the
bushels
15
in
bankers
is
the
by
manifest,
the
wheat, the same
of potatoes (if they have not al¬
ready been destroyed by order of
the government).
It is holding
top
reduction
a
securities absorbed
the
of
hundreds
of both
millions
of
and
corn
degree of concentration among
leading few firms has been
heightened. This dominance is not
the
result
hundreds of millions of dozens of
eggs.
It holds huge quantities of
and
ence
of
the
personal
\
What About Capital
V':
/'
-Expansion?
*
;
In this survey of the economic
outlook there are three other ele¬
the
probable
expendi¬
tures on expansion and improve¬
ment
Of our economic "plant."
That plant was worked to the
limit during the war.
It got "run
down"1 physically.
But since the
war ended it has been thoroughly
overhauled.
New buildings have
been erected, older ones rehabili¬
tated; machines have been recon¬
ditioned or replaced by new or
more modern
ones; and all this
course
has cost enormous
of
sums:
Of money.
participate, as
a
major account, in the distribution
of large-scale corporate offerings.
The failure of competitive bidding
of
cotton, with
making. In addition,
it has in storage many millions of
in the
more
pounds 6f butter.
Even the Secretary of Agricul¬
ture is obviously worried by the
present
still
size
more
pect.
-
being
of
the
burden,
and
worried about the pros¬
Besides, he is apparently
advised
by
incompetent
aides, for
Aug. 23 of this year,
of a speech, he
blandly admitted to a farmers'
meeting that they had made an
error of 267,000;000 bushels on the
wrong side in the estimates for a
single, crop and its "carryover,'';
in just thirty days!
The prospects for exports of
in
the
on
course
manage
and
to eliminate concentration of
derwriting is all the
in
face
of
the
fact
"the
that competitive bid¬
would reduce the adminis¬
argument
trative task of judging the reason¬
ableness of fees does not appear
very
significant.
.
.
This
.
wide
gamut of experience of the
SEC
gauging the 'reasonableness' of
prices
indicates not only that
in
competitive
fails
as
an
sometimes
bidding
automatic
device
for
relationships
by the SEC, but
represents
the
capital,
millions
bales
that
feels
to
securing the best prices and fees,
manpower, and skill necessary to
of
Robbins
Mr.
difficult
more
but also that for this very reason
it cannot be relied on as a sub¬
stressed
.
rather
is
influ¬
banker
flaxseed and it holds hundreds of
ments that should be considered
ity of a
One of them is
activity in that giant employment by the banker.
field.
more
just;that. In any
case, the forward-looking banker
will be watching carefully for the
.
vehicles in
possibility of
The idea that huge crops at
food-importing nation, has" lower prices will still give farm¬
already shifted its purchases to ers a very large income, especial¬
Argentina and even to Poland, ly with the increased yields and
behind the Iron Curtain, in order lowered cost per
unit, does not
to save precious dollars and to get seem to appeal either to the Sec¬
great
"declared
try know full well that the end in the false belief that they had
of that shortage is in sight.
What in these things a haven of refuge
life. Nothing less than a major
must follow?
Merely a replace¬ from personal economic misfor¬
ment market?
Well, it will be a tune as well as against the haz¬ crop failure can prevent its ap¬
:V;> ::r'U,"'-' v;.
bigger replacement market than ards of economic penury in old pearance.
'
The irrefutable fact is that we
the industry has ever known, for ageV
'
there
tion of inflated standards and the
.
what the counters are
Yet must be wrecked* by such a course
important and, in addition, that his own for¬
areas in which
not true, tune, whether large or small, can
and it is in the light of these that be wiped out when the bubble
Furthermore,
any, level-headed banker will look eventually bursts.
at the course of the future. One of he would also be forgetting the
now
commodation
and cheap credit industry, in
tremendous
our
on
direction.
