FINANCE
Are Stocks Better Than Ever? President's Economic Report, Senate Banking C o m mittee, ond Federal Reserve Board view stock m a r k e t Τ Ν HIS E C O N O M I C REIORT t o C o O g r e S S ,
* President Eisenhower comments that the people expect their Government to pursue policies t o moderate economic fluctuations. H e feels this confidence desirable a n d not misplaced. Among t h e many facets o f t h e mes sage sent t o Congress, he includes a re view of corporate profits from 1Θ29 to the end o f 1954. I t shows improve ment in corporate health since t h e 1929 boom-and-bust.
Fulbright points o u t that the market value of all corporate stocks listed o n licensed exchanges i s well over $ 2 0 0 billion, nearly a s much as the national debt. T h e exchange also lists over $100 billion worth o f bonds. H e says that no major securities legislation h a s been enacted for many years because it has n o t been necessary. I t is t h e committee's hope, n e says, that this condition w l l continue. I n Fulbright's judgment, Hearings
Corporate Profits and Dividends 1929—54 Corporate profits before taxes Corporate profits after taxes Dividends Undistributed profits
(in billions) 1929 $9.6 8.3 5.8 2.4
T h e m u c h larger percentage o f profit being retained b y corporations in recent years g i v e s them a. much sounder foundation. This s a m e conclusion can be reached by comparing firms o n the Dow-Jones Index for 1929 Avith some recent date. A popular date L· N o v . 1"7 w b e n the industrial average first regained its 1929 peak:
Firms on Dow-Jones Index 1929--54 In % In crease i n Market crease in Price Earnings Allied Chemical 18 K6 36 200 General Electric -26 206 International Nickel Standard O i l (N- J.) 170 356 132 215 Texas Co. Union Carbide 75 133 3 113 Westioghause Nevertheless increasing stock prices are causing some concern. T h e Fed eral Reserve Board b a s increased mar gin requirements. T h e Senate Hanking Committee is planning an investigation into recent stock market movements. Sen. Fnibright (E>.-Ark.), chairman of t h e Banking Committee, says i t plans no ^investigation'' of the market at t h e present t i m e in the meaning often at tached to that term. However b e feels that the remarkable rises in market prices o v e r the past 15 months, and especially since the first o£ November, warrant t h e committee's concern. 462
191.0 $9.3 6.5 4.0 2.5
1950 $4O.0 22.1 9.2 12.9
1954 $35.0 17.8 9.9 7.9
will serve two major purposes. First, they will enable t h e committee) to re ceive testimony of experts i n the securi ties field which will permit t h e com mittee to have t h e best advice, opinion, and factual materials available. Sec ond, they will provide a method of broadening public education of the o p erations of tlie securities market. These, t h e committee feels, are valuable purposes. The committee assures that tbere will be no "witch bunts.** It realizes tbat this action may affect the market, but it intends t o avoid this to t h e maximum extent possible. Bagasse Board Firm Seeks Registration o f Debentures Texboard Inc., Dallas, is seeking registration of $1.5 million 6 % series A debentures d u e serially from Feb. 1, 1957 to Aug. 1, 1961, and $1 mdllion of 6% series Β convertible debentures d u e serially from F e b . 1 , 19S2 to Aug. 1, 1966. Emerson Cook Co. is named as underwriter. Texboard w a s organized under Dela ware law on Nov. 4, 1954. It proposes to construct a n d operate a plant near Orange, Tex. The plant will make in sulation building products from bagasse for use in exterior and interior building board, roof insulation, and other build ing and insulating purposes. This is expected to require $2,560,000, of which $ 3 0 0 , 0 0 0 is t o be obtained from the sale to t h e organizers of 60,000
shares o f common stock at $ o per share and $2,260,000 n e t from proceeds o f the sale of debentures. C. F . McDougal of Dallas is presi dent, treasurer, and a director. H e has agreed to purchase the plant site for $7500, and t o turn it over t o the com pany i n exchange for 2 1 , 5 0 0 shares o f • common stock. H e has purchased 20O common shares for $1000; l i e a n d h i s associates have agreed t o purchase 5 9 , 8 0 0 shares o f stock a t $5 per share within 3 0 days of the effective d a t e o f the registration statement, payable $99,000 upon subscription t o the stock» $100,000 within four months, a n d $ 1 0 0 , 0 0 0 within eight months. T h e y have also agreed fco subscribe to a n ad ditional 118,500 sliares at $ 5 per share payable over a period not to e x c e e d five years. G l i d d e n Annual Report Shows Slight Sales D r o p During its fiscal year ended Oct. 3L» Glidden had a net profit of $ 7 , 0 9 3 , 0 4 3 compared to $ 7 , 1 3 9 , 2 7 2 in 1S53. Sales for the year were $209.1 million c o m pared with $ 2 1 1 8 . 1 million in 195&. Glidden says that t h e first three quarters of the year were adversely affected b y a small soybean crop which, c o u p l e d with certain government support pro grams, created a n unsatisfactory re lationship between the price of beans and their e n d products. Glidden b e lieves this condition will be much im proved in 1955. Gliddens operating profit for t h e final three months of its 1954 fiscal year exceeded that of t h e previous year. This upward tren
