| BUSINESS

- WEEK

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INDEX YEAR AGO re) % a 00 = ; 7 Oo « Oo-«

OCT. 27, 1956

They thought it was alive

( )* their second voyage to the New World ity of Shell Chemical’s synthetic rubber, which ( Olumbus and his sailors Saw Indians for many requirements 1S superior to any that

plaving with balls that bounced with such resili comes from a tree

ence that the startled Europeans thought they "7 Y y

were alive Shell synthetic rubber, in a variety of solid Those strange jumping balls, of course, were and liquid types, fills the needs

made of rubber, which has become a basic tool of Western manufacturers for a

of our own era—so essential that our scientists raw material indispensable to

learned how to svnthesize it from domestic raw the continued growth of in-

materials, Their success can be seen in the qual dustry

Shell Chemical Corporation

Chemical Partner of Industry and Agriculture

TORRANCE, CALIFORNIA

INn BUSINESS

GENERAL BUSINESS

Page

BUSINESS OUTLOOK 23

WASHINGTON OUTLOOK 43 INTERNATIONAL OUTLOOK PERSONAL BUSINESS THE TREND FIGURES OF THE WEEK CHARTS OF THE WEEK READERS REPORT

THE DEPARTMENTS BUSINESS ABROAD:

CANADA:

ECONOMICS: FINANCE:

GOVERNMENT:

INDUSTRIES:

LABOR:

MANAGEMENT:

MARKETING:

THE MARKETS:

PRODUCTION:

REGIONS: RESEARCH:

BUSINESS WEEK « Oct. 27, 1956

THIS W E E K October 27, 1956

THE SOVIET EMPIRE SHAKES. Uprisings in Eastern Europe are c real disaster

for the Kremlin. They reflect nationalist feelings, resentment against economic misery

A SHIP’S WORTH MORE IN THE SEA. So a business group Is betting half a

million it can triple its money by salvaging the stranded Etrusco DROUGHT HITS OLD MAN RIVER. It’s playing havoc with industry THE COMING SHORTAGE OF STEEL. With Detroit about to claim its old

share, the market is sure to be oversold by December

PROFITS: STILL ON A PLATEAU. The trend in nine-month reports ONE STEP BACK . . . in sales set-up will pay off, Chrysler hopes SUNNY SEASON FOR THE BANKS. Thot’s how the bankers see it

BUDGETS GO ON FOREVER. Amid campaign, experts chart fiscal 1958.

IN BUSINESS. News about titanium and zirconium, Ford don: rise, Nash sil Hudson cut, Sohio’s oil sand venture

Changing the Face of a Giant. approach in international selling

Reds Play a Trump Card in India. A $234-million steel mill for Bhilai In Business Abroad. News about Willys in Brazil, aid funds, Cuban steel

Canada’s Massey-Harris-Ferguson drops old

Inflation Fears Dog the Boom. Canada faces restrictions even while it’s expand- ing faster than any country.

Reds Step Up Play for Canada’ s Trade. But U. S. may be ultimate aim In Canada. News about campaign against U. S. progress on pipeline, labor... .

How Prosperous Is Prosperous? The answer could be crucial on Election Day....

The Psychology of the Squirrel.

Letting Bills Pay Themselves. The system of letting a creditor draw a monthly check on your account is spreading

Survey delves into what makes savers tick.

In Washington. News about help for small business, CAB subsidies, end to nickel stockpiles, oil imports, opposition to fast write-off

U.S. Atom Power Is Set to Jump. Industry's emphasis switches

Start-up of World's First Power Reactor. British get off a lead

In New York: Another Port Strike? BF UAW Hopes Wane at Kohler. But the strike drags on, yas: into its third year.... In Labor. News about Mitchell’s pledge of T-H change, Steelworkers’ dues, SUB foothold in aviation, Westinghouse dispute Perey

Generals Make Good in Business. .

In Management. News about office grapevines, merger law, hardest workers. ...

Science Can Find Their Market. Camera Passes the Word to GE salesmen from coast to coast How to Get Stuck With Gumballs. A new book tells the story

In Marketing. News about FTC monopoly charges, decline in television viewing, bonded whiskey tax case

Auto industry changes its selling concepts

Victims of Sluggishness. Capital goods shares and consumer goods group are far below their 1956 highs

Insulation Toots Its Horn. It can cut heating and cooling bills a third, industry says. Washing Off the Fallout. Navy uses network of plastic pipe to give warships a decontaminating shower while still in action after nuclear attack

Helping Hand for the Data Processor. Typatape hitches in older mechines....

Regional Incomes. Back on the upward beam

Shooting for Strange New Targets. Fledgling packaged power industry find new uses for cartridges in guided missiles, metal forming—even fishing

Miracle Drugs Get Down to Earth. New drugs plus acceptance of antibiotics as a food preservative are pushing antibiotics into big industry class

BUSINESS WEEK is published weekly by McGraw-Hill Publishing Co. ag Broadway, Albany 1, N. Y. Entered as coon class matter Dec, 4, 1930 ot Office at Albany, N. Y. under act of Mar. 3, 1879 Subscriptions $6 @ yeor in

FIGURES OF THE WEEK

70; 1547-49 = 100 RY | mm ao 1947-49 = 100

160 ' = . : ed

| 150}

M0) 130 120)

No“951--1952~=“«‘S2SD~SSCNS AS 8S

1946 Yeor Average Ago

BUSINESS WEEK INDEX (chart) . . 91.6 145.0

PRODUCTION

Steel inget (thous. of tons) 1,281 , 2,502 12,495 2,489 Automobiles and trucks a4 . 62,880 , 52,718 196,986 121,288 Engineering const. awards (Eng. News-Rec. 4-wk daily av. in thous.) ‘a $17,083 j $64,369 $75,471 $78,264 Electric power (millions of kilowatt-hours) 4,238 , 11,482 11,300 11,333 Crude oil and condensate (daily av., thous. of bbis.) 4,751 . 7,063 6,990 6,997 Bituminous coal (daily av., thous. of tons). ... i 1,745 ; 1,775 1,735 1,705 Paperboard (tons) ; 167,269 , 272,890 279,692 276,397

TRADE

Carloadings: miscellaneous and L.c.l. (daily av., thous. of cars) Carleadings: all others (daily av., thous. of cars)

Department store sales index (1947-49 = 100, not seasonally ‘adjusted) Business failures (Dun & Bradstreet, number os

PRICES

Spot commodities, daily index (Moody's, Dec. 31, 1931 = 100) : 425.7 418.0 Industrial row materials, daily index (BLS, 1947-49 ) abies k 98.7 97.7 Foodstuffs, daily index (BLS, 1947-49 100) rer Tet rey . 82.4 81.1 Print cloth (spot and nearby, yd.) a wtiasd saa : 18.6¢ 19.4¢ Finished steel, index (BLS, 1947-49 100) . ee . . 168.6 168.6 Scrap steel composite (iron Age, ton) saa ven ; . $58.17 $56.17 Copper (electrolytic, delivered price, E & MJ, Ib... 26... cee eee eee . ) 39.945¢ 39.88 1¢ Wheat (No. 2, hard and dark hard winter, Kansas City, bu.) Ff $2.29 $2.29 Cotton, daily price (middling, | in., 14 designated markets, Ib.)............ Y y 33.12¢ 33.20¢ Weol tops (Boston, |b.) ; 7 - ' , ; $1.91 $1.90

FINANCE

90 stocks, price index (Standard & Poor's) Medium grade corporate bond yield (Bao issues, Mooty’s) Prime commercial paper, 4 to 6 months, N. Y. City (prevailing rate)

BANKING (Millions of Dollars)

Demand deposits adjusted, reporting member banks tt45,820 55,908 ‘ 55,623 Total loans and investments, reporting member banks tt71,916 , 85,843 85,338 86,066 Commercial and agricultural loans, reporting member banks tt9,299 y 29,694 +29,833 29,836 U. S. gov't guaranteed obligations held, reporting member banks tt49,879 , 26,383 25,732 26,392 Total federal reserve credit outstanding , ‘ 25,852 25,707 25,810

MONTHLY FIGURES OF THE WEEK Year Month Lares

Ago Ago Month Cost of Living (U. S. Dept. of Labor BLS, 1947-1949 = 100) . 114.9 116.8 117.1

* Preliminary, week ended October 20, 1956, + t Estimate * Revised. ** Ten designated markets, middling ih in. 8 Date for ‘Latest Week’ on each series om request.

THE PICTURES..Automatic Electric Co.—105; Grant Compton—Cover, 113; Walter Curtin—147 (rt.); ford Motor Co.—47; General Electric Co.--52, 53, 56; B. F. Goodrich Chemical Co.—98; Robert Lackenbach—59; Archie Lieberman—111 (top & bot Massey-Harris-Ferguson Ltd.--147 (11.), 148; McGraw-Hill World News-—-129, Dick Miller—-36, Guido Organschi—126, 127; Owens-Corning Fiberglas Corp.—91; Sov foto—155; U. P.—28 (cen.), 94, 136, 150; W. W.—27, 28 (top & bot 167; George Woodruff—30, 31

BUSINESS WEEK e Oct. 27, 1956

Washing a bridge used to be dangerous business

A typical example of B. F. Goodrich improvement in rubber

ey of the little black lines you can hardly see in the picture, running up to the scaffolding where the men are, is a piece of equipment that used to be very dangerous—a steam hose that could burst!

Workmen wash off dirt, sale and grease with high-powered streams of superhot solution before paint ing. But heat used to weaken steam hose. It sometimes burst with ex plosive force, spraying scalding steam, seriously injuring workmen,

B. F. Goodrich men wanted to make a hose that was completely burstproof. They developed a new kind of heat-resisting rubber which they used inside the hose, and be tween the plies. Then they devel oped layers of fine braided steel wires for reinforcement

The hose lasts longer than any steam hose ever made before. Not one length has ever been known to burst. Even if a hose wears out after years of service, steam can leak out but it Cannot « xplode This B. F. Goodrich hose is 40 per cent lighter than steam hose used to be It's more flexible, easier for work mien to handle. Its rubber cover stands more scuffing, resists abra sion better than steel

Your B. F. Goodrich distributor has exact specifications for the B. F Goodrich hose used in this bridge

cleaning job and exact specifications for products featured in dozens of other B. F. Goodrich success stories. B. F. Goodrich makes conveyor belting, V belts, flat crans- mission belts, hose to Carry air, water, gasoline, paints, chemicals, even dry materials such as flour, cement or brick chips If you don't know your nearest distributor, write B. F. Goodrich Industrial Products Co., Dept M.-792, Akron 18, Ohio.

B.EGoodrich

c= er GR RENNIE gr ery INDUSTRIAL PRODUCTS

THE FINE ART OF FILING AND FINDING...

COMPLETELY EXPRESSED BY REMINGTON RAND!

\ simple phone call to your local Remington Rand representative can start you toward solving one of the most costly and time-consuming headaches in business today! That's the management of your records ... the fine art of filing and finding. And it is a fine art, for the paperwork involved in business today is increas- ing in quantity and complexity. The Remington Rand specialist can show you that very likely a good portion of most business records are not kept in the right place. That another part of these records can in fact be destroyed immediately. That much is inactive and can be stored elsewhere. He'll help survey all your records, and assist you in setting up a system that will keep the management of your records flowing moothly and efficiently In doing so, he may well recom- mend that champion of all space-savers, 1 FILM-A-RECORD microfilm machine. For a stack of records a yard high can be reproduced permanently, exactly,

quickly on a roll of film samall enough to hold in the palm of your hand. And, ee)

they can be quickly found when needed. Or it could be that your solution to saving space and cutting cost in the file room is Remington Rand’s shelf filing system. And something that will fit into just about everybody’s filing situation is the Remington Rand exclusive KOMPAKT® line of files. Same height, depth and width as conventional filing cabinets, but you get one extra drawer. buf Imagine the savings in space and } » money. : These are only three of more than 120 record control and filing systems he might suggest. Why not put your filing problems ' in the hands of your Remington Rand specialist. Call him, or write for FREE illustrated booklet, “Your Records,” (X1615) to Room 2010, 8315 Fourth Avenue, New York 10, New York.

HMlemington. Ftand

DIVISION OF SPERRY RAND CORPORATION

/

B U S$

N.& $..$ W..6&.8 K

EDITOR & PUBLISHER Elliott V. Bell MANAGING EDITOR Kenneth Kramer

ASSISTANT MANAGING EDITOR Robert B. Colborn ASSOCIATE MANAGING EDITORS John L. Cobbs, Peter French, Eugene Miller SENIOR EDITORS Clark R. Pace, Merlyn S. Pitzele, Howard Whidden

DEPARTMENTS Business Outlook: Clark R. Pace, Editor; Robert H. Persons, Jr. Economics: Leonard Silk, Editor Finance: William McKee Gillingham, Editor; David B, Carlson, Jr. Foreign: Howard Whidden, Edssor; Sol Sanders, Paul Finney Industrial Production: Theodore B. Merrill, Jr., Editor; Herbert Klein Labor: Merlyn S. Pitzele, Ed:sor; Edward T. Townsend, Robert R. Reichenbach Management: Lee Geist, Edstor; Edward McCreary Marketing: Richard L. Waddell, Edstor; Cora Carter, Jack E. Patterson Money & Credit: M.J.Rossant, Editor Personal Business: Barbara Dana Regions: Werner Renberg, Editor Research: Jane H. Cutaia, Edstor Statistics: Elsa Denno

Staff Writers: Brenton Welling, Jr

Illustration: Richard A. Wolters, Editor; Robert Isear, Pictures; Louis H. Dufault, Graphics; Grant Compton, Jack. H. Fuller, Herbert F. Kratovil, Jomary Mosley, Arthur Richter, Joan Sydlow

Library: Dorothy Roantree, Librarian; Jane G. Raczka

Assistant to the Editor & Publisher: John F. Hartshorne

NEWS EDITORS

T. B. Crane (Senior News Editor), Jeanne A. Bernhardt, Robert F. Deed, John H. Maughan, Lawrence H. Odell, Doris 1. White

EDITORIAL ASSISTANTS

Mary T. Beckerle, Edward J. Burgess, Jr., Jean Drummond, Marilyn Holmes, Kathleen Kundel, Olive L Heureux

McGRAW-HILL ECONOMICS STAFF Dexter M. Keezer, Director; Theodore C. Boyden, William H. Chartener, Douglas Greenwald, Robert P. Ulin

U.S. & CANADIAN NEWS SERVICE

Acianta Bureau: A. R. Henry, Manager; Frances Ridgway

Boston Bureau: Norman Korcker, Manages

Chicago Bureau: Merlin H. Mickel, Manager; James S$. Lewis, Joanne Sponsler Cleveland Bureau: Robert E. Cochran, Manager; Ruth E. Nelson Detroit Bureau: William Kroger, Manager

Houston Bureau: Normand DuBeau, Manager

Los Angeles Bureau: Thomas M. Self, Manager, Margaret W. Hayes Milwaukee Bureau: Charles M. Garvey, Manager, Kathleen C. Horan Philadelphia Bureau: W. B. Whichard, Jr.. Manager; Esther A. Schule ee Bureau: Richard N. Larkin, Manager; Elinore 8. Thomas San Francisco Bureau: Richard Lamb, Manager; Margaret J. Scandling Toronto Bureau: Jean Ross-Skinner

Washington Bureau: George B. Bryant, Jr, Manager; Glen Bayless, Alan E. Adams, Roy Calvin, Ernest Conine, John C. L. Donaldson, Jay Flocken, Boyd France, Sam Justice, Arthur J. Kraft, Donald O. Loomis, Gladys Montgomery, Arthur L. Moore, Seth Payne, Morton A. Reichek, V. Craig Richter, Caroline Robertson, Vincent Smith

Correspondents: Akron, Albany, Austin, Baltimore, Birmingham, Buffalo, Calgary, Charleston, Char lotte, Cincinnati, Columbus, Dallas, Denver, Des Moines, Fort Worth, Greensboro, Hartford, Jack sonville, Kansas City, Knoxville, Little Rock, Louisville, Memphis, Miami, Minneapolis, Montreal, Nashville, New Orleans, Omaha, Orono, Ottawa, Phoenix, Portland (Ore.), Providence, Richmond, Rochester, Salt Lake City, San Diego, Seattle, St. Louis, Syracuse, Toledo, Tulsa, Vancouver, Winni pez, Worcester, Honolulu

McGRAW-HILL WORLD NEWS SERVICE

Editor: John Wilhelm; Bonn: Gerald W. Schroder, Silke Brueckler, London: William J. Coughlin, John Tunstall, Edith Walford; Melbourne: Alicja Grobtuch; Mexico City: Jack Kearney, Paris: Robert E. Farrell, Helen Avati, Rio de Janeiro: Peter Weaver, Tokyo: Dan Kurzman

ASSOCIATE PUBLISHER Bayard E. Sawyer

ADVERTISING MANAGER John M. Holden BUSINESS MANAGER Richard E. McGraw

®

BUSINESS WEEK . OCT. 27, 1956 . NUMBER (417

(with which are combined The Annalist and the Magazine of Bu Published weekly by McGraw-Hill Publishing Company. Inc. Executive, Editorial, Advertising, and Subscription Ofhces McGraw-Hill Building, 330 West 42nd Street, W. Y. 3%, N.Y Publication , 99-129 North Broadway, Albany 1, WN. Y.; entered as second class matter Dec. 4, 1936 at the Post Office at Albany, N. Y. under act of Mar. 3, 1879 Donald C. McGraw, President; Paul Montgomery, Executive Vice President; Joseph A. Gerardi, Executive Vice President and Treasurer; Hugh J. Kelly Executive Vice President; John J. Cooke, Secretary; Neilson Bond, Executive Vice President, Publications Division Raiph B. Smith, Vice President and Editorial Director; Joseph H. Allen, Vice President and Director of Advertising Sales; J. &. Blackburn, Jr., Vice President and Circulation Director, FOR SUBSCRIPTIONS, write to: Business Week Subscription Service, 330 West 42nd Street, New York 36, N.Y. Subscriptions to Business Week are solicited only from management men in business and industry. Position and company connection must be indicated on subscription orders bscription rates: United States and possessions $6 a year; $12 for three years. Canada $7 a year; $14 for three years. Other Western Hemisphere countries and the Philippines, $20 @ year; $40 for three years. All other countries $25 a year; $50 for three years, Single copies, 25c. Printed in U.S.A. Copyright 1956 by McGraw-Hill Publishing Co., Inc. All rights reserved

BUSINESS WEEK e Oct. 27, 1956

READERS REPORT

Ultrasonic Welding

Dear Sir:

We have read with interest the article entitled Shaking Metals Into a Weld [BW—Sep.8'56,p91}. From what we have heard and seen to date there is no doubt that this new intriguing welding technique will find an increasingly important place in the metal fabricating industry.