Peace Readjustment Still
the
future; and that it is push¬
ing the whole banking system into
policy less far- an easy
sighted than that may easily pro¬ policy.
be restored.
veterans within
insurance to
near
are
of
from
one
the
commodities
these
suring. Europe is getting back on
its agricultural feet. Britain, the
that,
The second of these elements is
Thursday, September 8, 1949
un¬
more
striking
that
govern¬
stitute
for
administrative
super¬
vision. Moreover, the SEC,
to its
credit, has certainly provided am¬
ple evidence of its ability and
willingness to appraise the ade¬
quacy
nomic
of prices and fees on eco¬
and
equitable
grounds,
rather than seeking ways
of
ing its administrative load."
eas¬
ment
control over holding com¬
Great weight is placed by Mr.
panies, restriction—of Investment- Bobbins on the number of ex¬
companies, and legislatipipL to ex¬ emptions which
the
SEC
has
pand the respon;sibilities of 'cor¬ granted in applying its Rule U-50.
porate
have, contributed "The fact that the SEC, despite its
freeing the industry from 'strong: advocacy of competitive
many of
the abuses of banker bidding, has issued a number oof
domination that helped - produce decisions
exempting
particular
trustees
toward
the degree of c o n cent ration
transactions
described."
ments
In
reference
to
the claim that
under competitive
bidding under¬
useful
of
from
U-50
-the
provides
require¬
further
material; the reasons which
have led the Commission to
grant
-
THE
Number 4836
170
Volume
ly the company elected ~ to sell
$15 million of $4 cumulative pre¬
ferred stock through negotiation
because the management believed
should help to in¬
possible weaknesses"
Detailed analysis of the under¬
lying factors in the cases covered
-by these SEC decisions leads Mr.
Bobbins to the following conclu¬
-exemptions
dicate
COMMERCIAL
any
that
to
the
be
most
sions;
"The extent to which the
"From the management
point of
view, the most solid plank in the
competitive bidding structure is
the higher price received by man¬
agement for bonds sold and the
reduced 'spread' to underwriters.!
Against these benefits must be
weighed the shortcomings of com¬
petitive bidding.
Some of the
benefit of expert advice gained in
arranging the details with a com¬
petent underwriter may be lost.
Even more important, the process
is inflexible.
It is not readily
adaptable to special situations or
rto the junior securities of wellentrenched corporations and se¬
nior
obligations
of
enterprises
showing slim earnings protection
for fixed charges. Difficulty may
also be experienced in attempting
to market very large or extreme¬
ly small issues by means of com¬
petitive bids.
V; ■'£"As
result,
a
thorities
.
regulatory
com¬
pulsion to issue securities com¬
petitively represents a usurpation
of
management
function
is
a
problem
that
warrants
careful
consideration.
of
more
market
supply
l
ing service in the field of corpo¬
financing, but care must be
exercised
t
«
a
thus
the
au¬
method of financ¬
decision
to
1949,
stockholders
of
it
belongs
however, maintain close
should,
surveillance
practices in the
over
insure the mainte¬
nance of free competition as re¬
flected by such factors as banker
compensation, prices, and issue
industry
to
distribution.
Standards
of
business
September
record
1949.
14,
MATTHEW T. MURRAY, Secretary.
the
mobility of
cor¬
MGM PICTURES
of the par value of $12.50 per
share, payable October 1, 1949, to hold¬
ers
of record at the close of business
A dividend of 75^ per share or three per
cent
•
THEATRES
•
Stock of the
CHARLES C. M0SK0WITZ
Vice Pres. & Treasurer
Drawn for
opinion that the cost of
money
obtained
by
negotiated
; transaction is lower than it might
expect to obtain at competitive
bidding
can be accorded no
weight in determining whether ..
competitive bidding is not appro¬
priate to aid the Commission.' If
negotiation appears to suit a par¬
ticular case more adequately, the
assertion
that
competitive bidcling must, nevertheless, be used
f because
the
procedure
might
otherwise
be
nullified
suggests
that the Commission may be veer¬
pf the
cents (254) per
15, 1949 on the
Corporation, to stock¬
the close of business
A dividend of Twenty-five
share will be paid October
Stock of the
Common
record
of
holders
at
Holders of
Joseph L. Martin, Treasurer
per
dollar
one
share
on
CORPORATION
RADIO
share
business
on
.
.
of
Redemption
First Preferred Stock
At the meeting
CARL A. SUNDBERG
held
tors
Secretary
external loan Of
for
number
a
been
have
bonds
.
that
redemption
drawn
States
will
tional
City
be
in
of
Bank
The
at
New
the $3.50 Cumulative First
on
Stock, payable October
of business September
E. B.
1,
Dividends have been
,
i
;;
reason.
the
M.
GONZALEZ,
Treasurer
•
GORIN, Treasurer
Safeway Stores, Incorporated
*
Preferred and Common
declared by
follows:
Stock Dividends
T1SHMAN
The Board of Directors of
$3.25 Dividend Series of 1946
$.81 (4 per
Realty & Construction Co., he.
share
$4 Dividend Series of 1948
The Board
of. Directors de>
clared a quarterly dividend of
thirty-five cents (35$) per share
on the Capital Stock orthis cor¬
poration, payable September 27,
1949, to stockholders of record
(for quarterly period ending
September 30, 1949)
COMMON
York.
$.371/2
STOCK
per
share
payable Septem¬
of rec
close of business "September
The dividend
Stock is
and is
the
on
the^Common
of 30c per
share
payable October J, 1949 to
at
rate
stockholders of record
at
the close of
business September 16,1949.
The dividend,on the 5% Preferred
Stock is at the rate of $1.25 per share
the close of business Septem¬
at
are-
ber 15, 1949.
NORMAN TISHMAN. President
15,1949.
Company's $5 Par Value Common
arid 5 % Preferred Stocks.
——
Na¬
Safeway
Stores, Jncorporated, on September 1,
1949 declared quarterly dividends on
the
DIVIDEND NOTICE
$1 per share
drd at
1
and is
payable October 1, 1949
Stockholders pf record
Philip Kapinas
at
MILTON L SELBY, Secretary.
'
"Despite the adoption of
com-
September
BRITISH-AMERICAN
\ petitive bidding as a requirement
OF DIVIDENDS TO HOLDERS
NOTICE
OF ORDINARY AND
PREFERENCE
STOCK WARRANTS TO
BJEAWER.
"
| Kesspn & Bobbins debentures in
i
of McKesson &
case
interim
dividend
on
lie Or¬
Stock fqr the year ending 30th
September 1949 of one shilling for each
£1
of Ordinary Stock, free of United
Kingdom Income Tax will be payable on
30th September 1949.
Robbins,
dividend
must
the
with
York,
E.C.3., for
ness
days
payment is
Trust Company of
32, Lombard Street, London,
examination five clear busi¬
the
5%
Tax)
dividend of 2% %
Preference Stock (less In¬
for the year ending 30th
Coupon No. 92 must be deposited With
National Provincial Bank Limited,
Savoy
Court, Strand, London, W.C.2.,
for examination five clear business days
(excluding Saturday)
business;
knowledge
of
have
acquaintance
worked
is
closely
and
a
phases
with
countrywide
duction makes interesting reading.
tising
all
of
the
have organized and supervised large trading
successfully;
dealer
thorough
and correspondence that
constructive
producer
combination
who
ideas.
wishes
In
to
retail
I
departments
forces.
own
the
retail
type
himself
can
use
my
a
"go
in
am
trader, salesman, wholesaler and
Box S 98, Commercial & Financial
investment
of
My
adver¬
the
getter"
and
capacity
correspondent
with
of
a
talents and production.
Chronicle, 25 Park Place, N. Y.
8.
clared the following
BY
17th August, 1949.
share,
on
of
the AM
Cumtu»ti"J Preferred
Stock, payable,October 1,1949
to shareholders .of record Sep¬
tember 19,1949.