We would like, however, to take exception to a statement made this article ie. “The ultrasonic process makes possible the welding of copper to aluminum—not now feasible—and this will have im- portant applications in the elec- trical field.”

The Koldweld process |BW Oct.29'49,p64—Pressure Welding} among others has for years been able to weld aluminum to copper in addition to other non-ferrous combinations.

Not only are a number of our licensees making aluminum to copper Koldwelds successfully, but the Utica Drop Forge and Tool Co. has available a standard line of Koldweld tools and dies for producing such bi-metal joints in sheet, foil, wire, rod, and other shapes.

Verne Ciaim, Jr, KOLDWELD CORP NEW YORK, N. Y.

Boosting Investment

Dear Sir:

Your editorial entitled A Boost for Private Investment Abroad {[BW—Oct.6'56,p200| seems to me to overlook one very important point,

The institution which you say will give a boost for private invest- ment abroad is the International Finance Corp., which, you also mention, has received its funds from 33 governments,

The question that occurs to me is this: By what method of reason- ing do you arrive at the conclu- sion that private investment abroad is being encouraged by the appro priation of funds by the govern- ment—-funds which private in- vestors might have used for enter- prises abroad?

When it comes to a matter of investing funds, where do the peo- ple in the International Finance Corp. get the superior judgment that justifies their appropriating the incomes and savings of private citizens, who sometimes have also

1 PUNCHING — Presses used for punching holes, knockouts, and stamping small parts ore strategically located throughout our plants. Some of them run at a rate of 108 strokes @ minute, and their capacity runs up to 250 tons. Small boiler-jacket parts are being stomped

here for United States Radiator Corporation,

PLANNING OR

FABRICATING A SHEET

STEEL PRODUCT?

SHEARING — Berger shears operate from 40 to 60 strokes

a@ minute. They will cut sheet steel up to 14/ on the shortest dimensions, and medium-hard stock up to ¥%”. Operators above are shearing sheet steel that will be processed into boiler jackets for the United States Radiator Corporation.

re 5 i —) ol elo) i ommcot-te mm c- 1. ¢- mm dal —

You may not realize how many different products are made in Republic’s Berger Division plants because many are fabricated for other manufacturers and marketed under their brand names. We will manufacture your product in volume runs—engineer, fabricate, finish, pack and ship, all to your specifications.

Some of our contract-fabricated products are completely assembled units with operating mechanisms installed. Others are sheet metal assemblies that leave our plants finished with a prime coat, ready for final finishing, assem- bly and packing by our customer.

Our large stock of standard tools and dies and the spe- cialized equipment of our Berger Plants are available to you. Often we can reduce costly tooling investments be-

cause we «lready have the tools to do the job. Because you use our facilities, you can eliminate the overhead problems of building or expanding your plant.

Constant research and development at Berger have re- sulted in advanced processes and equipment to make your fabricated sheet steel products more attractive, and more economical. Furthermore, our facilities and fabricating experience provide you with the same high quality you see in our own products—lockers, office furniture, shelv- ing and steel kitchens.

If you have a sketch or blueprint, send it along to us with complete specifications. We'll tell you promptly what Berger's specialized service can do for you. Learn more details in Bulletins 793 and 908.

REPUBLIC

Woldli Widest Range of Standard Steels

FORMING — Brakes running at speeds up to a stroke a second

range in capacity from 60 to 500 tons making possible production of a variety of items and gages simultaneously. Operators shown here are forming boiler jacket backs. The next stop will be the welding department.

PAINTING — We're equipped to paint over 87, 000 square feet of

steel surface each hour. Equipment includes mechanical bonderizers and degreasers for cleaning mill stock parts; 32 spray booths, six mechanicol dip tanks .. . plus 40 baking ovens to assure beautiful, lasting, baked-on finish. And we can match your sample for color,

4 WELDING — Berger's major plant facilities include the very latest welding t and techniq For every requirement there's @ specific unit located to do the best job most economically, Eighty- eight welding units are available, The operator above is spot-welding stiffener channels,

PACKING AND SHIPPING— Boiler jackets are shipped in cartons,

knocked down. Packing equipment includes newest machines for cratemaking and automatic nailing. Beyond our doors, more advan- tages— you are shipping from centrally located Canton, Ohio,

tm

bse ij “<a Ha me

tars

INDUSTRIAL LOCKERS—These popular Republic Double Tier Lockers are fabricated at Berger, long a leader in the manufacture of all types and sizes of steel lockers for every require- ment. Berger will help you plan your locker installation. Send coupon for details,

PALLET RACKS— Another Republic product made by Berger makes it easy to palletize bulky items of tremendous weight. Rack permits two-way entry ... plus removal of pallets from any level without unstacking and re- stacking. Sizes available up to 10 feet high.

REPUBLIC STEEL CORPORATION

Dept. C-2432

32136 East 45th Street Cleveland 27, Ohio

Please send me additional information on: C2) Berger Fabricating Facilities 794 and 908)

OC) Wedgelock Steel Shelving

(Bulletins

Name Company

Address

WEDGELOCK STEEL SHELVING —The world’s strongest shelving, specifically designed for high stacking of enormous weights, Joints actually get tighter as the weight increases. There's no distortion or instability. Wedgelock is completely flexible for easy rearrangement,

© Pallet Racks ) Industrial Lockers

Title

Zone

COMPLEX TRAINABLE ELECTRONICS Wreaasas

rome QD de LAE Oly AnDWWL

W- Nc Can inn

Western Electric started hiring for its first North Carolina plant in 1946, Evidence that it has found a healthy climate for growth is shown by continually increasing investments in facilities and personnel, with a network of plants now spread over three different cities.

The North Carolina Works produce electronic equipment — some of it the most complex manufactured by Western Electric at any of its many plant locations,

Almost fifteen per cent of its North Carolina workers are in engineering jobs. A large percentage has come from colleges and universities in the State. Others of the 11,000 total employees have been obtained from North Carolina’s vast pool of willing and able workers, Western Electric management has commented most favorably upon the character and “trainability” of the workers it found here.

A businesslike State government and many friendly communities invite you to share the bright future of North Carolina, where pleasant living is a key to industrial productivity. We'll gladly supply more information in confidence, without obligation. Phone, wire or write today.

a | ud id 1a le id Roa shel 74

“Your visit to Western Electric North Carolina Works”,

Let us send you a copy.

A LIFT FOR THE PROCESSOR. Part of the streamlined, permanently leak-proof welded aluminum piping systems that keep quality up, costs down at Refined Syrups & Sugars, Inc.,Yonkers, N. Y. This pioneer producer of “Flo-Sweet” liquid sugar uses TUBE-TURN Welding Fittings and Flanges for top yuality piping

How welded piping helps give pop a lift

Dad's “fresher upper’ . . . that cool bortle of pop... gets its energy from liquid sugar. This sweetener, in ready-to-use form is popular with coday’s bortlers (as well as canners and ice cream makers) because it greatly reduces handling and processing time and saves them money. Liquid sugar manufacturing is an automated process in which welded piping keeps product flow at the peak of perfection and efficiency Technicians of this field as in other industries get a powerful life on their piping problems from Tube Turns. Our research assures advanced fittings and flanges for all applications. Our distributors give fast delivery from the industry's most complete line. In all ways, you get more for your money when you specify and buy TUBE-TURN* Welding Fittings and Flanges.

** TUBE-TURN" and *@* Reg. U.S, Pat. Of

A LIFT FOR THE TOURISTS. Stations A LIFT FOR VOU. You get exactly along the New York Thruway are well equipped what you need promptly from your nearby with hot water for tourists comfort Heating Tube Turns Distributor Call him for facilities employ welded piping and TUBE-TURN complete-line service. He will make Welding Fittings for safety and permanently available the engineering help of Tube leakproof service. Heating Contractors: Joseph Turns on piping problems, Photo: Cour Davis, Inc., Buffalo tesy Taylor Supply Co., Detroit

tt umm TUBE TURNS

A DIVISION OF NATIONAL CYLINDER GAS COMPANY LOUISVILLE 1, KENTUCKY

“Out of the Mud” or “Out of the Muddle”

You can depend on Concrete

Forty years ago America was pulling itself out of the mud. Today it is lifting itself out of a traffic muddle. Now, as then, concrete

pavement is the dependable, low-annual-cost answer to the problem.

Illinois celebrated its first Good Roads Day in 1914. To com- memorate the event a motorcade made the grueling 12-hour trip from Chicago to Sterling, Illinois, in flying gravel and choking dust.

Forty-two years later a motorcade of antique cars made the same trip, now possible in 3 hours, in rain. Looking down on the new Congress Street Expressway, Chicagoans saw an amazing spectacle

ancient cars on the most modern of highways.

Farther west, near Geneva, the old cars rolled over a four-lane section of U.S. 30, two lanes of which were built in 1918, two in 1931—all still giving good service at low annual cost.

Even better performance can be expected of the concrete pave- ments being built in the gigantic national highway construction program now under way. Today's smoother-riding concrete roads have a life expectancy of at least 50 years. Concrete serves far longer than any other pavement. It costs much less to maintain. And it is the safest pavement, wet or dry, night or day. Write for free illus- trated booklet, distributed only in the United States and Canada.

PORTLAND CEMENT ASSOCIATION

Dept. 10d-12, 33 West Grand Avenue, Chicago 10, Illinois

A national organization to improve ond extend the uses of portland cement and concrete .. . through

scientific research and engineering fleld work

been known to be astute and intel- ligent?

It has become common these days to gloss over the stealing that occurs when a government appro- priates from its citizens the funds it wants for the projects which suit its fancy. This is moral dis- integration—and it is time we learned to discriminate better.

KeitH S. Woot PRESIDENT WOOD BROTHERS MFG. CO. OREGON, ILL.

¢ The International Finance Corp. has been set up to stimulate the flow of private capital abroad, which has been much below ex- pectations. The amount of money that IFC plans to invest, either in individual enterprises or in total, is not large. But as its investments will be in partnership with private investors, the total amount will be substantial. IFC makes no claim of possessing superior judgment, but it hopes, by making profitable investments solely in private enter- prise, to show that such ventures are worthwhile.

We consider that if the IFC's performance leads to a _ greater flow of private investment, it will be making a constructive contribu- tion on behalf of private investors. And if it shows a profit, it will not cost taxpayers anything at all.

Someone Else’s Views

Dear Sir:

The article An Old Threat Takes a New Twist {[BW—Sep.15°56,p67]| contains statistics on the earnings of skilled construction workers relative to earnings in manufac- turing during two wartime infla- tions. You attribute these figures to Professors Arthur Ross and William Goldner. Actually, they are taken from an article by Stephen Sobotka in the JOURNAL OF POLITICAL ECONOMY for April, 1953.

I make this correction both to give Dr. Sobotka credit for his work and to dissociate Professors Ross and Goldner from views of Sobotka’s and mine which they may not share.

ALBERT REES DEPT. OF ECONOMICS THE UNIV. OF CHICAGO CHICAGO, ILL.

Letters should be addressed to Readers Report Editor, BUSINESS WEEK, 330 West 42nd Street, New York 36, N. Y.

BUSINESS WEEK e Oct. 27, 1956

Site of Chicago’s new filtration plant, where Gardner-Denver portable compressors are sinking shafts to water tunnel level.

From this dusty “island”...water for 3 million

On this dry, sunken island in Lake Michigan, Chicago is building a plant to provide filtered water for three million more residents. From an immense reservoir here, water will flow through a six-mile tunnel, as deep as 220 feet below lake level, into existing water mains. Gardner-Denver rotary portable compressors and rock drills are helping to sink five 250-foot shafts down

At the northern end of Chicago's water tunnel, Gardner-Denver 600 rotary portable compressors supply compressed air for shaft-sinking.

Increasing the nation’s oil reserves by giving a new lease on life to old oil wells is an important job for this Gardner-Denver water flood pump.

to the tunnel level. On big projects like this, time schedules are vital. So are budgets.

That’s why construction giants so often include Gardner-Denver portable compressors and rock drilling equipment in their plans. They know Gardner-Denver dependability will help hold rigid time and cost budgets, Gardner-Denver Company, Quincy, Lllinois.

Productive capacity on big assembly lines is greatly increased when Keller Tool multiple nut setters provide automatic torque tolerance control,

GARDNER - DENVER

THE QUALITY LEADER IN COMPRESSORS, PUMPS, ROCK DRILLS AND AIR TOOLS FOR CONSTRUCTION, MINING, PETROLEUM AND GENERAL INDUSTRY

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u and likes it

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"> 7

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\ city man like Mr. Jones might not know that American farmers raised a bumper crop of insects this year.

Aphids, termites, grub worms, bor- ers, fruit flies, locusts—the ancient agri- ultural enemies—turned up in hopping, hungry legions. For farmers fighting the $4 billion yearly loss they cause, the strongest allies are new chemical “hired hands,” many of them from Hooker

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The codling moth and voracious corn borer—your competitors for the juiciest apples, sweetest corn of the season are licked by sprayings of DDT, made with Hooker monochlorobenzene.

The same weather that unleashes in- sect hordes also promotes the growth of undesirable weeds and brush. Young fir trees in timber nurseries threatened by a smothering growth of brush, find room to breathe, thanks to selective sprays made with Hooker 1, 2,4, 5-te-

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These are just a few of the “chores” Hooker chemicals do swiftly and cheap- ly for farmers. They're good reasons why all the industries supplying the farmer's needs depend increasingly on Hooker chemicals and Hooker research to help. Write Hooker Electrochemical Company, 110 Forty-seventh St., Niag- ara Falls, N. Y.

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BUSINESS OUTLOOK

BUSINESS WEEK OCT. 27, 1956

A BUSINESS WEEK

SERVICE

PAGE 23

Auto dealers started this week very nearly cleaned out of cars.

They had sold (at a price) all but a few of the very worst dogs among the 1956’s. And they were having trouble hanging onto enough of the lim- ited number of 1957's for display purposes.

So buyers will get little choice of model or color for the next several weeks—unless they are willing to stand in line for a while.

Searcity—or relative scarcity—of new cars may have queer effects on customers. Demand surely will feel strange crosscurrents.

* Tight supply will intensify yearnings in those who have waited. This is the first appetite-whetting shortage in a long time.

¢ But tight supply also will dismay some prospects, maybe even turn them away. Deals, for a while, won’t be lush. This could in effect add $200 or $300 to actual sales prices—on top of the $50 to $100 officially tacked onto list prices of many models

Inventories of new cars in dealers’ hands will, of course, build up grad- ually from now on.

Yet production-line bugs always sap output in an extensive model change. Those bugs have chewed more than 100,000 off originally sched- uled output of 510,000 cars for October—holding the month below 400,000

This lag probably has been accentuated by Detroit’s determination to clear the decks before launching the new lines.

It now seems improbable that fourth-quarter output of new cars can exceed 1,650,000. And even if retail sales should run 10% behind a year ago, they would still go over 144-million

Allow about 75,000 for exports and other unregistered sales, and the quarter’s addition to dealer stocks would be only 50,000 to 75,000

This means not many more than 400,000 cars in showrooms on Jan. | (for stocks were down to about 350,000 on Oct. 1)

This is about half what dealers had or hand going into 1956.

Selling autos in 1956 has been pretty rough on a lot of people. Yet the final results, when they are in, won't look bad in perspective:

¢ Output should be fourth best—between 5.8-million and 5.9-million, ex- ceeded only by the years 1950, 1953, and 1955

¢ Sales to domestic customers—actual registrations—will be third best at just a little under 1950’s 6,326,438; that looks bad only in comparison with the extraordinary record of 7,169,908 for 1955

—* You don’t see in steel any such slack as still persists in some of the nonferrous metals.

Steel output holds above rated capacity. Sales executives, already pressed to handle available business, see no letup (page 33). The belief is that the full pressure of auto needs has yet to make itself felt.

This is the kind of steel market in which prices could go up any time (any time, that is, that anybody is willing to lead off).

BUSINESS OUTLOOK (continued)

BUSINESS WEEK

ocT.

PAGE 24

27,

1956

Just about everyone knows that steelmen aren’t satisfied with the recent price boost—especially in relation to expansion programs. Anyone who doubts it needs but to listen:

“Steel is still too low; another increase is needed,” John F. Smith, Inland vice-president, told St. Louis purchasing agents this week. e

Domestic producers of copper at midweek were high, if not dry, with their asking price of 40¢ a |b

The London market, sagging day after day, had been shaded to just over 33¢. Custom smelters in this country had come down again (BW—Oct. 20'56,p20), and were offering the red metal at 35¢.

And copper for future delivery could be had at about 32¢.

There are Missourians to be found in the textile trade; they will have to be shown that the flurry in cotton goods is the real thing

One, who has questioned numerous recent buyers of gray goods, finds they all have but one answer: “Oh, the price was going up.”

The price rise reflected a wage boost. It brought a pickup in new orders But doubts persist that there is any more to it.

Activity of the cotton mills apparently ran behind a year-ago again in September. The daily average consumption of cotton was just under 33,000 bales, between 5% and 6% behind last year

That marked the fourth consecutive month to fall behind, following gains for the first five months of 1956

e Shoe industry gains over 1955 will be small when the score is in During this year’s first quarter, the shoe factories posted a nice 6% gain over even last year’s record activity. Since then, however, it has been a good month that has as much as matched 1955

The industry is now figuring October production at about 48-million pairs, clinging close to the 1955 rate. But preliminary estimates indicate that September ran sharply behind—and the nine months’ gain over 1955 had dwindled to 142%.

Retail results for the first half of next year are viewed conservatively by members of the National Retail Dry Goods Assn.

In a report this week, they suggest a year-to-year rise of 242%

That would be only half the rate of rise for the first half of 1956. More to the point: It implies little or no gain in unit volume, for the year-to-year price advance looks like at least 242%

Doubtless the hope, deep down, is for a better dollar gain.

e ‘

Here are good clues to business activity through Christmas.

* Fewer than a million workers drawing unemployment compensation for the first time this year. (The number averaged 1%-million through late winter and spring, 1%-million during the summer.) The total, never- theless, remains a little higher than a year ago.

* New claims for compensation also the lowest for the year. Contents copyrighted under the general copyright on the Oct. 27, 1966, issue—Business Week, 330 W. 42nd St., New York, N.Y

——— € / - j —— oe eo + a a o ——/

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BUSINESS WEEK

OCTOBER 27, 1956 NUMBER 1417

The Soviet Empire Shakes

HE SOVIET empire in Eastern Europe has started to shake, under forces that Moscow can no longer control, ex cept by brute Rule from the Kremlin is threatened by an upsurge of anti-Russian nationalism and deep, widespread resentment against unbear- ibly low living standards It is not clear yet how Moscow will handle this explosive situation. With in the weck, the Sovicts have reacted in two entirely different ways e Last weekend, a new “national Communist” regime came to power in Poland, the heart of the imperial edifice that Stalin built in Eastern Europe after World War Il. After a threat of force, Moscow backed down. ¢ This week, a spontancous anti Soviet revolt tore Hungary from one end to another. But this time the Communist government called on the Red army to quell the revolt—and Soviet tanks and planes went into action

force

space of a

Clearly, Moscow’s problems have only just begun. There may be one crisis after another in the months ahead. ¢ Real Setback—There can be no doubt about one thing: This is by far the worst reverse Moscow has suffered ince Stalin launched the It could mean that the cold war has lready been won by the West.

At the very least, it puts a new perspective on the East-West struggle.

Ihe military balance in Europe, . at least in conventional forces, will be drastically altered. Up to now, Poland has been the center of Moscow’s East European alliance

cold wal

svstem—an advance position for any Soviet military moves iwainst the NATO countries. Unless Moscow should change its course in Poland, it seems doubtful if the Red army can long remain there. Even if it Poland in the future will be a protective buffer at most

The Soviet economic offensive in the Middle East will be blunted. Mos cow has been counting on the satel lites, especially Poland, Czechoslovakia, and East Germany, to supply the capital goods (and arms) for this offensive Now Poland, and long the others, will have to devote their eco efforts to strengthening their own shaky cconomics It's possible, too, that Egyptian Pres. Nasser will revis«

doc 5

before

nomi

his estimate of the advantages to be gained from leaning so heavily on Mos cow s support.

Soviet military action in Hungary won't go down well in the uncommitted nations of South Asia, especially India It's likely to wipe out the political and cconomi idvantages Moscow has gained over the past year from the

smiles” of the Khrushchev-Bulganin team.

In the Kremlin this week there must be a real “agonizing reappraisal” of the foreign policy line laid down early this year at the 20th Communist Party Congress. It scems likely that drastic changes in the Soviet leadership will be made at the upcoming meeting of the party's central committee

The uproar in Eastern Europe may force Moscow to take a second look at what the West offered last year at the Geneva summit meeting—a Huropean Security Pact that would include Ger man reunification and a guarantee of Russia’s western border

I. New Leader Gomulka

Although events are moving so fast that you can’t be sure of anvthing it scems likely that the Poles, rather than the Hungarians, have struck the most serious blow at Soviet power

Ihe head of the new Polish regime, Wladyslaw Gomulka (picture, page 25), was put on top by a popular uprising that first exploded in the Poznan riots and then made Communism the cul prit at the Poznan trials (pictures right) Behind this pressure lav lone years of Russian domination and th living standards produced — by Soviet-stvle Communism (BW —Oct.6'56,p30 e Disaster—In Warsaw last weekend the Russians uffered i real deback a reverse comparable with that met by 1920, when he sent Soviet troops to the gate yf Warsaw, only to have them beaten back to Kiev

Half the Soviet Presidium, led by party boss Nikita Khrushchev, rushed to Warsaw to put out the fire, met stub born defiance from former stooges, now under Gomulka’s leadership ¢ Not Titoism—T her for the national lution that ha hares with ‘Tito

grievances against

miserable

Lenin in

no precedent Communist” revo wept Poland It 1945 revolt against

JUNE

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SEPT.

NOW

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Poles riot in Poznan, are quelled by troops and tanks,

ney { yy:

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Peal: Poznan rioters are tried with surprising leniency.

Polish Communists set up own regime—and make it stick.

27

‘4

WL

MARSHAL

has

NIKITA KHRUSHCHEY

Poles

28

ADYSLAW GOMULKA — demands

to run Poland's domestic affairs.

ROKOSSOVSKY no the Polish

longer

full control over Army.

the then uses rough tactics in Hungary.

bows to

Stalin a defiance of Sovict rule—a de- fiance that was much more dangerous for the Poles, who have fronticrs with the West (map, page 29). But national Communism im Poland dif fers in this fundamental respect: The driving force came from below, from the people, not from a dictator, as it did in Yugoslavia

The Hungarian revolt scems to be different again The Communist Party in Hungary has held power the war solely because of the presence of Soviet troops in the coun try. Today few Hungarian workers and students—ceven in the present crisis— regard the Communist Party as a rallying point in their struggle for national liberation. ‘That's why former Premier Imre Nagy and anti-Stalinists pushed back in power by the crisis, had no choice but to call for Soviet troops

no

since

to shoot down the rioters ¢ Pioneer Nationalist—Gomulka had popular backing in Poland because he was the first “national Communist” in Eastern Europe before Tito ind went to prison for it In 1947, when Tito henchman, Gomulka was isting Stalin's economic and _ political directives. On the one hand, he opposed farm collectivization and, on the other, Poland

has

even

Stalin's already re

Was

he was ready to have Marshall Plan aid. When Stalin finalh lavia, according to a recent revelation by ex-Foreign Minister Molotov Poland “still greater disaster” there ure that it didn’t happen, he had Gomulka from the post that

he has now regained and tossed into

ect pt turned on Yugo

he was

hooting at also—to prevent a

Just to be re moved

jail

¢ New Demands—Now that in power, Gomulka wants a for Poland than he did before. He in ists that Poland should be free to run iffairs without Sovict inter

he’s back

lot mor

its internal ference That doesn't mean he the kind of break Tito made with Moscow No doubt he’: tor Moscow's agreement to respect this de mand, to respect the Sovict’s security it seems that Moscow will no longer have one of its the whole military Marshal Rokossoy sky, Polish defense

may be re

wants

ready, in return

needs in Poland. Even so

marshals running

Poland

who had been

show in minister ind commander-in-chief,

placed by a Polish general

ll. The Polish Way

Gomulka

that there is than one road to socialism. “There is the Sovict wav,” he savs. “There is the Yugoslav And there are other wavs.”

According to the nounced last weekend

insists more

wal

program he an

Poland will de

velop its political institutions as War- saw sees fit, even give the people a chance to be heard in the selection of Poland’s one-party parliament, which in turn will decisive voice im government policy.

As for affairs, Gomulka has suggested these basic changes:

¢ A shift in investment policy from heavy industry (including arms) to consumer goods production.

¢ A reorganization of industrial management to the managers, rather than the bureaucrats, a real say.

e A halt to farm collectivization and lower taxes on individual farmers, who still represent 80% of Poland's farm population. ¢ Easing the Grip—There’s no doubt that Gomulka plans to loosen the grip Moscow has had on the Polish economy.

Up to now, heavy industry has been working largely for Moscow’s benefit. Much of the output went to the U.S.S.R. at nominal prices, or to Red China, the other satellites, or the Middle East on Soviet account.

The same has applied to more than two-thirds of Poland’s coal exports, even though Poland can demand world market prices in the coal-hungry mar kets of Western Europe. In return, of Poland received many Sovict-built industrial plants, including large mills. But there's no doubt about who has gained more out of the Soviet-Polish exchange ¢ Hard to Shift—If Gomulka is to change the whole economic climate in Poland and give the people a better standard of living, he will have to reduce over-all exports and also shift a good part of the reduced total toward West- crn markets

However, any big shift in Poland’s trade pattern will be tricky business Moscow won't let Poland detach itself from the Soviet bloc, even gradually, without trving to block th process by economic squeeze plays against the Poles. And Poland can’t turn completely to the West, as

have a

cconommic

o give

course, has

several steel

cconomc

CCOnOPIIE

some

Tito did, without running the risk of a

Soviet military attack

lll. View from Kremlin

Since last weekend, the Kremlin has been facing one of the worst dilemmas to confront it

Using force to put down national Communism in the satellites is costly in terms of world public opinion. It jcopardizes the prestige that Moscow has been trying to build up in un- committed such as India

Rolling with the punches and grant- ing control over internal affairs to the satellite government shatters the Communist monolith. What's more, the Russians are bound to the

ever

nations

lose

BUSINESS WEEK e Oct. 27, 1956

large economic profit they have ex- acted from the satellites. ¢ Domestic Backfize—The Kremlin has to think also of the domestic con sequences of any action it takes in Eastern Europe. If it puts down the upheaval there by a massive use of force and retightens its military grip over the whole area, East-West rela- tions would immediately become at least as tense as during the Korean War

That weuld require a return to Stalinism inside Russia, regardless of resistance from the industrial man agers and professional people at whom the “liberalization” of the past two years has been mainly directed. ¢ Politics—But if Moscow is going to roll with the punches in Eastern Europe and still satisfy its security needs in the area, there will have to be a re vamping of the Soviet government. The debacle in Warsaw last weekend hurt not only Khrushchev but the Soviet Communist Party as well.

lhe party's power, which was shaken by the liquidation of Beria, was re vived at the party congress only last February. Now that the party has been shaken again, a shift in the power bal ance in favor of the Red army seems inevitable

That could bring down the Khru- shchev-Bulganin regime and produce a new Army-Party coalition team, headed by Marshal Zhukov. He is the Soviet leader who has come through the whole postwar period with an un- scathed national reputation.

one

IV. And from Washington

Washington will play a cautious game in Eastern Europe, for the time being at least. U.S. officials are to embarrass Gomulka by rushing too openly to his assistance. They assume, however, from hints received from the Poles that U.S aid will be requested at some stage + How to Do It—Agricultural surpluses will be the main source of assistance An of these will require Congressional action to remove the ban on sales of surpluses to Communist countries for local currency. But the Administration is confident that Con gress will go along ¢ General Strategy—Outside the eco nomic aid field, the only immediate shift in U. S. policy will be an attempt to step up cultural exchanges with the satellite countries

In general, the Polish revolution looks like confirmation to Washing ton of the wisdom of trying to foster cultural exchange The exchanges with Russia, along with other products of the “Geneva spirit,” are credited with having indirectly encouraged the satellites to grab for more freedom

anxious not

economic

major use

BUSINESS WEEK ¢ Oct. 27, 1956

é

BLACK SEA

Satellites Get Out of Hand

The Russian armies of World War II pulled Eastern Europe inside the Com munist orbit. During the winter and spring of 1945, Red troops conquered Warsaw, Budapest, Prague, Vienna, and finally Berlin. By May 1945—the date Germany surrendered—Moscow al ready scheming to convert a military victory into a political triumph Soon the Iron Curtain—at Moscow's behest—was dropping between East and West. In the years since, the West has bet on Tito’s “national Communism.” His defiance of the Kremlin has helped tilt the scale against Soviet domination of Eastern Europe. That's apparent if you look at what has happened

June, 1948—Yugoslavia: Tito breaks with Stalin. Yugoslavia and Russia fight their own cold war. Tito begins to build “national Communism.”

September, 1948—Poland: Wladyslaw Gomulka, top Polish Communist, con fesses to a “Poland first’’ attitude, later goes to jail for three and a half years

February, 1949-—Czechoslovakia; Red puppet Klement Gottwald masterminds bloodless coup in Prague, puts Com munists in full control

December, 1952—East Europe: Stalin purges Titoist leaders in Hungary, Bulgaria, and Czechoslovakia, including Czech Communist Rudolph Slansky

March, 1953—Russia: Stalin dies

was

June, 1953—Kast Germany: An upris- ing in East Berlin fans out to other industrial centers. Flare-ups also occut in Czechoslovakia

July, 1953—Russia relations with ‘Tito

February, 1956—Russia: Khrushchev launches his de-Stalinization policy in a speech at the 20th Party Congress.

June, 1956—Yugoslavia: Tito makes a three-week trip to Russia, gets a promise from Khrushchev of “equality and independence” for the satellites.

Poland: The day after Tito’s return to Belgrade, workers in Posnan riot—the first sign of a popular revolution in Poland

July, 1956—Hungary: Matyas Rakosi, Hungary's “Little Stalin’’ and arch- enemy of Tito, is forced to resign

September, 1956—Russia: At Yalta, Khrushchev in talks with Tito tries to slow down the de-Stalinization drive in the satellites

October, 1956—Poland: Communists defy visiting Soviet leaders in Warsaw, reinstate Gomulka as top man, Another “national Communist” regime comes to power

Hungary: Fired by the ample, Hungarians reinstate former premicr Imre Nagy—Hungary’s Go mulka~as government head, break out in battle with Soviet jets and tanks

Moscow revives

Polish ex-

29

MEASURING Little s

"8

30

“ he i

stern

was when

work

take it

started

left

A Ship's Worth More

When a furious

Atlantic blizzard de posited the badly shaken freighter I trusco on the rocky be ich ot Si ituate Mass., last Mar the beach a dead hip’s Italian owners tid profit for an enterprising group of U.S thei

for th possibl

loss md a men and

bu iri hipowner 1550

ciate

With

mand

hipping space in keen de PI |

ind cries coming from te! to de-mothball meet the thi i hip on the beach wa bet a mothball ol ilvage ompan vn the refloating job a up determined to try it ible three-to-one

one return on imvestment a

ll quar rCOsSecrve need group decided that just as good a

Though one

h Te

hope ic

om in turned the with ci OT

luck

or even

KOTHINGE lur

i gamble. but not a b

16, it washed up onto

cls to

For the group ha its side retired Rear Adm. Lebbeus Curtis, president of Pacific Trailes Ships, Inc., who be came famous for his wartime salvage work for the Navy at Pearl Harbor and Okinawa. Curtis decided the Etrusco could be floated. By this week he had jockeyed it foot b foot its parallel-to-the-coastline tion around to a near right angle. Adm. Curti month's period of extremely high tides the next stage

on

from original posi

banking on next

to complet refloating the repail ¢ Proposition—When the 10,330-d.w.t Etrusco 1 Canadian-built Liberty, landed boulders on Scituate beach, it was owned by L'Italica de Navigazione, of Genoa. After the sal- thumbs down, the the

whe

Oper ition and start

mong th

age company turn d

the

msul

owners abandoned hip te

ince underwrit oftered

BUSINESS WEEK e¢ Oct. 27, 1956

+ meee |) pA DIGGING OUT Bulldozers clear rocks from beach—

bare at low tide—so ship can move.

% " PULLING Chains and cables tied to ship's own winches

strain to pull bow, foot by foot, out to sea,

STILL STUCK Stormy high tides might have set vessel

loose—but there wasn't any storm.

in the Sea

for sale to the highest bidder. When the bids were opened on Aug. 14, the top price—$121,211—was offered bi Victor ‘Transport Corp., of Monrovia Libena

Victor had been borm only th month before over a luncheon table at the Downtown Athletic Club in New York, where Adm. Curtis offered hi opinion that the Etrusco could be re floated. It's a three-headed company, with ownership divided equally among (1) three Norwegian shipowners, Gor don Mosvald, Capt. Armfeldt Johanne en, and Karl Glastad: (2) Henrv Dowd, New York ship broker representing a mall group with extensive shipping in- terests; and (3) A. D. Lee of Houston lex BW —Sep >, pl 36 head of Lee Shipping Co Adm. Curtis has an option for up to one-tenth interest.)