COMMON STOCK
dividend of 40
share
ORDER
per
cent
A
DATED
dividends:
Regular quarterly dividend
$1.06K
per
before payment is
made.
the
on
cents
per
Common Stock,
E. G. LANGFORD, Secretary.
pro¬
bring business and I have j»ev»
words
associate
forward thinking organization who
sales
My
scope.
I believe in
will
other
in
,on
the
TO i!N AGGRESSIVE ORGANIZATION:
Dividends
The Board ofDirecfcors has de¬
PREFERRED STOCK
September next will also be payable
the 30th September 1949.
a
CORPORATION
before
Saturday)
(excluding
made.
The usual half-yearly
come
have
PENERA! TIME
.obtain this
deposit Coupon No. 205
Guaranty
New
on
I
GT
Holders of Bearer 'Stock to
the reason advanced
for using competitive bidding in
July, 1941 was that the company
was under the trusteeship
of the
court at the time, and subsequent¬
moreover,
\
second
A
r\
dinary
July, 1941 and an issue of $15 mil¬
lion
of * Cudahy / Packing
first
mortgage bonds in May, 1947. In
the
i, 1949.
TOBACCO COMPANY LIMITED
the regulatory agencies and
arguments advanced in its
favor, only two industrial corpo¬
rations have elected voluntarily
to use this method of financing—
an
issue of $13 million of Mcby
V the
!
to
the close of
business September 16,1949.
Treasurer
September 1,1949
."CV'
and
September 6, 1949
CUMULATIVE PREFERRED STOCK
The dividends
ing toward the formulation of a
principle of faith rather than of
JOHN
12, 1949.
ber 30, 1949 to stockholders
.
surrendered
so
are
York, N. Y., September 2,1949
New
Industrial Loan
-
.
1949.
Stock issued in accordance with the
provisions of the Plan of Reorgani¬
zation confirmed by order of the
United States District Court for the
Southern
District
of
New
York,
daled July 28, 1937.
1949, to holders of record at the close
Beneficial
lpt
194$ at
tfnifeci
the
made
these
by
Dec. 1,
on
Redemption
par.
of
curities
dividend of 87V5e
a
share, for the period July 1,
Preferred
1930, due Dec. 1*, 1970, are being:
notified
.
20,
Certificates of Deposit "and old
Mortgage Twenty-Year 7^2%
Sinking Fund Gold Bonds, entitled
to receive,
upon the surrender of
said securities, shares of the Com¬
pany's $1 par value Common Stock,
will be made when and if said se¬
September 30, 1949, was de¬
1949 to
\
of the Board of Direc¬
today,
cents per
clared
the Board of Directors, as
City of Copenhagen
41/£%
September
on
of
on
September 14,
1949. Transfer books will not be closed.
August 31,1949
pet
First
Divideail
Common Stock of this Company have been
declared payable October 1, 1949 to holders ol
record at the close of business
AMERICA
OF
the
on
this
a
($.80)
Payment of this dividend to holders
five cents
the Preferred Stock and
per
has
Directors
dividend of Eighty
share on the Com¬
pany's $1 par value -Common Stock
payable October 3, 1949 to stock¬
holders of record at the close of
seventy
(354)
cents
of
declared
Cents
Common Dividend No. 97
($1.75)
Board
day
New York 8, N.Y*
Preferred Dividend No. 165
of thirty five
Wall Street, New York 5
106
The
.
bonds
DIVIDEND
MANATI SUGAR COMPANY
September 1, 1949.
of
Treasurer
Dividend No. 14
Corporation
City of Copenhagen Bonds
are
Robert Fisher
AMERICAN LOCOMOTIVE COMPANY
Dividends
September 2, 1949. The stock
on
August 12, 1949
September 30, 1949.
30 Ouircb Street
declared
transfer books will remain open.
Corporation
share
DIVIDEND NOTICE
.
ness
a
value of the shares of
on par
1949, to
stockholders of record as shown by the
books of the company at the close of busi¬
Wichita River Oil
The Board of Directors has declared
quarterly dividend of 37i^c per
on
the outstanding Common
Company, payable on
September 30, 1949, to stockholders of record
at the close of business on
September 13,
(3%)
The Texas Company has been
this day, payable on October 1,
Treasurer
MjiM RECORDS
September 1,1949
financing programs."
new
Dividend paid
Texas Company and its
predecessor.
pany
LOEW'S INCORPORATED
imposing heavy
the
on
COMPANY
Consecutive
The
by
J. H. M3CHAELI,
avoiding
porate management in undertak¬
ength bargaining and is not itself
e goal.
The SEC has stated
that *the contention that the com-
188th
de¬
dividend of 251 per share on the
Capital Stock of the Com¬
a
concern¬
thus
banker,
necessity of
shackles
ing
of Directors has
The Board
clared
outstanding
August 30, 1949
ing these elements should be used
as guides in the establishment of
sound
relationships between is¬
and
TEXAS
DIVIDEND NO. 209
•-
September 13, 1949.
close
directors
the
on
and according
the maximum degree of flexibility
to management. The Commission
suer
its financial advisers
1,
THE
gi AND LIGHTING COMPANY, INC.
Wl
an
where
r "Indications have been manifest
pany and
the
deemed
most
appropriate,
placing the responsibility for
ing
bidding is merely the tool with
which to achieve genuine arm's
.
be
determine the
that the SEC sometimes tends to
.
at
30, 1949, payable
1949. Checks will be mailed.
compulsion for adop¬
practice would appear
overly harsh extension
of a sound basic principle. In lieu
of such regulations, management
should be given the authority to
to
undertaking.
.
October
DIVIDEND NOTICES
THE SAFETY CAR HEATING
tion of the
overlook the fact that competitive
.
the quarter ending September
on
39
>
($3.) per
share on the Capital Stock of this Company for
"Blanket
difficult
more
1949.
declared
quarterly dividend of Three Dollars
fields
invade
to
sentatives of the two sides.
urgent during periods
uncertainty when the
funds seeking invest-
becomes
not
properly reserved to management.
Probably the most effective reso¬
lution of the competitive bidding
problem lies between the ex¬
tremes advocated by the repre¬
ment dries up and marketing new
tissues
.
of
7,
this day
Both the SEC and
rate
ous responsibility when they are
requested to grant exemptions in
particular cases. Failure to reach
proper decisions could seriously
.interfere with the success of a
i corporation's
financing program.
This problem is likely to become
even
York, September
the ICC have rendered outstand¬
confronted with seri¬
are
New
The Board of Directors has
(975)
DIVIDEND NOTICES
GUARANTY TRUST COMPANY OF NEW YORK
a
"
FINANCIAL CHRONICLE
DIVIDEND NOTICES
satisfactory
method.
&
Rusham
payable October 1, 1949 to
shareholdersofrecordSeptember
House, Egham, Surrey.
19,1949.
Stockholders
who
may
XIlI(l) of the Double
Treaty
between
the
United
States and the United Kingdom, to a tax
credit under Section 131 of the United
States -Internal
Revenue Code
can
by
virtue
Jqhn H. Schmidt
be entitled by
of Article
Taxation
application to Guaranty Trust Company
of New York obtain certificates
giving
^
particulars of rates
of United Kingdom
above
Income Tax appropriate to all the
mentioned dividends.
Secretary-Treasurer
September 7, 1949.
WESTCL0X
.