With the Etrusco bought, the group

BUSINESS WEEK ¢ Oct. 27, 1956

formed Ocean Salvage Corp., with

Adm. Curtis a pre ident, to do the refloating job, and put up $75,000, in the same three-wa' proportions

* Time and Tides—Adm his salvage crew Ktrusco early

Curtis and aboard the in’ September

Lhe plaw all along has been to kedge the ship-as the nautical men have it off its rocky perch and back into the vater; that is, to drop sea anchors or kedges off shore, link them to the bow with stainless steel cables, and use the ship

moved

own winches for pulling the that method—plu on high tides—that has edged the Etrusco’s bow out almost at right ingles to the beach

And for every four feet the anchors pull the bow, the stern shifts a foot

lor the big push, though, Adm. Cur tis looks to the high tides that come only during three or four days cach month at full moon. If Ox tober's high-tide period, over last week end, had brought the promised north easter (the kind of storm that tranded the Etrusco in the first place) the final push might have come. Now, though the daily inching will go on eyes are on November's big push

bow seaward. It reliance

extremely

SATHIC

And of course E.trusco it’s riveted, not welded—it’s always possible the train might snap it im two

¢ Money—By the time afloat, if the

ownel

though the has much elasticity because

the Etrusco is succeeds, the figure they will have put in ibout a quarter of a million dollars But that won't be all. Though the holes torn in the Etruseco’s hull have been patched up, the ship will have to » into dry dock for repairs. ‘That will ild another quarter million—maybe a: much as $600,000 more

But take the total investment at ibout half a million, which one of the thinks is a good figure. With the E.trusco seaworthy again, the owners would have a property worth $1.3-mil hon to $1.5-mullion

And that’s more than a paper figure The United Mine Workers with coal producers ind railroads in a joint coal ship deal (BW—Aug. 18°56, p3 are reported to have offered $1, 10,000 for the ship. One of the Et rusco partners has been dickering with ome Krupp ofheials in Germany Th Krupps have indicated they'd be happy to charter the Etrusco on a five-year contract that would net the ome $40,000 a month—and advance the owners up to $850,000 « ish to sew up the deal. The Krupps would use the ship to haul coal

Other charter deals are possible. But on the indicated Krupp figures, the would net

operation

owne)l

involve d

ownecl

$2.4-million over five vears—and still have a $1.5-million ship. Not bad for a half-million invest ment

owners

32

Drought Hits Old Man River

Shippers and industrialists along the upper Mississippi River are praying hard for rain, as receding waters curtail nav- igation and threaten local industry.

Low water on the Mississippi is cur- tailing river navigation and threatens to create a coal and fuel shortage in the St. Louis area. And unless the region gets a good sustained downpour soon, power and water supplies will be head ing into a crisis within a few weeks

This critical situation is the cumula tive effect of years of below normal precipitation in the Mississippi ind Missouri watersheds. Last week, the water level gauge on the Mississippi at St. Louis read minus 2.6 ft., and, ac cording to Col. George E. White, Jr., of the Army Engineers Corps St. Louis Div., the river may be so low by Nov. 15 that all barge traffic above St. Louis through the Alton Locks and below the dam to Cairo will be stopped ¢ Conference—Last week, representa tives from 25 oil and 40 river transport companies met to discuss the possibility of setting up a nonprofit river barge pool. Among the emergency measures considered were (1) a plea to Pres. Fisenhower to double the present draw from Lake Michigan, and (2) installa- tion of oil pipelines to pump from barge to barge across the Alton Locks

This week, diversion of Lake Mich- igan water into the Illinois waterway system was temporarily increased from 900 cu. ft. per sec. to 2,600 cu. ft. per sec., through an agreement between Army Corps of Engineers and the Chi- cago Sanitary Distnct. The higher rate

for a 10-day period—will raise the water level in the Mississippi at Alton an estimated 24 in ¢ Trafic Tie-Up—Meanwhile, there was a traffic congestion at Alton Locks, t Alton, Ill., where barges already have to be lightened 20% of their normal loads to make the trips up the Illinois River to Chicago, or northward on the Mississippi. Many barges stood in line for 24 hours to be “locked through” in Operation that takes about 25 min under normal conditions ¢ Appeal—To ease the emergency, St Louis Army Engineers Corps is looking bucket or two of thing, it has trving to wheedle more Missouri River water out of Army Engineers in Omaha Currently, the Missouri is supplying half the Mississippi's flow

I'he central fact about the Missouri, insofar as the St. Louis area’s emergency is concerned, is that it is a controlled river. Army Engineers has absolute regulation of its flow through the four upstream dams in the Dakotas and

several

evervwhere for a

water. For one been

Montana. By its ability to adjust supply to needs, Army Engineers will save the Missouri Basin itself from any emer- gency caused by short supply. But that will worsen St predicament.

During the summer months, Army Engineers cut loose about 34,000 cu. ft. per sec. (CFS) from Gavins Point Dam at Yankton, $.D.—lowermost of the Missouri River dams. By the time this water reaches the mouth near St. Louis, contributions from tributaries have swelled this by 2,000 CFS.

But during the winter, to fill the reservoirs, the Missouri's flow is pinched down to the minimum needed for con- sumptive use and pollution control. The pinchdown is now in process. Re leases are being cut to 15,000 CFS at Gavins Point; on Nov. 15, they will be cut to 7,500 CFS. ¢ Last Straw—This year, the cut will be a body blow to St. Louis. The re- ductions in the Missouri's flow will be the principal factor in a downward drop that will carry the Mississippi from its present stage of minus 2.6 te. at St. Louis to what Army Engineers expects to be closer to the actual level of minus 8 ft

Before the St. Louis situation be- came public, Col. White called a meet- ing of Army Engineers representatives in the Missouri Basin and the upper Mississippi to discuss the emergency. The Missouri River Division office at Omaha sent the head of its reservoir No one actually asked him for more water from the Missouri, but the implication was plain ° Stand— Th position of Maj Gen. G. FE. Galloway, Missouri River Di- vision Chief of Army Engineers, is that it was Congress’ intent that the Mis- souri River be developed for the benefit of the Missouri Basin

It might be different if there was an abundance of Missouri River water available: but there isn’t. The amount in storage at the four dams today is only 13.6-million acre-feet

Vhis subnormal supply is forcing the navigation month early this vear—on Oct. 26. Tonnage this vear, due in part to the shortened season but because of com- petitive rate railroads, will run only about 300,000 tons, com- pared with last year’s 415,000 tons. And the situation is causing concern among

Louis’

control center

season to close a

mostly slashes by the

local industrialists, who wonder where they will get the water run their plants

necessary to

BUSINESS WEEK e Oct. 27, 1956

Fee RENEE NT CRM cx ey an,

Percent of Domestic Shipments of Steel to Automotive industry

40 Detroit's take of the nation’s steel has been dwindling for 30 a -

20

o 1954

Dota: American tron & Steel institute.

+ 1955

m ore th an

a 1956

© business ween

The Coming Shortage of Steel

Scads of steel top-level gales execu

tive pent Monday in Detroit looking at Chrvslet 1957 line Almost to a man, th deeply impressed

And man tay-at-home steelmen

reported happily, that same day, that automotive stecl orders for December it | of quota something that hasn't been true for months Rather freely around Pittsburgh, all week, it is asserted that the 1957 Chevrolet drew more buyers when it ppeared, Oct: 19, than the 1956 models did last year ¢ No Letup Seen—Everywhere that ,

tecl is made, the industry chugged

al lig it

9 lightly more than capacity it ina im earl post strike davs N ild any letup be seen through

months All th things had Pittsburgh rub

bing it han cheerfully—when it wasn't scratching its head a little anx ious! Ihe hand-rubbing, of course iticipated prolonged high-level stecl to the industn best customer utomobil 1 market that has been dull for months. But the head-scratch ing reflected a deep concern about th ld steel market that is rapidh

and unmistakably coming up Ihat can’t come any later than De cember—now that Detroit has placed firm ord t 100% of tts quota for that month. That follows simply on

BUSINESS WEEK e Oct. 27, 1956

the basis that steel is at capacity with iutos taking only about 75 of theu quota Wemand will be ovei capacit by at least 5 when Detroit is taking ill its quota

¢ The Real Problem Is:—Ilow much

oversold? tion the It depends on how well the nev ilthough it that

which the

‘That ibout the onl qu

teclmakers can't answer neht now models sell not quit imple as all

Ihe rate at new Cal ell

will determine just how belligerent! Detroit swarms into i production In turn, this will govern its steel orders

ordering by Detroit, in

he rate of

turn, will affect the rate at which other big steel buyers order. When Detroit is really beating on the table for steel other buver tend to over-ord just to insure a place on somebod melting ind rolling hedul Wher that hap pens, demand surg beyond suppl ind a market frenzy develops as it did in 1955

¢ Lesson Learned—It's truc that vou hear considerable reassuring comment

by steelmakers and that there'll be

juto pe ple botl

no ‘repetition of the

1955 frenz Numerou techmen 1m sist that vou'd need a return to 7-million plu mito vear to de clop uncontrollable a steel demand And the auto makers talk in terms of much tighter scheduling, of more close] on

trolled dealer stocks, and of less “bor rowing’ of car sales from future years Detroit you hear freque ntly, has learned its lesson from the 1955-56

boom lump ( ck However, that oversold steel market bi Steel has be plu mce the During that

tah has been

won t prevent an December

n operating at ¢ ipacity trike ¢

penod thi

overy period itomotive below

stec]

order

perhaps 25°

number of unfilled

1 dar igo

normal hven ) I

more had Ihen, too, for all its in

producer have today than the ¢ Inventory

tensive drawdown of steel inventory in the last four months or so, Detroit still hasn't finished cutting steel stocks One of the Big Three has 30 davs more of inventory reduction ahcead—another

xpects to cut through the end of the ear. Plamly, if the new models catch n briskly, production will rise and right along with it will go Detroit's teel inventors Ihey won't have to ri o far so fast as mm 1955 or 1956 for there's to be no steel strike in 1957 But in a stecl market that was at capa city even before the new mode} vear, Detroit won't be able to expand pro duction very far while holding inven torn it low levels

linally, as more than one steelmaker points out, the automobile business is

competitive Thu teclmakers

33

difference does it make how many lessons Detroit learned from the 1955-56 “boom-slump” cycle? All juto makers are striving to gain or hold market participation. If one gets a car that’s selling briskly he'll shove his production just as far as it can go. The threat

irguce what

competitor whose position is

ened will strive to match it If thi j

now do

they add, you keep other steel users from

goes far enough trying to protect thei positions?

* New Capacity—Stecl’s principal hope uncontrollable market idded in the 125.8-million in place the 1955 really took off, almost ex ictly two years ago. Today, it probably ibout 6-million more ingot tons ivailable. That would vield 4.2-million ulditional product tons, of which autos,

of avoiding lie

last two vears

nm in the capacity it ha Steel had when

innual tons

mode | race

on a 20% basis, could expect to get an idditional 840,000 tons. At two tons that should vield 420,000 mor added that number 1956 production, you wouldn't far short the predictions Detroit is making ¢ Ingots—But there's at in the ointment, When the tarted, stecl was capacity. That tons

per if if ind if to the }

vou of

rT ver

least fly

1955 model

one

ir got {) ot

vcTe

operating at meant there for what isn't truc

million open

his

er business today

came nm One of the five largest producers, for that he'd probably be hard put to produce only the cucing now

Another substantial woducer put

xample, agree

50 more in

ots in next month than he’:

pro iutomotive steel it this was

Look trving to steel to finish. The market's just tight enough that it ll cost me $110 for ingots, $120 for slabs. Now vou add a 2-million-car first quarter to that kind of a market ce what you get.” * Prospects—One

I'm bu

nad thing is plain. For Detroit to have a 1957 model vear that

its seclate to 6.750.000 cars

matches forecast—6.5-million some non-automotive tee | HWscTs lor capa if 1S%

is about

ire going to have to move stecl been at with autos taking only of production. Their normal take 20%. At today’s production that figures to about 400,000 tons per week more steel on which Detroit has a pretty

Those steelmen who parcel out the tuff stop right there, unwilling to talk ibout the problems thev'll face if De troit has a better vear than it now pre dicts for 1957, rather than another 6.1 million car vear as in 1956. About all thev'll say that Detroit generally to get most of the steel it really

ove has

gain ibout

rate

persuasive claim

is

manage

ice ds On

we rsold

that basis market

steel can't avoid

by December

an

34

PROFITS: Still on a

A sampling of third-quarter yps and pOWNS

CHEMICALS & DRUGS Allied Chemical & Dye American Cyanamid Atlas Powder Diamond Alkali E. |. du Pont de Nemours Hooker Electrochemical Parke, Davis Rohm & Haas Union Carbide & Carbon..

CONSTRUCTION General Portland Cement Johns- Manville Lehigh Portland Cement National Gypsum Penn-Dixie Cement

CONTAINERS Container Corp Continental Can Libbey-Owens-Ford Glass

MACHINERY & ELECTRICAL EQUIPMENT Fairbanks, Morse General Electric Hussmann Refrigerator International Business Machines Minneapolis-Honeywell Regulator Radio Corp. of America

PAPER & TEXTILES American Enka Industrial Rayon Rayonier Riegel Paper St. Regis Paper Scott Paper

METALS Allegheny Ludlum Steel Climax Molybdenum Crucible Steel Republic Steel U. S. Pipe & Foundry Youngstown Sheet & Tube

TRANSPORTATION, OILS, RUBBER Allis-Chalmers Atlantic Refining Caterpillar Tractor Continental Oil **Douglas Aircraft Eaton Manufacturing **General Tire & Rubber Glen L. Martin Sun Oil Thompson Products

MISCELLANEOUS Gillette Liggett & Myers Tobacco National Distillers Products Philip Morris Schick

* Estimated **Third Quarter and Nine Months Ending Aug

Third Quarter

Sales

Us UWOn NO OO

+27 +19 +11

+21 +13

*

a ooe eon u o

Ls)

Percent Change From 1955 Nine Months

Net Profit Soles

;

—11 + 63

+ 26 28

—26.1 + 23.7

+14 +12 *—12

9

14 - 7 —15

%o

—

om 9 1) +28 -11 + 0

1 3 6 6 1

on vo" ON wowa NOD N@Y

4 0 +24

+15 2

+25

+15 +28

owoocaN NU WO a OWNnR @ & @ OC

BUSINESS WEEK e Oct. 27,

Net Profit

eoownvooewo oes

oNNR GO =

1956

Plateau

The headlines announcing the early statements on third-quarter corporate sales and carnings are mostly cheerful ones. Gains predominate in this early tabulation. But the picture is spotty; gains are selective—as in the stock mar ket. It was a good quarter, but not an exceptional one by present standards.

The figures reflect what has been generally true of business activity so far this year—a narrowing margin of in crease over last year. As the Dept. of Commerce noted this week, corporate profits are not moving the same way as Other types of income. ¢ Slowing Down—During 1955, profit margins still rising, to regain the ground lost in the preceding re cession During the first half of 1956, corporate earnings dipped mod erately in dollar total, while other major types of income continued to increase

lor most companies, the third-quar ter performance dragged down the per- formance for the months. It still ran ahead of a year earlier, but not so far ahead as the two previous quarters Anyway, stockholders hardly have cause to complain this vear. Cash dividend payments of all publicly reporting cor porations were 13.1% higher in the first 1956 than in the comparable 1955 period. For manufac turers alone, the increase was 16.4%. ¢ Cost Squeeze—Higher costs took a toll of profits in the third quarter in many Today a large increase required to get an increase in net proht A number of companies reported increased sales with substan tials

in profits

Radio Corp. of America, for exam ple, reported a 12% decline in third quarter net profit compared with last year, despite a 13% increase in sales to a new high. Last month, RCA raised prices of television 14% to 10 to offset its increases, but not in time to help third-quarter profits

kord Motor Co. lost 82% in net earnings, compared with last year’s third quarter, on a sales drop of 25%. Giant General Motors reported sales of $2.3 billion and profits of $137-million in the third quarter this year against $3-billion ind $252-million in the same period of 1955 ¢ Steel

cou;©rs¢e,

wcrc

rine

nine months of

instances in sales is

smaller increases—or even declines

receive’rs

cost

Industry—The steel strike, of brought lower sales and sharph profits to that industry during the past quarter All of the mayor steel producers suffered. But, despite their poor third-quarter performance, stecl companies are very optimustx for the final quarter as well as for the year as a whole

lowe I

most

typic al statement, Republi

BUSINESS WEEK e Oct. 27, 1956

Steel Corp. Chmn. C. M. White noted that Republic made a strong comeback in operations following the strike and that fourth-quarter sales and earnings were running at a record rate. He also reported that, with business at record levels for the rest of the year, he be- lieves Republic's 1956 dollar volume could reach a record level in spite of the strike.

Only Kaiser Steel Corp. reported a gain in both sales and net income dur ing the third quarter Earnings in creased to $6.9-million in the third quarter, from $2.8-million a year earlier But this reflected net savings arising out of an agreement to consolidate its in come tax returns with Kaiser Industries Corp., the company said ¢ Chemical Industry—Chemicals as a group performed only fairly well in the third quarter. E. I. du Pont’s net was down sharply for the quarter. It would have dipped more sharply had it not been for dividends received from Gen eral Motors. Other large chemical com Allied Chemical & Dye md Union Carbide & ¢ uffered substantial proht declines

Manufacturers of fertilizer

panies such as

irbon

ind dyes ind, of course, textiles have had a dif ficult time. American Enka, Industrial Rayon, and Rayonier suffered substan tial declines Ihe American Cyanamid Co. are slightls misleading: The nine-months report in cludes profits from Formica Co., a¢ quired in April, and from sale of a plant and a subsidiary ¢ Building Materials—Makers of con iffected by the harp drop in home building

National Gypsum Co there for its third-quarter sales and profit decline. The 35 the company says,

gains show n for

struction materials were

places blam drop in profit is largely accounted heavy tartup costs at plants completed this year United States Gypsum Co., on the other hand, reports a decline of 0.2 in third-quarter sale net prot spottiness of the picture within industrial Unfortunately for the material

for by five new

with a 0.6% in crease In Vhis points up the third-quarter profit group

construction group, the decline in home when thes

Gypsum capacity

building me at a time wer expanding capacity for the nation ts « xpected to be up one 1954 bv the end of the ¢ Machinery—In the third-quarter r sults of the compan thi selectivity is also apparent. Allis-Chal mers Mfg. Co. reports that the dechin in farm equipment sales and the up being felt I ractor Co.,

farm equipment

third over veat

1hihae hine r\

ward pressure of costs are However, Caterpillar which also produce

reports a 43% profits. Reason in track-typx

equipment

gain in third-quarter Its largest tractors

volume is carthmoving

ind diesel engine

One Step Back...