PIG BEN
SETH THOMAS
StROMBERG RECORDERS
-HAYOON
>
MOTORS
40
THE
(976)
FINANCIAL
&
COMMERCIAL
CHRONICLE
Thursday, September 8, 1949
and the end of
BUSINESS BUZZ
notice
a
At the
off
Tb
•
•
•
from the Nation's
crop
losses
of
$73
.
million, since this
inaugurated in
*
A UIM/
By
the
culture's
*
*
Department
own
year
a state of demor¬
disorganization of a depth without precedent in this
generation. This, as old legislative hands see it, is the result of the
President's refusal either to acknowledge the fact that it is impos
sible for Congress to sign all the<^
that he made no such statement campaign
promise
"checks" he
with respect to the steel industry.
made out during the 1948 cam¬
He did not say that the steel
paign, or even to help in working
out a schedule of which promises
industry had over-expanded, he
asserted. He only said, he ex¬
might properly be deferred until
When the House walked off the
field until Sept. 21,
it did so, as is
well known, with obvious bitterjness.
In
the
Senate, with the
President insisting upon having
everything his own way, it simply
takes time and more time to get
legislation
disposed
of
where
there is free debate.
to
up
instance
the
refusal
allow
to
present
for
extension
reciprocal
of
trade
scheme
with
its
point" provision, is
agreements
.kiO,
"peril
viewed
by
critics
the Hill
on
foolhardy.
helps
during
about
movements
So
If they
Judgment,
'"■]
have
are
correct in their
President
the
will
law lasting perhaps two
with provisions obnox¬
a
years,
ious to him, instead of a tempo¬
rary
law for something like six
months, with such provisions.
drain.
is
said
now
be
to
its
schemes
tion
on
with
bill is presented
Dixiecrats established
office
ton
National
after
the
There
primary
election
that
suporters
is
rather
a
which is
a
election.
for
As
the
of
listens
gress
there
today,
every reason to
man,
November
to
decision
South, to
put
A
been
has
to
in
of
way
objectives.
reports
can¬
Louisiana
the
a
pri¬
next year against Senator
Russell
Long,
the
of
son
Long.
Senator
President
late
Russell
term.
far
than
his late father's political machine
behind him. That the Dixiecrats
inclined
were
from
to make
something of the reports
that Robert Nathan told the Steel
Wage Board that industry
1947
and
1948
expan¬
was
a
is
more
or
less
the
high
-economic
priest
of
the
Steel
Workers' Union, having authored
two
reports
setting forth in the
lingo of the economist, the argu¬
ments
higher
The
cause
of
the
steel
workers
for
wages.
was
steel
and
mean
the
aroused
workers
CIO
in
in
be¬
par¬
general
that
to
the
of
on,
is
Dixiecrats
be
just a talking
or
propagandizing
organization.
They will run their candidate as a
conservative
Two
of
schemes
the
Mr.
now
Truman's
pet
headed
appear
to "encourage" pri¬
capital to invest in
S.
U.
if
So
:
had
steel
original
backward areas, as a part of the
have
"Point
the law of the
land and with poor sportsmanship
for doing so.
Either steel's pros¬
pective strike was an emergency,
IV"
President's
inaugural
Committee
members
port themselves
there
that
is
guarantee
pears
likely
tisan
to
There
be
no
this
for
a
invest¬
ap¬
bipar¬
scheme
trying
been
conservative
opposition
Republicans
crats.
from
rv';w.'^K:,
*
*
case
the law should have
or
it
was
not
in which case collec¬
tive bargaining should have been
followed
through.
The
steel
would
industry
have the further argument that
special
panels
are
negation
a
of collective bargaining, that so
*
Among .the best friends of the
steel
industry in Congress and
Washington there is
a
the
as
more
or
tlement
end
less
by
of the road
One
compulsory set¬
outsiders,
neither
side will fully bargain.
ing that or inferring, that this
panel was committed in advance
friends
and
free
not
was
to
use
its
own
a
widespread feeling
that the steel industry's original
stand
at
against
all
piece
was
of
any
a
special panel
salable
highly
political
merchandise.
The Taft-Hartley law is the law
of
the
land, and
The
law's
scored
it
established
regular,
said
by
the
industry's
here, once it had capitu¬
industry's spokesmen
being
validity
the
by
provided
a
procedure.
was
failure
under¬
of
should
have
not
attacked
is
this
the
case
they^ could against a wage
boost, "without putting the board
on such a spot that if it did give
a
favorable
decision
to
the
*
*
capacity even if
(and they hope
It will be the government) has to
more
government
build it.
v
Mr. Nathan told this reporter
a
wide list of firms in every
phase of the securities business to*
enroll employees in the course has
been good with most firms assum¬
ing the enrollment cost, according
to
Mr.