. .» in sales set-up to bring quick strides forward in marketing Plymouths. That's aim of new Chrysler move.

Chrysler Corp., saddled with the auto industry's thorniest problem, 1s dusting off, reshaping, and renaming an old management function im its at tempt to find a solution, Chrysler's problem is how to put more sales em phasis on Plymouth, the volume car on which the corporation’s must be It hopes it can do this through creation of the job of “General Manager, Group Marketing.”

Into this job, on Nov. |, goes Byron J. Nichols, Dodge Div.’s former vice president for sales, who will work un der William C. Newberg, Chrysler's automotive group vice-president * Reverse and Forward—With _ this, Chrysler is, in a taking a step backward in the hope of being able to take several strides forward. Until about two years ago, ultimate responsibility for the whole corporation's sales was in the hands of a vice-president. Then decentralization came to Chrysler; each division's sales vice-president took over more authority in merchandising his own products

But the change left Plymouth no bet ter off than before, because dealers” franchises were written only by the Chrysler, De Soto, and Dodge Divs Ther field took orders ind naturally gave heaviest emphasis to their own division's car

\t first, Chrysler tried to get around this by establishing separate dealerships for Plymouth. But this failed because the dealers cither didn’t want to give up one of the cars they handled, or didn't

business

based

sctise,

men dealers’

have cnough money to set up separate howrooms for Plymouths

¢ Centralization—So Chrysler Corp. is trying centralization again, A newly established body, Chrysler Mo tors Corp., will write all dealer fran

how

chise }

ind will sell all the a

cars to the dealers. Through this, Nich- ols will have direct control over dis tribution of all cars, and can see that Plymouth gets top billing in dealers’ orders

Working for him will be four area directors who'll be responsible for sales of all Chrysler cars and trucks in their sectors of the country. Regional and district managers will still represent one or other of Chrysler's lines.

Thus, the switch leaves to the ions the manufacturing,

divi advertising, and sales promotion of their own cars But it puts marketing back up at the top level of the corporation

35

Eight thousand bankers at the American Bankers Assn. conven- tion in Los Angeles this week discussed their problems but put top emphasis on social get-to- gether—a sign that it’s a

Pe >» Pe

af | “y he o> fry : i

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s

_

Sunny Season for the Banks

.

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ABA's

under

WORK

b conomic

gets share of time when

Policy Committee meets

Chmn. Evans Woollen, Jr. (center).

if | arn

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FQUIPMENT that

business

like

can

this check help

processing banks

interest

machine handle

growing

pulled bankers

light

mien

business borrow, but it’s bringing for the country’s bankers. here's no sign yet that the pinch on borrowers is worrying many of the lenders

kor sure proof of that, just look at the pictures on this page. They show 1 representative the 8,000 bankers who went to Los Angeles this week for shop talk get together at the Bankers Assn.’s 82nd annual convention. When there’s economic gloom in the air, pr ority at a convention goes to hop talk; but among the bankers at Los Angeles this week the chief emphasis iffair

big

money may worry

who have to

sunshine

few of and social American

banke rs

was on the social end of the ¢ Prosperous Forecast—Th« ma jority of the 8,000 bankers ap proaching the end of a boom year, sa‘ their business will continue to be More important, they're con fident that despite the Federal Reserve Board's re there'll he credit the nation's high business activity through the first half of 1957

Bankers from all parts of the try say thev’re making a record number

just

pros pe TOUS itrictive credit policy

enough to maintain

of loans to meet the demand for funds And, with the Fed holding down credit upply, banks are getting higher inter est rates on the money they lend Ihe Fed's policy, in fact, gets strong the bankers Phev feel that tightening of credit has kept inflation under control, and, so the Fed capital shortage by pressing its the economy can without Said

upport from most of

long as does not create a policy, continue expanding crious inflation

Ohio banker

) good nd ‘ thy

We've

that

one h id it

he spoke for a lot of the 8,000 other delegates ¢ Minority View—A number of others are worried about general complacency in their Most of these ar the aggressive banks that have been lending to business to the limit of their They squeezed for funds, and they fear a continuation of the Fed's policy may bring on a real capital shortage. If this happens, the prosperity of the banking business would fade away

This group, however, is strictly a minority. Most of the bankers savy they have funds to lend. And thev'r convinced the Fed will itself quickly if economic conditions sud denly change. They see no weak spots in the economy that are likely to war- rant anv such shift. In fact, some of them think the Fed mav jack the dis- count rate even higher, though it’s now at 3%, the highest since 1933

heir predictions of continuing pros- perity aren’t dependent on reelection of the Republican Administration. think the Administration will be defeated next month; nevertheless, the that a wouldn't Theit

Democrati

busine SS from mor

resour;rces are

reverse

ew

change-over in

iffect the only fear is idministration would weaken the Fed’s independence * Self-Respect, Too—In_ their spread approval of the Fed's independ ent policy, the bankers iren’t merely ipplauding something that helped give them

Said one Chicago banker, become mere lost a traditional standards when Now

gain

COTISCHISUS = 1S Washington nation’s that a

CCOonoOTH

wide-

l boom vcal We had lot of

mone

sale smci our we're learning to be

And a California

was Casy

bankers

BUSINESS WEEK e Oct. 27. 1956

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banker said, “We're now in the jockey’s seat when it comes to dealing with business.”

lightening credit has forced bankers to become much mor Most say

to new

selective in they're turn businesses and

granting loans ing down loan speculative borrowers, taking no gov ernment-guaranteed mortgages in many breath, not discrimi igainst small business * Tough Decisions—Yct the protests make it plain that this issue is troubling them, and a few candidly admit there's ome substance to the charge. But even these explain that with only a limited amount of credit available, big corporate borrowers are inevitably in a better posi tion to get funds than small ones. They can readily sell bonds to the public and to institutional investors; but now, be cause big corporations are relying on the banks for their credit, the small outfits are not getting all the credit they need Sclectivity,

communite Im the most of them say they're nating

Sanne

they like it, isn't so easy, some bankers complain. They don't like tying up ms * in long-term loans to big companies, but these asking for them and it’s hard to say “No.”

lhe Fed, frowns on the prac tice of banks making long-term loans, particularly for expansion. It feels bank credit should be used for rela- tively short-term needs * Hunting Deposits—It's this practice, that troubles the few pessimists among the bankers at Los Angeles. Most of the big commercial banks in New York, for believe the only way they their lend ible funds is by adding to their de posits. So they want the Fed to allow them to raise the 24% ceiling they can pay on time deposits. In opposi tion are the smaller commercial banks, not so fully “loaned up” as the big New York outfits, nor so pinched by shrinking deposits

But with prospect, a lot of bankers acknowledge that ittracting increased deposits could become an acute problem, With banks will be hard put to keep up their loan expan making of thei

COoUTSC,

much as

r OM panic S ar

too,

also

instance, can mcrcease

continued tightness in

out mor deposits, the

They are already borrowers keep 10% to 20% I his ot

higher

sion rate loan on deposit amounts to a charge to the borrower

Until tn mostly ther loan

sold

bonds

have

banks

government

now, secur from portfolios to make ‘But,” New York banker we're at the bottom of the barrel. Some banks still money available, but not the And if the economy is to keep on expand have

investment

SavVs one

have big ones bigger banks wil

ing, the to get

more funds.”

38

Budgets Go On Forever

While the Presidential campaign swirls outside their door, Budget Bureau experts plot the government a fiscal path. They see spending and revenues up but no general tax relief.

Most U.S. politicians have hung a figurative sign on their office doors read- ing, “Gone Campaigning Until Nov. 6.” But not so within the federal Bureau of the Budget, where it’s busi- ness as usual among the planners work ing up a budget to go to Congress in January.

For the fiscal year that begins next July 1, they see a $3-billion rise in fed: eral spending shaping up.

The increase in outgo is expected to be matched—or exceeded—by a rise in tax revenues stemming from the boom, Thus the outlook is for another ‘Treas ury surplus and another reduction in the public debt.

But the chance of a surplus large enough to stimulate a broad, general tax cut does not look bright ¢ Win or Lose . . .—The election 10 days from now will not change this outlook in any fundamental way. A budget message for fiscal 19558 will be submitted to Congress early in Janu ary by Pres. Eisenhower, whether he wins or loses. And the message will be the major guide for appropriations, no matter which party wins.

By now, budget making for the next fiscal year has reached the review stage inside the Budget Bureau. Officials al ready know they are fighting a losing battle against a combination of rising costs and expanding programs ¢ Going Up—Here’'s the spending pic ture

¢ Biggest increase is for arms. De fense Secy. Charles FE. Wilson, jumping the gun on the Budget Bureau, says the rise will be somewhere between $1.5 billion and $2.2-billion. Pentagon bud get experts say the service chiefs are asking for increases closer to $3.5-bil lion, but these presumably will be cut down by Wilson himself

¢ Next biggest rise is for construc tion of public works. Outlays for the new highway program alone will rise by half-bilhion Requests

for schools, dams, slum clearance,

nearly a dollars and the like will increase construction plans by an $1-billion The big

question is whether Congress will work

idditional

out some sort of school aid program

© The budget than ever

item in the more of a puzzk Such unpredictable factors is crop conditions and price levels have trouble in the past; now there is the added question of how the soil bank will affect price support operations ¢ In Uniform—Secy. Wilson plans to

erratic farm aid—is

most

Cause d

reduce the armed forces next year by something like 110,000 to 170,000 men. But this is not enough to offset the rising cost of weapons.

¢ Costs Climbing—One reason for the increase is the general price rise. But the big reason is the spectacular rise in costs due to improvements. An atom- powered submarine, for example, costs $47-million, where the submarines used in the Korean and War II fighting cost $7-million each.

Also in the general area of national security, the Atomic Energy Commis- sion has requested an increase, likely to be around $200-million, mostly to double the present electric power reac- tor program. ¢ One Exception—Stockpiling of stra- tegic materials is the only national se- curity activity that now seems destined for a decline next year.

Military foreign aid, also assigned to national security in the Eisenhower method of grouping expenditures, is running about $3-billion in fiscal 1957 (page 158). The Administration is ex- pected to ask Congress for about the same amount or a bit more next year. Economic aid is expected to level. ¢ The Result—Total expenditures in the present fiscal year are set at $69.1- billion in the traditional, administra tive budget. In addition, the road pro gram is drawing out $1.15-billion from the new trust fund established for the ag for a total spending of $70.25- villion.

In fiscal 1957-1958, spending in the administrative budget is heading toward $71.8-billion or so, and the road pro- gram toward $1.6-billion. This comes to a total of $73.4-billion, or $3.15-bil- lion more than this year. ¢ Into the Coffers—Receipts going into the administrative budget this vear are scheduled for $69.6-billion and so far are running comfortably ahead of that rate. In the next fiscal vear they could easily rise by $3-billion if the boom continues, which would leave a surplus of something like $1-billion ¢ No Relief—If business were to soften materially, the Administration would back a tax reduction. If the boom con- tinues—and that is what the Washing ton forecasters now expect the Admin istration will cling to the same no-tax- cut position (except for small corpora- tions) it maintained this vear, unless the surplus for fiscal 1957- 1958 promises to be much greater than the budget makers now expect

successfully

BUSINESS WEEK e Oct. 27, 1956

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l'wo of the hottest of the exotic metals kicked up their heels a bit this week

Titanium Metals Corp. of America bought the Toronto (Ohio) steel plant of the Louis Berkman Co. The plant, with added equipment, will be converted into a rolling and forging shop, providing specialized facilities for attacking the exacting problems of finishing titanmum alloys. TMCA is owned jointly by National Lead Co, and Allegheny Ludlum Steel Corp. Con sumption of titanium mill products is expected to reach in annual 15,000 tons in 1958; last vear it was only 2,000 tons :

Zirconium production was expanded when Allegheny Ludlum announced completion of a 25-ton consumable clectrode furnace at its Watervliet (N. Y.) plant for the reduction of zirconium sponge into ingots. The furnace, and a twin to be built soon, will raise the company’s ingot capacity to 63.5 tons per month

his major expansion of capacity is a strong indicator of the growth of U.S. atomic reactor construction, since structural and shielding parts of reactors are the only present commercial uses of zirconium.

Sohio Deals Itself a Hand In Utah’s Oil-Bearing Sands

Standard Oil Co. (Ohio) is trying its hand at extracting crude from the oil sands in Utah. A subsidiary, Sohio Petroleum Co., has acquired title to patented lands and placer claims on Asphalt Ridge, near Vernal, that had been owned by Orem Development Co

Sohio is starting exploration and engineering studies, secking an economical method of recovering the oil If reserves prove large enough, a separation plant might be set up. In that case, a share in the profits would go to W. M. Barnes Co, and Knickerbocker Investing Corp hese companies had drawn cards in the corporate life of the Asphalt Ridge deposits since the first claims were hled by John ‘Tl. Pope in the 1800's

\sphalt Ridge is 15 miles long, with oil-saturated sands cropping out at many places. ‘The overburden varics from a few feet to several hundred; oil content averages about one barrel per cubic yard of sand.

Ford Prices to Dealers Raised,

Some Cuts at Retail Suggested

Ford Motor Co. has raised the price it charges its dealers for Ford cars. At the same time, it suggested a small retail cut on several models to bring their list price $1 under Chevrolets

40

In effect, 1957 Ford prices are now 6%-plus above 1956, instead of the 2.9% boost announced Sept. 29. Ford and Chevrolet price increases are now compar- able.

Ford cut its discount to dealers on suggested prices to 24% from 25%—down to the Chevrolet level—and now get as much as $42 per car more than on the Sept. 29 prices. The move could bring Ford up to $25-million additional revenue.

In autos, price changes after original announcements are rare; Detroit observers believe Ford has had to re- vise its estimates of production costs.

Nash and Hudson Prices Lowered

American Motors Corp. this week swam upstream against the auto industry trend when it dropped sug- gested list prices on its 1957 Nash and Hudson cars below the 1956 levels. At retail, the cuts range between $200 and $300; wholesale prices were cut, on the average a shade over 9%. The cuts, in a year of general boosts, indicate that AMC is making progress in chopping down production costs.

‘The company says the 1957 prices of its smaller line, the Ramblers, will be up slightly, but still the lowest in their field.

Business Briefs

Terms of an agreement made by Pickands Mather & Co. with Canadian Javeiin, Ltd., reveal a larger pur chase commitment than reported last week (BW—Oct. 20°56,p36). Pickands Mather has agreed to buy an- nually during 1959-1964 up to 2-million tons of iron ore pellets, which Javelin will produce on its property. John C. Doyle, Javelin president, said the company had in its offices contracts with 13 German steel pro- ducers. He also pointed out that his company is tax free on land

The Missouri-Kansas Texas RR plan to issue debt securities to swap for its 7°, preferred stock is defective and a severe dilution of the road's debt securities, ac- cording to an ICC examiner. He urged the Commis sion to reject the plan, affecting the Katy’s 667,005 shares of $100-par preferred, on which dividend arrears were $154 a share on Jan. 1.

The Chicago Tribune plans to operate its newly ac- quired Chicago American as a separate unit, with a status within the Tribune family similar to New York's giant tabloid, the Daily News. Last week the Tribune bought the American for a price guessed as high as $12- million, thus ending the Hearst operation in Chicago that began in 1900.

Ford Motor Co, has buttoned up arrangements for the $250-million loan it has been seeking. A group of institu- tional lenders will provide the money on 4° promissory notes, due in 1976. The group includes life insurance companies and the trustees of various pension plans.

BUSINESS WEEK ¢ Oct. 27, 1956

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WASHINGTON BUREAU OCT. 27, 1956

A BUSINESS WEEK

Some points to remember on the election returns. —_— You may get the tipoff from any of four states: So, as you watch the returns, keep in mind that reports from these states may well tell the story.

In the Northeast, Massachusetts will be important. Returns will be coming in fairly early, and they usually reflect the general New England outcome.

In the Middle Atlantic tier, Pennsylvania is the one to look at. Ardent Stevenson partisans agree they must have this state to win.

In the Midwest, it’s Minnesota. That’s a big union state with a good- sized farm vote, too. It might show how things go in the whole region.

In the Far West, California is the spot to watch. It has the biggest electoral vote—32—west of Pennsylvania.

If the first three go Republican, an Eisenhower sweep should be in the making. If Stevenson wins two or more, you'll know a horse race is on. Even New York would not necessarily clinch the prize for Eisenhower then. You recall Truman lost New York and still won.

/How do the Democrats figure they can win? How can they get the necessary 266 electoral majority to take the White House from the GOP?

They start with 89 votes—the score Stevenson made in the '52 race. He got these last time in seven Southern states—Alabama (11), Arkansas

(8), Georgia (12), Louisiana (10), Mississippi (8), North Carolina (14), South Carolina (18)}—and two border states—Kentucky (10) and West Virginia (8).

The Democrats’ finish fight will be for 177 more votes. That's what it will take, on top of 1952’s performance, to win. Here’s their current hoping:

In New England, Democrats figure they have a good chance in Massa- chusetts and Rhode Island, with a total of 20 votes. That would bring them up to 109.

In the big three Middle Atlantic states, Stevenson counts most on the state of Pennsylvania. A win would add 32, lift the total to 141

In the six so-called border states, the hope is to hold Kentucky and West Virginia and to add Delaware (3), Missouri (13), and Oklahoma (8). That would bring the total to 165.

In the South, the figuring is that Stevenson can get back Florida (10), Texas (24), Tennessee (11), and Virginia (12). That would add 57 votes, for a total of 222.

In the Midwestern farm states, Minnesota (11) is considered the best bet. That would raise the total to 233.

In the Rocky Mountain states, eight in ali, only New Mexico (4) rates high on the claiming list. That would make 237

On the West Coast, California is the big hope. Its 32 votes would put Stevenson over the hump with 269.

What are the chances that Stevenson will pull this off? No one can be sure, of course. The betting odds are worth noting. Right now, most of

WASHINGTON OUTLOOK Continued)

WASHINGTON BUREAU OCT. 27, 1956

PAGE 44

the betting on Stevenson is 1 to 3, after a brief shift a couple of weeks ago to 1 to 2% or even 1 to 2. What this says is that the betting people don’t think Stevenson will make it.

Here’s some Truman thinking on the picture: The Democrats are strong as a party—in the best position since 1936, when Roosevelt made his biggest sweep. Chances of taking some new governorships and of holding majorities in the House and Senate are very, very high. The big weakness is Stevenson, himself—he lacks the common touch needed to capitalize on the party’s strength.

Eisenhower will wind up the campaign running hard.

Fact is, GOP hopes are on the rise. In late September and early October, the Democratic boom caused uncertainties. Now, the picture is much different. Rightly or wrongly, the Eisenhower side buys the idea that Stevenson peaked up too early and is now on the decline.

Take the South, for example:

Virginia will split again. One of its sons, T. Coleman Andrews, heads a third-party ticket—campaigning against the income tax. The veteran senator, Byrd, has come out for Democratic candidates for local office. He never mentioned the White House candidate, Stevenson. The faithful in Virginia take this as meaning it’s O.K. if you vote Democratic locally and vote whatever way you please on the national ticket. GOP hopes stay alive

In Florida, Eisenhower still has a good chance

Texas is no sure thing for the Democrats. The odds give it to the party of the South. The worry is that Gov. Allan Shivers’ faction, which gave the state to Eisenhower in 1952, isn’t nearly so dead as the forces of Senate leader Lyndon Johnson would like to have it. It’s a fight

As for New England, Eisenhower's camp concedes nothing. It’s agreed that the Democrats may be better off than in 1952. The question is whether the gains are big enough to take such a state as Massachusetts

New York, the biggest electoral voter of them all (45), is rated safe for Eisenhower. In fact, the New York Daily News poll is so lopsided that many observers interpret it as a walkaway comparable to 1952

Pennsylvania will be tough. The Democrats have scored big gains in the off-elections. GOP Sen. James Duff generally is rated to have a very thin chance. However, most observers say that Eisenhower will carry the state

You hear lots about Republican troubles in California. That's the home state of GOP Vice-Presidential candidate Nixon. Politically, it’s a mixed-up state. But most political travelers who have covered it come back reporting that Eisenhower and Nixon have the edge

For the last week of the campaign Democrats will be able to talk again about a record high cost of living. The September figure, out this week, is a tenth of a point above the record of 117.0 set in July.

Contents copyrighted wader the general copyright on the Oct. 27, 1956, issue—Business Week, 330 W. 42nd St.. New York, N. ¥

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theory...

Science Can Find

Che auto industry's mass selling tech- nique is a wondrous system that cach year puts on the highways more than 6-million new cars, worth around $12- billion. Other consumer industries ot- ten look on the system as a model on which they, too, should pattern their methods. But these days, the men in the auto factories have growing doubts about the efficacy of the system they've developed.

“It's as old-fashioned as high button shoes,”

Selling is more than just a sales- man’s job” says Ford Vice-Pres. fF. C. (“Jack”) Reith, manager of the Mer- cury Div. Reith and others in the auto industry are coming to realize that sell- ing is but a part of marketing, a science

Says one

involving such things as highly special-’

ized and detailed research and analysis. As this Detroit, you're finding that ¢ ‘There's a vice-president for mat keting (not “‘sales’’) at Ford Motor Co., and this is the first time that men long in the industry can recall such a title on an auto company’s organization chart ® Uher

idea seeps in at

i new marketing (not “selling’) organization at Chrysler Corp. that will coordinate and direct all merchandising from a central office, instead of leaving it to the separate divisions

All this is more than an exercise in The proof of that lies in what has been happening inside Reith’s Mercury Div. ‘Vo seil a 1957 car that’s unlike any other in the industry (pic- ture, above), Mercury has set up a marketing organization that—so far, at least—is also unlike any other in the industry. The “General Sales Dept.” that find im every other auto division has gone, superseded by a “General Marketing Dept.” At Mer

cury, this is headed by George §S

scmantics

vou almost

BUSINESS WEEK e Oct. 27, 1956

Coats, a former assistant sales manager who’s a convert to the marketing con- cept. ¢ Theories at Work—The ment’s “Marketing Analysis & ning Manager’ is on the as the sales manager. The man who fills this spot is Robert W. Chambers, a former faculty member of the Harvard Business School. And Chambers is at the heart of what Mercury is trying to achieve through its new organizational set-up: Adapting the theories and tech niques of marketing, as espoused by business schools, to chandising

Such an aim, and adoption of such means to achieve it, aren't wholly new to industry. ‘The appliance industr among others latched on to the idea of emphasizing marketing—as against sell ing—a few years ago. lor example, the key man in General Electric Co.'s sell ing organization is the marketing mana ger (BW \pr.18°54,p] +2) And it's significant that a former GE marketing man, James J. Nance, one-time chief of GE’s Hotpoint Div., is bord vice president

But among the auto producers, Mer cury is the first to attempt to make fullest use of a scientific marketing con cept

depart Plan

Same leve |

automobile met

i new

It has been driven to this partly because of its special problems, partly because of the kind of car it has to sell in 1957, and partly because of the course lord Motor Co. has charted to find a bigger market for its products

own

|. The Passing Medicine Show

Under these pressures, Reith has led Mercury into the task of resolving one of the industry's most perplexing prob lems—one that has particular pertinence at Mercury. It is: Who are the buyers?

It has become a problem because the auto market has changed. In carlier dav

Their Market

the three low-priced cars were basic transportation, sold to people who wanted or needed wheels and nothing fancy. The medium-priced cars were for professional people (a Buick was “the doctors’ car’’); the high-priced cars were for bankers and the country-club set Since then, the increased size, power, ind optional equipment on the low priced cars, the rising income pattern, the growth of two-car families have battered the old ideas of the auto mar ket. You see Cadillacs, Lincolns, and Chryslers parked outside factory work ers’ homes today, along with the Fords Chevrolets, Plymouths, and Buicks. Al maker can find his place in the

most every auto buyers im any Strata

\ precisely defined market is gone,

and even a supersalesman can’t find if

Mcoie

“The medicine show has passed at Ford, Ih

walesman can’t draw an

says one exccutive

snake-oil cnce ¢ New Men—This change has fed bacl to the factories Until very recenths many of the auto divisions were headed by salesmen, in fact if not im title, be cause selling was the climactic act in the auto But complicated economy of hidden mai kets, cost analysis, and cost control has put a different type of man at the head of most auto divisions No matter started in the organization his bent todav is business “The

the finance

di

business now, a mor

where he management division general manager ha says L. D executive vice-president for cars and trucks at lord. “So he should run the division, and he needs the tool Mer cury’s General Marketing Dept. is one of Jack Reith’s most important tool

° Long Growth—The idea of building this tool grew up at Ford sey working for Crusoc erved im two othe

load,” Cruse

eral Vcal io when Reith wa in Ford Div. Reith

Marketing 47

MARKEM

solved these marking problems

marking fountain pen i refill cartridges

Molding a red tip and imprinting cartridge proved costly, caused refill to warp Markem was given the problem, devised method of simultaneously color- banding tip and imprinting

instructions, using a Markem 20A machine. Costs now 4 lower, production up, customer satisfled |

{

imprinting phono records

Eliminating all the problems — and expense — of poper label inventories and application, were the important benefits gained from the Markem Method Standard 25A machines now imprint records directly — using Markem printing elements and Markem marking compounds to produce clear, high

quality imprints.

ye Paige \~

“SS

printing hacksaw blades

Manufacturer needed a fast, economical way to mark

complete detail on enameled hacksaw blades. For

printing entire blades .

up to 30” long, at a rate ( O° AY of 30 per minute, a , Markem 65A machine was recommended. Successful use resulted in purchase of a second Markem

} machine, J

For product, part or package marking that tells and selle more fer you, contact Markem Machine Ce., Keene 33, N. H.

48 Marketing

key Ford posts before taking charge of Mercury in April, 1955, and resurrec ting the marketing department idea The elements of it were slowly tested and put together before the General Marketing Dept. was formed last month

One of the key elements—which proved to Reith the concept was sound has been in the crucible for more than ad VCar

This is what Reith calls the “X-Ray Study.”” This study goes into operation when, for example, Mercury sales lag in a certain locality. A team of analysts from the home office swarms over the arca trying to pinpoint the trouble. Their questions: How are general eco- nomic conditions in the area? How are competitive makes selling? What is the general retail picture? What about dis posable income? Are the dealers’ meth- ods or management at fault? All factors bearing in any way on Mercury sales are isolated and studied. Reith and his marketing chiefs examine the report and act. Wherever the technique has been tried, sales have increased ¢ Finding the Buyers—In essence, the job of George Coats’ department is to broaden and deepen the X-ray study, nationally, regionally, locally, by income and other groupings to nail down (1) the potential for any medium-priced car, and (2) the potential for Mercury. Broadly speaking, Mercury Sales Mana- ger Chester E. Bowie tells dealers how to find customers; but Bob Chambers, through Coats, tells Bowie where to in struct the dealers to look

Bowie, although trained in the tra ditional tvpe of auto sales department, is all in favor of the change. “It frees the sales manager to concentrate on selling cars,” he says

This change at Mercury was timed for the introduction of the 1957 prod uct; it had to be. ““The Mercury dealers were driving a one-horse shay,” says a lord executive. “Now they have a fast horse, and will need guidance.”

ll. The “Challenge” Car

lor years Mercury dealers have been out-classed. They have been selling a product — that intrinsically, a beefed-up Ford. Ford and Mercury have shared a shell; inside—the “package size”’ was the same, no matter what the ex terior looked like

About three years ago,” Breech,

was, comnon body the room

Ernest R Ford board chairman said re cently, “the Mercury Dealer Council made strong recommendations to us that the Mercury should be a large distinctive automobile, in no respect having any sheet metal panels inter changeable with the Ford car. They impressed us fully with the desirability of the Mercury being completely com

petitive with, primarily, Buick and Oldsmobile in size and weight.”

Breech’s reference by name to com- petitive automobiles in a public speech was unusual, but deliberate. “In July, the month in which Mercury reached its highest point of penetration this year, General Motors captured 61% of [the medium-price] market more than four times Mercury's 14% share of the same market. If Mercury had equaled Buick’s penetration in 1956, it would have sold about 225,- 000 more units.” ¢ New Shape—The 1957 Mercury which will appear in the showrooms Nov. 12—has its own body shell, com parable with the “B” body shared by Olds and Buick’s Century and Special The wheel base is the same as that of Buick, 122 inches, and three inches longer than that of the 1956 Mercury. The over-all length has been increased five inches. And, moreover, there is not a line, not a body panel, common to the Ford

Crusoe calls it the “challenge car of the vear a daring challenge to the present leaders of the medium price market.” The roof is flatter and appears thinner than the public is accustomed to (the stylists call it “crisp”’), the V-shaped tail-light hous ings are unmistakable identification marks, the grooves in the rear fenders (the stylists call them “‘projectiles’’) are unlike any sculpture on other cars, the oval-shaped bumpers are identical on front and rear. There’s a sharpness of line and plainness of surface unre- lated to other Ford designs.

Under the rear of the car a dough-

nut-like air cushion is combined with leaf springs to give the car a_ better ride. Up front there’s a 255-hp. en- gine (a 290-hp. engine is also avail- able) with a 9.75-to-l compression ratio. The engine fan is geared so that it can idle when the car is cruising, for a claimed saving of up to 17 hp. In- side, there’s a push-button transmis sion selector and, as _ optional equipment, an automatically adjusting seat. e Star on the Lot—Around Ford Motor Co. there’s no mistaking the fact that though the Ford car still has to win its fight with Chevrolet, the emphasis for the moment is all on Mercury. More than $100-million was lavished on the 1957 model ($400-mil- lion if you include new plants). And the reason is that the marketing men, ac cording to Breech, are predicting that 2-million cars in the medium-price range will sell this year.

If the total sales increase next year as expected, this market will be even bigger, and Breech expects Mercury to gain more than 100,000 additional sales in it. Reith is aiming at 6.5% of the total market, thus increasing his

BUSINESS WEEK e Oct. 27, 1956

‘Here's why

WHITING CRANES Jive

lowest-cost handling”

These t2 Whiting “bulilt-in" features mean longer life... less maintenance.

Seventy years of crane manufacturing ex- perience is behind the cost-cutting features of every Whiting Crane. You can be confi- dent of performance, and here’s why:

WHITING OFFERS

1. Correct motor selection based on survey

of requirements by experienced engineers

. Full-vision cab

. Magnetic controls

. Hydraulic brake

. Rolled steel wheels

. Timken Tapered Roller Bearings

» Flexible couplings

. Oil cooled mechanical load brake

. Enclosed safety hook

. Oil tight gear housing and unit speed reducer design

. Precision machined herringbone gearing

. Moving parts accessible from wide steel walk with safety tread

Get the full story on lower cost crane handling. Write for the Whiting Crane Bulletin—Unit 80. It gives information on how Whiting Cranes reduce handling costs. Send for it today!

RESULTS

- Speeds selected to match

production

. Greater visibility for operator

- Easier control of all crane motors . Easier stopping of crane bridge

. Longer wheel life

Longer bearing life

Longer motor and gear life Safer suspension of loads Safeguard for workman's hands

. Lower maintenance - Quieter operation - Easier, safer inspection and

maintenance

WHITING CORPORATION 15661 Lathrop Avenue, Harvey, Iilinios

SHIPPING PROBLEMS EVER PUT “... Ford must be shooting

at the broad, shifting, me-

YOU OVER A BARREL? dium-price field . . .”

MERCURY starts on p. 47

sales from around 300,000 this year to about 435,000 in 1957.

Mercury's high goals are motivated by Ford's long-range plan for broad- ening its markets

lll. Working the Fringe

One step in that plan was the split- ting of the Lincoln-Mercury Div. into two separate car-producing operations. Reith took over Mercury just when this split was made. He, like just about everybody else in the auto in- dustry, had long understood that some day there would have to be separate dealer organizations if Mercury was to be boosted to higher volume. Along with that understanding has gone the industry supposition that since Lin- coln’s volume is too low to support its own dealer force, Ford must be plan- ning another line of cars—most prob- ably a medium-price job ¢ Line for 1958—The logic in that proposition is so strong that Ford people no longer hide the fact that their Special Products Div., under Vice-Pres. Richard E. Krafve, is work- ing on an “E” car for the 1958 mar- ket. Obviously, the new car will not be priced above Lincoln—for that is where Continental is limping along. Just as obviously, it can’t be in the low-price range where Ford is battling to stay in the race with Chevrolet. So the conclusion is that Ford must be shooting at the _ broad, _ shifting, medium-price field that Bob Cham- bers has such difficulty defining.

If that conclusion is sound, it puts Mercury on its mark to carve out a » You and your customer need not worry over larger chunk of the market before it vital carloads of freight when you route them B&O gets even more competition from ’ within its own family. It’s unlikely that Ford would bring out a new car to give Mercury across-the-board com- consignor or consignee, are notified immediately petition before Mercury has a chance of any schedule interruptions and reforwardings. to solidify its own position. But the Your ‘when and where’ questions on carload upper and lower fringes of the medium-price class—where Ford, Chev- rolet, and Plymouth squeeze from one end, and Chrysler and the big Buicks and Oldsmobiles from the other—are attractive. The difficulty is that no one is sure where those fringes begin or end

That's what Coats’ General Market- ing Dept. has to find out and exploit. BALTIMORE & OHIO RAILROAD “You can’t approach this question on a brute strength basis.” Coats says.

Constantly doing things — better! “You have to change your methods ® with the times.” END

Sentinel Service! Sentinel cars move on fast, ac- curate schedules from siding-to-siding and you, as

movement are answered automatically when you ship by Sentinel Service—no other service matches its proved dependability.

Ask our man!

50 Marketing BUSINESS WEEK e Oct. 27, 1956

‘ planning

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Your atomic planning —whatever its stage of develop-

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For complete information on the many services offered by Ebasco to business and industry write for “The Inside Story of Outside Help.” Address Dept. C., Ebasco Services Incorporated, Two Rector Street, New York6,N.Y.

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4 IWiCk A MONTH GE's industrial salesmen see new

version of Apparatus News Hollywood-ty pe newsreel,

ON LOCATION, Apparatus Sales Div. men shoot new freighter in N. Y. harbor.

IN THE STUDIO in Schenectady, professional newscaster Leon Kelly goes before camera for bi-weekly news roundup.

FARTING NOo\ ome 4,000 Gen S eral Electric industrial sales engi

neers will be secin movie newsrecl of

the freighter John Sergeant—first larg merchant sh , : ,

PrP turbine engin was grected harbor pictul

This is the main feature of the \p paratus Sal LD) itest bi-weekh version of th c-tinn Hollvwood newsrecl translated imto imdustrial marketing term

Called \pparatu New minute movi

} | wot cati

m ) ASD studios in Schenectady—have become a regular part of the GE industrial sclling program

¢ Problem Solved—After more than a

it it company camera crew ind the

52 BUSINESS WEEK e Oct. 27, 1956

Passes the Word

recls have been Vice-Pr W. V

ipparatu

ins trial—3] new produced thus far ©’Brien, head of the go

OTfganization

ile 5 l

convinced 1 long wav toward

solving hi basi

lem fast

cation on ¢

prob

ind productive communi verything from major poli changes to the latest sales gimmick

In 14 da ASD’s 4,000

hown whatever sale

salesmen can be message

top management thinks necessary—and in a form that has the impact of a per onal call by a gencral manager or O'Brien himself

¢ Centralizing Sales—ASD is the sell for 40 CE industrial

manufacturing departments, all turning

produc t department

ing arm ibout good managed and

line ot fractional

jutonomoush

out complex goods he i

turbine to horsepowec!