Russell.
Donald B. Sherwood
With Sfifel, Nicolaus
CHICAGO, ILL. —Stifel, Nico¬
Co., Inc., 105 West Adams
laus &
Street,
announce
that
Donald
B.
Sherwood has joined their organi¬
zation.
Mr.
Sherwood
was
for¬
Co.
a
partner
in
Prior thereto he
Comstock
was
year
HAnover 2-0050
/
the
RFC's
loanable
funds. The House Committee still
plans
to
this
open
bill
to
of the
Corporate Trading Depart¬
Stifel, Nicolaus & Co. in
Chicago.
ment for
.
Paper stocks:
Keith Paper
Millers Falls Paper
Eaton Paper
Rising Paper
Strathmore
program
between
Investment
10 Post Office
Paper
Securities
Square, Boston 9, Mass.
Telephone HUbbard 2-1990
Teletype BS 69
now
Teletype—NY 1-971
Hill, Thompson & Co., Inc.
Firm Trading Markets
NEW YORK 5
FOREIGN SECURITIES
Executive A
hear¬
All Issues
ings, but in the Senate Commit¬
both
ticular
this
the
Chairman
subcommittee
legislation,
suspension,
are
70
it
is
other
FOREIGN
at1
proposition
Export-Import
TeL WHitehall 4-4540
P-ARL MARKS & P.O. INC.
to!
reported,
least until next year.
The
Underwriting Offices
WALL STREET
handling'
agreeable
is
the
Bank investment
SECURITIES
Trading Department
SPECIALISTS
120
50 Broad Street
.
&r
Manager
LERNER & CO.
surance
capacity to fight a depres¬
by removing even the 10limit on business loans, and
sion
its
Response to invitations extend¬
ed to
*
the,
Administration, that industry
McGraw-Hill.
steel."
abolished.
nar-1
the
by
session.
of
must build
in¬
Murray could say
that under the lashing of indus¬
try the board had to decide for
Phil
dustry,
Congress has approved a 200%
expansion in the Federal Gov¬
ernment's experimental crop in¬
proposal to expand
Banking Committee and the
left-wingers within
the
integrity but should have
gone forward and made the best
the
of organized labor be¬
the
the
lated,
board's
judgment.
of
industry. The course will be
conducted by Kelso Sutton, well
known sales training specialist and
author of "The Technique of Sell¬
ing," published last month
merly
if steel
capitulated under direct or indi¬
rect White House pressure, it is
On the other hand, even
RFC's
tee
by
is
disappointment tfiat the in¬
dustry attacked the personal in¬
tegrity of the members of the
special steel wage panel, by stat¬
keen
half
by ten one-hour
top sales executives
from
with
invoked,
long
elsewhere in
Fresident
first
emergency,
Demo¬
and
the
evade
to
in which
the contrary, very vocal
on
both
re¬
in
point
foreign
support
but
now
at this time.
ments
message.
unconvinced
as
any
of
the
of
program
chided
for
adopted
the
this
to
stuck
it could in effect
stand,
hind him, to get it amended or
have adopted as top doctrine, also
^
vate
the
deepest possible pigeon-hole,
least for
at
guarantee,
pressure
♦'
*
you're
gottee
looking for Mr. Poodle? — Velly solly, you
the wlong number!"
President, with all the political
Democrat.
♦
doubling
interest
the
ticular
elements
thinking of taking him
bad
thing, that industry should have
shared profits instead with labor.
Nathan
moribund
indication
don't
*
There is
even
an
lectures
"You say you're the Bloodhound Collection Agency and
'
Tru¬
are
sion in
to
The incumbent Senator has the
*
Some periodicals
came
unexpired
an
1949.