BUSINESS WEEK e Oct. 27, 1956

that move in a highly technical Sale

constant pressure to keep up with

motor

group of market men are under new ind improved product ind n ipphi cation With ibout 14 field

CIVvice

14 geographi il districts and office ASD work, including advertising An other

inpo ible

ou cant

centralize ’ sale

ind installation would be virtuall is O'Brien points out 10) sale ]

ctup ince, have men ing on one cu tome!

The 1H

mecting of

rec] idea emerged from a ASD promotion department Gl

it the best answer it found better than canned tall ile ture, and other

¢ Now Playing—1)

idvertising and sal onsidcr

4) fat litera

ha

rhe dia

urrent edition

Varketing 53

PLANS for

advertising and sales promotion department

Ret ey

newsreel are worked out by

.

PRODUCTION is completed in the cut

ting room and in the soundtrack room.

_

7 ,

America’s new kind of man

The Jobs he holds never existed before

Electronics has developed so fast that the very term is just now finding its way into the dictionary.

There are important jobs in electronics that have not yet been named, that didn’t exist a year or two ago.

This field, which has already contributed radio and television to our daily lives, is perhaps today’s most actively expanding scientific frontier.

Naturally, it has attracted brilliant scientific minds. It has, in fact, er its own kind of man— young, highly creative, unhampered by conventional approaches in research or manu- facturing —a man completely at home in the world of radar and rockets, of electron tubes and microwaves, of machines that “think” and planes that fly themselves

At Hughes we have 2,700 of these men in our Research and Development Laboratories—men like John H. Rubel, at left. Brought together from all over the country to solve urgent new problems of national defense, they have already success- fully carried out the vital projects illustrated here . . . develop- ments that rank among the most formidable scientific achievements of our time. And the work they have done is so basic it is already contributing vitally to the peaceful uses of electronics.

JOHN H. RUBEL, B.8.E.E.

At 36, Director of the Hughes Fire Contro/ Systems Laboratories engaged in development of airborne weapon and contro/ systems

for the U.S. Air Force and U.S. Navy. Native of Chicago and honor graduate of California institute

of Technology

Mighty midgets. Two tiny Hughes diodes shown above, at left, re- place bulky vacuum tube 100 times their size, do better job. Major problems of size and weight were solved largely by “miniaturization” Nature of Hughes work demands utmost skilf and knowledge from 2,400 technicians, as well as from 2,700 scientists and engineers Hughes has grown from 900 people to 24,000 in only eight years,

“Thinking missile,” the Hughes Falcon, undergoes simulated flight test. Released from a fighter plane, the Falcon sets out-on its own at supersonic speed to seek enemy bomber .. .“sees” and finds its way to target with deadly accuracy ... explodes with force of artillery shell. The Faleon—first U.S. air-to-air guided missile with its own “brain”—was created and is manufactured solely by Hughes.

zy

a

FC-773 TEST

Atk

~“+

of solving the unconventional problems posed by the Hughes projects Hughes scientists and engineers average only 31 years of age. Yet one in four has his Master's Degree, one in fifteen his Doctor's. Togethes they form a reservoir of creativeness, a battery of sheer scientific brain ower, almost without parallel in industry, They have other spectacu iar projec ts, some highly secret They will he heard from again and again in the development of both military and commercial clectronics,

Plane's nervous system — Hughes automatic weapon and control system in foreground — fits compactly behind nose of interceptor System, developed and manufactured by Hughes for ail U.S. Air Force interceptors, includes electronic “eye” and “brain” It can locate ap proaching enemy day or night in any weather, guide plane at super- sonic spe eds automatically fire weapons at right time to score hit.

Only men of fresh outlook, of bold imagination were found capable

-

| 4 ‘| HUGHES | Le

Hughes Aircraft Company, Culver City California

“ Creating a new world with ELEC } 1S

Vi

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56 Marketing

SALESMEN in Schenectady area watch a going out soon to 4,000 sales engineers.

of Apparatus News, besides the arrival of the John Sergeant and a camera tour of the ship, includes

e Pictures of the new gas turbine for helicopters, 1-58, undergoing tests in Schenectady

¢ A development engineer in the electrical distribution partment at Plainville, ing features of a new commercial buildings

¢ A discussion of the state of the utility market

¢ A Boston meeting of GI industry sales people

¢ Finally, a short news roundup by professional newscaster, Leon Kelly ¢ On Location—Cameramen ranged from the St. Lawrence Seaway to St. Petersburg, Fla., and San Jose, Calif. To put this kind of package to gether, ASD set up a separate section under the visual education group, which has been making industrial movies (chiefly for customer showing) and

assemblies de Conn., review

product for

paper

have

for year lop men in advertisi: sales promotion lay the plan R. B. Reid, advertising and promo

tion head, says opinion surveys show

g 16

what the salesmen want. New products and developments come first, followed by management policy news from ASD headquarters in New York, marketing news, new sales and promotional pro grams, and news from other parts of

Gl

“at once

run of the latest GE newsreel, which will be

Ideas come from ASD districts them- selves or from manufacturing depart- ments. The whole project requires tight scheduling, to keep the shows newsy and at the same time within a limited budget (ASD doesn’t give out its cost hgures ) ¢ Showing—Once produced, each bi- weekly edition gets 39 prints, so that over half the 558 regional offices see it Using projection facilities already provided for customer movies, regional schedule one big meeting for their salesmen or scatter showings over three or four days of the week (now, even clerical and secretarial help want to see the special luncheon showings are times scheduled)

From the start, spectators have liked the idea, though some had some reser- vations. As the though, comments have become more and more enthusiastic, A survey made after the showing of Newsreel No. 10 showed that the district em ployee had seen seven and

managers

newsrecls; so some-

bugs got worked out,

average between cight of the 10 films shown

One big advantage of Apparatus News films—besides the fact that sales- men get what would otherwise be a rare chance to tou products such as the ocean-going gas turbine in action—is strongly felt at ASD headquarters: “It saves time and travel of top management ”” END

plants and sce

BUSINESS WEEK e Oct. 27, 1956

Since installing 1€ we’ve saved

thousands of dollars.

We don’t have a stand-by unit

because it is so dependable.

After 21 years of success with it,

we expanded our plant with a second.

We never worry about a breakdown,

A . . 1t is so reliable.

it has run for 15 seasons with-

out breakdown or major service.

* ‘ ; , 1t is a Carrier Centrifugal Refrigerating Machine

_™ rt

YOU'LL HEAR many comments like these about Carrier Centrifugals, which have a record of service unequalled by any other centrifugal refrigerating machine. They provide reliable, low-cost performance in widely different industries —in textile mills, refineries, chemical plants, breweries, food and meat packing plants, and other plants requiring contin- alr conditioning uous and precise temperature control. retrigeration

Carrier Centrifugals are designed to operate day after industrial heating day, around the clock, without interruption. Many of them installed more than 30 years ago, are still in operation. In fact, over two-thirds of the installed centrifugal capac ity in operation today is Carrier. Want complete facts

about them? Call your nearest Carrier office—or write

Carrier Corporation, Syracuse, New York.

Since its manufacture for Consumers Power Co., this 46,000 volt under- water cable has been installed across the Straits of Mackinac (see map). One of four lengths that totaled nearly % million pounds, this power link contains over 900 miles of copper conductor and steel armor wire, 23 tons of paper ond insulating oil and 2 carloads of lead.

“MISSING LINK” i TURNS UP IN MICHIGAN! Qs °°"

And Michigan is fit to be tied! Tied together, that between Michigan’s upper and lower peninsulas. is, for the first time in history by a 46,000 volt power This link is another example of the reliance which link consisting of four huge Okonite underwater utility and industrial companies place on Okonite electric cables —each four miles long — stretching cables for circuits that must not fail. The Okonite

across the bottom of the Straits of Mackinac Company, Passaic, N. J.

where there’s electrical power . . . there’s OKONITE CABLE

4157

James Nelson, an aspiring young tycoon from east of the Hudson, goes west to carve out his fortune. In grappling with the vending machine business he learns. . .

How to Get Stuck With Gumballs

In these days of big business, suc cessful businessmen tend to forget just how imuch cnterprise private cnterprise may call for. James Nelson (picture the cheerful young author of ‘The ‘Trouble with Gumballs, takes on the job of refreshing the minds of the economically blase about the that can attend a ver pris ite prise. Simon & Schuster, New N. ¥ publi hed the book last (price >9.9U

A few veal igo, Nelson gave up his post as illustration editor of BUSINESS week (before that he had put in a stint as marketing editor) to go out into the world, in the best classical tradi tion, to seck hi Hk piled hi wile ind = youngstct ind household headed for California Gumballs tells the first encounter with private

truggl } ente! York weck

rortun

gear into a truck The Troublk story of hi enterprise

Nelson tricky grapple with: the vending machine busi ness. His tale will probably strike horror to the souls of old pros in this field Many big carefully worked out plan to

with

in the raw

chose 1 bu in to

COM panic have

help an

ispiring

young tycoon set up a vending oper ation. Such peopl on reading his book will surely sav, “We could told

you so ‘as

have

BUSINESS WEEK e Oct. 27, 1956

The book has for the sophisticat It isn't that the day-by-day tablishing a graphically ind truce that on one count 1 typical capitalist. Most then

Ne | on

value, though, even often headaches of ¢ ribed humor It Nelson

young

busine ire des with isnt mcn dream of

own

ctting out on wealth and power wanted mor than anvthing els life in hi

motive may not be ¢

freedom to enjo' own wav. But though hi ommon to mans

young cntrepreneurs the energy with vhich he tackled th lreedom to Nelson time. So, when he reached hi Mecca—California—it isn’t too urprising that he succumbed to the

lure of such ads as thi

ob i

meant quite imph

cho Cll

estment S500 0 ] 000 in

OO

Ne | On

Folly—So — th

vn the ivings tt est im

¢ Nelson's plunk ed d

100 gumball and tab gum machines (price; $5,200 plus $156 tax), The Multivend Corp., James Nelson, presi dent, Mary-Armour

of the board, wa

Nelson, chairman And the comeds ground

bor got off the oon discovered that he had paid $52 for machines that listed as +17.35. Mr. Chugwater, the official of No-Name Co Nelson bought the machines and route proved omcthing of a jovial fraud Ihe Nel ons realized they had been had—but thei pent, the t long last were in place md thes till had hope of up to SLOO weekl for eight hours’ work. So thes rink * Some Shattered Hlusions—Jim Nelson found out a lot of things fast. He how vital a good location 1 hard to find. When the ma Tee the property they ar

of error

Nc | on

from whom

mane. Wa machine

hung on

le immed nd how i huge

chines ar man on

whose installed may

go crazy trying to mect youngster demand for throw the

gum over the cou

pennies and hie may machines out. Places that sell nter finally figure then than the 15% to 25% commission they collect from the

He learned what happen when the machine ire left

net from such sales is greater

vender ta colored

cumball

Marketing 59

THE

ROM

Most of them would say “yes.” Why?

In most instances the executive has a substantial life in

urance program and an adequat retirement plan to sale

guard his family and himself. You have probably aided measurably program Yet he has little os Under

program ol financial se

What guarantee have

he is seriously disabled? Conventional sick leave plans are short in duration

in these no financial protection against se-

rious disability uch circumstances the thinking man realizes that his

urily is inadequat

ou made him upon which he can de pe nd, in the event

and represent no solution to the proble m of a long disability

Well known corporations are successfully solving this problem with Provi- lent’s EXCLUSIVE and GUARANTEED Long Term Salary Continuance Plan.

Covering groups of 15 or more, thi plan is sold on a cooperative cost basis,

vhich provides tax advantages for the employer and provides the executive

a realistic income for long pe riods of di ability.

On request we can how you that:

Net cost to employer, after taxes, is surprisingly low.

avings to the individual, as against the conventional forms of coverage, if available, are large in terms of tax-cut dollars

Physical condition is not questioned and all participating ar granted full benefits without relation to previous medical history.

WRITE DIRECT OR ASK YOUR BROKER TO GET FULL INFORMATION FOR YOU ON PROVIDENT’S EXCLUSIVE LONG TERM DISABILITY PLAN,

Provident Life afd/Accident uurnanee (_ampany

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Life + Accident + Sickness + Hospital + Surgical « Medical INDIVIDUAL + FRANCHISE + GROUP

60 Varketing

outside a store in the rain (the color runs, the gum gets soft, the machine clogs in a doughy mess). He discovered that chocolate-covered candies blanche or melt if the isn't right. He found that ants as well as moppets go for sugar-coated candies. He and his indomitable wife spent a deadly night climinating the ants under “Nelson's Theory of Inertia in Pismires,”’ which, put more simply, reads, “Ants don't roll.”” He learned to expect a snarl when he came a machine, and he stubborn a machine can be and what extraordinary hazards might turn up

¢ Fortune Sneers—lThe reader follows with suspense the ups and downs of Multivend, the slow penny-ante climb. ran like this. For 454, pieces of gum, which brought in a gross of $1. Of that, the location owner collected 15¢; Nelson’s profit was 40¢. Nelson records progress in the monthly take in these figures: A machine at the Dome Cafe yielded $2.78 at one month's end—up from $2.19 the month before. At Jerry’s, he collected $4.03, a gain of 4¢ from the preceding month. Perotti’s Drugstore brought in $3.10 instead of $2.88. And turned up $10.50,

temperature

round to service learned just how

Ihe CCOnOTIN you got 100

location against $9.62 Ihe Nelson heroic ingenuity from the vice was to offer charms as premiums. Plastic ring great hit—but two were apt to come out at once. To avoid this, Multivend’s officials stuck marbles into the centers of the taped the marble in place ¢ Rewards—The adventure proved not all grim. The Nelson they loved California

one fing

almost money

practiced an to tease more

vending machines, One de-

proved i

rings,

loved their house, And Jim Nelson, in his peregrinations around the try-side, found rewards. He _ reports, with a sort of John Steinbeck touch, on the humble people with whom he did

Lopez v Garcia, whose Hollow Delicatessen brought in few pennies but much delightful talk; Freddie Wing Duck with Moonstone, his wife, who ran contributed a puppy to the Nelson menage; old Mrs. Mather, who kept a doughnut shop, and treated Jim to a big slug of Old Taylor to celebrate her Sth wedding anniversary

And the Nelson their ob jective, up to a point. They did have time—for reading, for making mobiles, for playing with theiz young son. But the “up to $100 wecklv” earnings still eluded them. After months of struggle, Nelson r¢ icned his peak In Decem ber, he grossed the grand total of $633.38, or a net of $249.51 That's sweetic,”” his wife told him “You've done a wonderful job.” “Of course,”” Nelson concluded, “we can’t live on $249.51.” Eno

business Jose l'rog

1 grocery store and

gained

terrific,

BUSINESS WEEK e Oct. 27, 1956

She’s looking through someone else’s eyes

F.. purchases are made without thought of

how they will be judged by others.

Recently, marketing men have been looking with increased interest at the opportunities ship ping containers offer to make favorable impres sions on millions of potential customers.

Union can help you make the most of this low-cost sales tool. Art directors who have de- signed or modernized boxes for instantly familiar brand names are ready to study your shipping container.

The design is only the beginning. Union follows through with board that is good looking as well as sturdy. Conscientious printers take time for thorough “make ready.” Then your boxes are

run on high speed presses, using inks specially suited to corrugated board. and exceptionally scuff-resistant.

A new brochure, “Visual Design of Corrugated Containers,” may suggest ways in which you can get more sales support from your boxes. We will be glad to send you a copy.

UNION BOXES #4

UNION BAG-CAMP PAPER conroraTion

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EASTERN DIVISION SALES OFFICES 1400 &. STATE ST TRENTON OG. Hs

SOUTHERN DIVISION SALES OFFICES P.O 808 570, SAVANHAH, Ga

WESTERN DIVISION SALES OFFICES 4645 WEST PALMER, CHICAGO SO ILt

EXECUTIVE OFFICES 233 GROAOWAY. NEW vYOoR® NEW YORE

In Marketing

FTC Unloads Charges of Monopoly Against Three Big Dairy Companies

Concentration in the dairy products iadustry is the target of a full-scale attack launched last week by the Federal ‘Trade Commission with charges that three of the largest U.S. milk processing firms—National Dairy Products Corp., New York; the Borden Co., New York; and Beatrice Foods Co., Chicago—are guilty of monop- oly violations through acquisition of some 250 other com- panies in the last five years.

Last January, the commission filed similar charges against Foremost Dairies, Inc., Jacksonville, Fla. (BW— Jan.28'56,p1 26)

FTC claimed that since 1951, National Dairy has taken over 40 companies, Borden 80, and Beatrice 131. Accord- ing to the commission, these acquisitions were accom panied by substantial sales increases and were part of a “constant and systematic elimination of actual and po tential competition.”

All three dairy concerns deny that they have violated the Clayton and FTC Acts, under which the charges were brought. Hearings have been set for December.