*
an
fight
cat-and-dog
*
since he
pack
Washington to fill
suspect, if Con¬
that 1950 will be
worse
is
inten¬
an
followed
course
elections,
according
the
Dixie¬
direct
more
tentative
exciting
the
into
broad
reached,
didate
that
mix
may
Huey
constitute
■
Truman
campaign
to
of
in salesmanship being
Sept. 15, Stanley A. Russell, Jr.,
Blyth
&
Co., President
of
the Association, announced.
Ten
weekly
two-hour
sessions
will
Washing¬
Long has been running with the
time
of
re*
of
Democratic
through
plenty
of
sponsored by the Investment As¬
of New York this fall
the
campaigns. Then all want to get
in
times
end
views.)
own
initial session
The
attention
a
the
however,
mary
themselves for long pe¬
the
sociation
successfully
of
the
Thurmond-Wright ticket from the
vidual state delegations have to
during
three
by
not coincide with
"Chronicle's"
sive course
Committee
purged
from
riods
which
program
scope
has been scheduled for Thursday,
session. An election year session
faces
additional
strain.
Indi¬
absent
this
To Start
to the President
Comparatively little
was
paid to the fact
achieving
Little discussed is the projec¬
$15
is
increased to
Salesmanship Course
Sept. 15
basing points.
to Europe, and the word,
is that even if a
crats
tion of this situation to the 1950
be
present
the
finally, he will veto it.
thing
continuously.
to
It
and may or may
bill
a
around
hint,
gress
»
present only
million
annual
(This column ig intended to
Key House conferees in this ques¬
tion have gone on a two-month
gram, Congress can get away by
Oct. 7.
If not, then almost any¬
session
than
more
1953.
dim
a
Truman, it is said, is putting National Committee's rolls.
his own Congressional leaders on
As a matter of fact, the Dixie¬
a terrific spot.
They are fast los¬ crats themselves did comparative¬
ing their capacity to hold Con¬ ly little to excite either the "lib¬
gress in
session. They may be eral" or the conservative press.
faced with the necessity of openly They
expressly disavowed any
repudiating the President's pro¬ intention of starting a splinter
gram and folding up the Congress party.
The impression went out
or, if they wait too long in doing that maybe this was just another
this, having the conservative co¬ Washington organization aimed at
alition take the leadership and on influencing isssues in
Congress
their own motion, get the Con¬ and elections by speeches, propa¬
gress away.
r
ganda, and the like, and not a
One of the most astute leaders political action organization. The
put it this way: If the Adminis¬ Dixiecrats carefully avoided giv¬
tration
leadership
in
Congress ing any specific leads on their
decides soon to cut off the ses¬ operational plans, but talked only
sion on a limited additional pro¬ objectives.
happen because Con¬
does not plan to stay in
to
business
in
Mr.
can
were
this is for the
$12
a
enacted into the extension any¬
way.
costs
$50 million.
of any kind restoring to industry
the "right" to use price-absorp¬
passed
They insist that the
of
paid
pretation from the nation's Capital
junket
President will get "peril points"
costs
program,
fleet the "behind the scene" inter*
There is
downright
as
the
government, and not
by the insured. Admin¬
borne
world.
President's
the
the
This, however,
of
cyclical
the
bring
to
less than
the
istrative
times
boom
for
pre¬
hence
so
administering the
by
Agri¬
1947,
were
out,
exclusive
was
over-expansion of plant and in¬
ventory
paid
$73 million loss.
plained, that as a general prin¬
ciple
in
industry
generally,
prospect for final action
President's
The
losses
and
of
admission,
mium collections
WASHINGTON, D. C.—Congress is approaching
1950.
belt.
first
was
every
alization
farm
1939.
A
/If lit
Capital
the
time Congress wrote
insurance's cumulative
same
scheme
Behind-the-Scene Interpretations
1953, with hardly
outside
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
——;
BROADWAY
TeL REctor
2-2020
@FedFRASER