In a fourth monopoly case, FTC alleged last week that the Vendo Co., Kansas City, Mo., acted illegally by taking over a major competitor, Vendorlator Manu facturing Co., Fresno, Calif. Vendo is already the coun- try’s largest maker of soft drink vending machines, says the FTC, and acquiring Vendorlator could give it more than half of all sales of the devices, sold by only about 16 industry members

Vendo contends that the merger does not involve any monopoly

Americans a Little Less Fascinated

By Television Programs This Year

he average American now spends slightly more than in 11-hour chunk of his weekday evenings fixed before the family television set—down from the peak of view ing time reached in 1955

This was one conclusion drawn from the ninth annual Videotown survey, released this week by Cun- ningham & Walsh, Inc., New York advertising agency, which has been issuing the report yearly since 1948 on the basis of T'V set usage studies among the 40,000 people of New Brunswick, N. J.

Gerald ‘Tasker, C&W _ vice-president and director of research, predicted that the present level of TV viewing will continue until some major programing change occurs,

The decrease since 1955 was general enough to include all age and sex groups. But people whose homes have boasted ‘T'V sets the longest time still tend to put in longer hours in front of the screen than more recent owners.

Attendance at movies reversed a two-year upward

62 Marketing

trend with a drop to levels of early TV days—although later months may bring a recovery over these findings, dating from spring, when the survey was taken.

Magazine reading declined, too, despite an increase in male followers of this pursuit. Publishers can blame the housewives.

More leisure time went into such group activities as entertaining friends, social calls, club meetings, and sports events. tery on og reading, never much affected by TV, continued high.

Radio listening has recovered gradually during after- noon and evening hours, where TV inflicted its most telling punches. Morning radio, which TV has not seriously threatened, remained popular.

With a TV set saturation this year of 91%, sales continued a downhill trend. Buyers are almost all setting up new households or replacing an older model. Although homes with two sets slowly increase, there still isn't enough demand for a second receiver to con- stitute a market in itself.

Only 25% of the Videotown audience—twice the figure last year—had viewed a color program. Reaction was mixed. But about half of all TV set owners ex- pressed willingness to own a color model, if the price was right—between $300 and $400.

Court Rejects Schenley Plea on Taxing Of Whiskey in Bond for Eight Years

Schenley Industries lost the first round of the court phase in its battle against the federal $10.50-per-gal. levy on whiskey held in bond for eight years. A special three- judge court in Pittsburgh held that it could give Schen- ley no relief because of a clause in the Internal Revenue Code. This clause states, “No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court.”

The only possible exceptions, said Judge Austin Staley, would arise if the tax was in reality a penalty or if there were “extraordinary and entirely exceptional circum- stances” present. The judge found neither exception ap- plied in this case.

The Schenley subsidiaries involved will appeal the case to the Supreme Court. Meanwhile, Schenley points out that the court did not rule on the merits of Schenley’s contention that the levy is unconstitutional. A company spokesman says the court found against Schenley mostly on procedural grounds; it held that the correct route for the distiller was to pay the tax and sue for a refund.

Schenley has in fact already done this (BW—Nov.5'55, p137). Following the filing of the tax refund claim, it took the other case to court in the hope of getting faster action, the spokesman says

Both in filing its tax refund claims and in taking the case to court, the company argued that the tax was not 4 proper excise tax at all but a direct property tax, and so unconstitutional. Under the so-called “force out” regula- tion, distillers must remove bonded spirits from bonded warehouses after eight years and pay the $10.50 levy whether they have a market for the product or not. But in the Pittsburgh case, the judges maintained that the distiller’s losses were not due to a defect in the “force out” provision but to its own misjudging of the market.

BUSINESS WEEK e¢ Oct. 27, 1956

Styron

deserves vour allention

THE DOW CHEMICAL COMPANY \ eve hie | i fe af old-fashioned packa Put ton Plastics Seles Dept. 464A dist m af P , nark . siaeeiind iter nial Midland, Michigan

aru

you can depend on DOW PLASTICS <>

SWAN RUBBER COMPANY

WORLD'S LARGEST MANUFACTURER OF GARDEN HOSE-~RUBBER AND PLASTIC

“« Saltonal accounting Machines save us $22,500 per year...

return 110% of their cost annually!” —SWAN RUBBER COMPANY, &

! na President

THE NATIONAL CASH REGISTER COMPANY, barron ¢, onio

98P OFFICES IN 94 COUNTRIES

FINANCE

How Individuals Save

Liquid Savings of individuals in Biliions of Dollars

30

Following a wartime sav- ings binge, liquid sav- ings slumped sharply, and have recovered slowly...

But this year savings are surging to a postwar high...

SAVINGS &

LOAN ASSNS

Ist Half 194 1955 1945 8 1955

*Net decline in individuals’ currency and demand deposits Oota: Securities & Exchange Commission.

... As savers stash their dollars away for these reasons

BY INCOME GROUPS May and August 1956 $2,000 $5,000 $7,500 $10,000 Under to to to and PURPOSES OF SAVING $2,000 $4,999 $7,499 $9,999 over Against emergencies only 29 %o 26% 23% 20% 17% Against emergencies and for a specific goal 13 19 23 24 23 For a specific goal only 40 46 48 48 47 To bequeath money 2 2 2 2 5 To earn income from savings 1 1 ° 1 3 No reason for saving 6 2 1 2 1 Don't know, not ascertained 9 4 3 3 4 TOTAL 100% 100% 100% 100% 100% 100%

Dota: Survey Research Center, Univ. of Michigan,

The Psychology of the Squirrel

What gives and doesn’t give with encies, and to mect investment needs be pressing to a postwar high, up 49% savings was a recurrent theme of the that originate from savings growth.” from a year ago compared with a mod meetings of the American Bankers Economists and statisticians have a est 8% rise ' Assn. at Los Angeles this week. Many lush variety of definitions and meas bankers charged that individuals arent ures for ‘ saving.” Ome basic measure

in personal income, Of course, the figures are far short of the staggering wartime totals. But the half iving enough; the ABA as a whok is liquid savings—currency, bank de year figures show the trend. In the urged “sound principles of savings and posits, securities, savings and loan as first six months a year ago, $4.4-billion

. ‘T . | thrift as an offset to inflationary tend ociation share ind these seemed to quirreled in liquid savings; thi

BUSINESS WEEK c 7 6 , © Oct. 27, 195 Finance 65

Y- ; ad “... in any given year, more people announce their intention to save than ac-

TO LOOK GETTER, FEEL BETTER, WEAR BETTER! “

tuallydo ... STORY starts on p. 65

year, $7.3-billion went into the sock.

The second half is usually the heavy one for savings, and if this year’s period can match the $10.5-billion of second- half 1955, a postwar record is in the bag. ¢ The Whys—While these figures have. been drawing the attention of bankers, a different approach—the whys of savings—has been studied by George Katona, program director of the Sur- vev Research Center at the University of Michigan. Katona, who has pio- neered work on psychological attitudes in economics, has just completed an analysis of the public’s attitude towards savings and installment buying, “how American consumers have felt about savings and borrowing in 1955 and 1956 and how their motives, attitudes, and opinions have influenced their behavior.”

In the main, Katona’s findings con- firm commonly held beliefs about sav- ings, reinforcing the accepted views that most people save to guard against emergencies, or for some specific goal such as retirement or a child’s educa- tion, or for a combination of the two. ¢ New Angles—At the same time he came up with some new facets of the psychology of savings. Thus, he found that among urban consumers there is

SECRETARIAL still a powerful credo that saving is

H good in itself, an almost religious view

eteaats far older than Ben Franklin’s Poor

® Richard. But, as in other aspects of

Model 18-TA morality, Katona finds that more peo-

You'll raise her output, and her morale, with this smart, Pestare Chae ple preach than practice. In any - $49.96 year, more people announce their in-

($52.45 in Zone 2) tention to save than actually do so. By the same token, Katona finds that in any given year there are many more people who say they have sav-

‘ ings or reserves right now than there a free ten-day trial. Call now! eek AO are who claim td have had some the

$15.95 previous year. From all this, he con- Find your COSCO Office Furniture dealer in yellow pages of ($17.95 in Zone 2) cludes that people save unevenly; in

phone book or attach coupon te your letterhead some years they draw down earlier

adjustable chair by Cosco! All Cosco chairs are “Office fashioned’’—designed by seating engineers and masse produced by skilled crafteamen, to look better, feel bet- ter and wear better than other chairs costing twice as

much. Your Cosco dealer is ready to prove this, with

4 savings—dissaving—while in others they show a net gain

l Katona has also found that the ven | to save is not dampened by social

1 MAMILTON MANUFACTURING CORPORATION, Dept @ w . | 06,Cotumbus, indiana | 1-7 =~ Eg | Without obligation, | would like a COSCO Secretarial Chair | is j i. on free 10-day trial 4

| | also want free trio! on Executive Chair |_| Conference Chair | - security and pension plans or bv fears

| | | |

}G | Chair Full inf tion OSCO Busi Se of enaral Che LJ Pull information on COSCO Business | of of inflation. Few consumers said they | Furniture } | expected more than small price in- ten creases for the near term; and few } *Y COSSS Custness Puratture eBere com> people “accepted the notion of an ‘in-

parable values in chairs, settees, sofas, °

| Address and occasional tables flationary age’ in which the value of |

Also available in Canada, Alaska and Hawaii through authorized COSCO dealers | (Zone 2—Texas ond |! Western States) money steadily deprec lates I eople s em Se price expectations, says Katona, “hardly

66 Finance BUSINESS WEEK e Oct. 27, 1956

Whats NEW in Mechanization ?

500,000 cubic feet of air per minute are exhausted by this Jeffrey 8H AERODYNE® fan at pressures up to 10” W.G.

It takes a lot of “oomph” to keep air coursing properly through a mine or in an industrial plant. And it takes a lot of scientific knowledge and ex- perience to assure maximum efficiency in applying ven- tilating equipment. There are many chances for error in judging requirements and in planning the system.

50,000 pounds of squeeze compacts a lot of rubbish in one of these Pak-Mor trucks. Refuse loaded at the front door is immediately compressed to a fraction of its volume; discharged at the dump from the rear. The packer plate which does the squeezing and discharging is powered by dependable, high strength Jeffrey chain.

We can help you with modern, efficient equip- ment for Materials Handling * Chain Applications * Materials Reduction *« Processing * Sanitation * Mining... and with a contract engineering- manufacturing service for your products.

Since 1909, Jeffrey ventilation engineers have been studying this problem and solving it for all types of installations, large and small. Today more mines in this country are ventilated by Jeffrey fans than by any other make,

Broad bottomed chain was designed by Jeffrey for use where chain drags on gritty runways. Known as PW Chain, it provides 50% more wearing surface than ordinary chain—lasts longer, It is interchangeable with ordinary chain and is available through all Jeffrey distributors,

Founded in 1877 ry

DJEFFREY

THE JEFFREY MANUFACTURING COMPANY COLUMBUS 16, OHIO

Here's Baltimore's favorite hotel, where you meet the city at its gracious best. You'll fall in love with the Sheraton- Belvedere its spontaneous friendliness,

its superb dining rooms, and its modern facilities.

SHERATON the proudest name in HOTELS

any Sheraton Hotel call the Sheraton nearest you. EAST NEW YORK BOSTON WASHINGTON PITTSBURGH BALTIMORE PHILADELPHIA Sheraton Hotel opens 1957 PROVIDENCE SPRINGFIELD, Masa, ALBANY ROCHESTER BUFFALO

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The offering is made only by the Prospectus.

NEW ISSUE

311,040 Shares

each five shares

i1, 1956,

The First Boston Corporation

Glore, Forgan & Co. Goldman, Sachs & Co.

This advertisement is neither an offer to sell nor a solicitation of offers to buy any of these securities,

Bucyrus-Erie Company

Common Stock ($5 Par Value)

Holders of the Company's outstanding Common Stock are being offered rights to subscribe at $42 per share for the above shares at the rate of one share for of Common Stock held of record on October 16, 1956. Subscrip- tion Warrants will expire at 3:30 P.M., Eastern Standard Time, on October

The several Underwriters have agreed, subject to certain conditions, to

purchase any unsubscribed shares and, both during and following the subscrip- tion period, may offer shares of Common Stock as set forth in the Prospectus.

Copies of the Prospectus may be obtained from any of the several underwriters, includ- img the undersigned, only im States in which such underwriters are qualified to act 4s dealers in securities and in which the Prospectus may legally be distributed,

Kidder, Peabody & Co. Lehman Brothers Merrill Lynch, Pierce, Fenner & Beane Dean Witter & Co.

October 17, 1956

68 Finance

“a

. . « avery strong minority of U.S. consumers look on installment debt as a defi- nite evil . . .”

STORY starts on p. 65

influenced their choice between invest- ing money in common stock or sav- ings accounts.” ¢ Unwittingly—Katona unearthed one factor that may surprise bankers and economists: Many consumers who saved some money in the past year didn’t realize it. Of those individuals who bought savings bonds for less than $100 during the year, for instance, only 25% said they saved. This may merely indicate the widespread us¢ of relatively painless payroll deduction savings bond plans. Even among people buying bonds worth $100 to $500 at maturity, only two-thirds said they had saved.

lo many economists and money managers, including ‘Treasury Secy. George M. Humphrey, repayment of installment debt is a form of saving. Katona devotes a large portion of his new survey to’ installment debt, but narrows the usual definition to include only purchases of automobiles and large household appliances such as washing machines, I'V sets, or refrig- crators. ¢ Installment Debt—If most people regard saving as a positive good, a very strong minority of U.S. consumers look on installment debt as a defi nite evil. Katona says that while 51% of consumers thought installment debt a good idea, a full third of them thought that it was a bad one. The hostile feelings toward installment debt wer concentrated at extreme ends of the income spectrum. People with incomes under $2,000—presumably saddle-sor« from debt—and with incomes over $10,000—who presumably don’t have to trifle with imstallments—took the dimmest views. In between, opin ion weighed more heavily toward the approving side, with 58% of those in the $7,500 to $9,999 bracket feel- ing it was a good thing

The amount of

those

installment debt outstanding naturally reflects the way feels. Katona says that 40% of the individuals with no install ment debt thought it was a good idea to have such debt; 43% thought it a bad idea. The higher the amount of installment debt, up to over $1,000, the more people thought it was a good idea, the fewer thought it was bad

¢ Too Costly—Of the one-third who regard installment debt with a jaun diced eye, few are moved by such old- fashioned notions as “I don’t believe

1 consumect

BUSINESS WEEK e Oct. 27, 1956

Saving money and time for the process industries...

MORE AND MORE ALUMINUM Goes to Work Every Day

In processing plants, where corrosion and rust pro- ducing fluids and atmospheres are always present, aluminum stands up. That’s reason enough for the constantly increasing use of this “maintenance-

free” metal.

But there are other good reasons for Reynolds Aluminum, too. Aluminum heat exchanger tubing possesses qualities which provide superior heat transfer—and costs less. Lightweight aluminum sheet for jacketing is easier to fabricate and install —provides reflective insulation and improved ap- pearance. For lower cost corrosion resistant proc- ess pipe, aluminum is the ideal metal. Structural members and treadplate are lighter and simpler to install. And, of course, aluminum is non-sparking

Many process industry applications of aluminum are easily adaptable to other fields. Reynolds has pioneered profitable uses for aluminum in all in- dustries. To learn how Reynolds can serve you and your industry, write to Reynolds Metals Company, P. O. Box 1800-CA, Louisville 1, Kentucky.

See Reynolds new program, “Circus Boy,” Sundays on NBC-TY,

a The Finest Products Made with Aluminum °

are mace wit?

REYNOLOS G33 ALUMINUM

By the makers of Reynolds Wrap

70

3 NEPTUNE METERS Bo0sT

SYRUP PRODUCTION 200%

T TAKES less than 30 seconds of this man’s time to measure out three ingredients ... corn syrup, liquid sugar and water ... for a big batch of Nalley’s table syrup. He now produces three times as much as five men previously did with bulk sugar and barrelled corn syrup.

Tools required: Three Neptune Auto-Stop meters. Push buttons to set quantity... open the valves...and the meters shut off automatically right on the dot.

This is one example of savings Neptune makes for industry ... by providing closer control over more than 150 industrial liquids. And Neptune now means more than meters . . . as you'll see from the list below.

NEPTUNE METER COMPANY, 19 West S5Oth St., New York 20, N. Y.

for a better / measure of profit

DIVISIONS end / PRODUCTS Neptune Meter Co., Neptune Meters, Lid. liquid meters Revere Corporation of America / oircroft instruments & wire Superior Meter Co. / gos meters Cox & Stevens / electronic scoles Electronic Signal Co., Inc. /toll collection equipment

Finance

“7

. . . it isn’t true that peo- ple no longer believe in saving .. .”

STORY starts on p. 65

in debt.” The biggest raps are that it (1) costs too much and (2) is likely to result in the consumer's buying too many things, many of which he won't really need

Most of those who favor installment credit say they need it because other- wise they couldn't buy the household durables at all; a relative few like it because it helps establish credit, or say they get better service on their car or appliance if they still owe money on it. A bare 3% mentioned that paying installments helps them to save.

A major section of Katona’s analysis of savings and borrowing is his research into how consumers reacted to their appraisal of their own financial future. Katona asked his sample whether they thought that “a year from now, they will be better off financially, or worse off, or just about the same as now?” ¢ Optimists—He found that those who expected to be better off next year had saved the most—including installment debt—and spent the most, last year. There wasn't much difference, _per- centagewise, between the behavior of groups that expected no change in their financial status and those who believed that they would be worse off. In previ- ous years, these same relationships have shown up, with those who are most optimistic about their financial future being the biggest savers—and the big- gest spenders

Another key to the behavior of in- dividuals emerges from how they felt about jobs. Those that preferred a job with chances for advancement and a “feeling of accomplishment” acted differently, in their economic behavior, from those who looked for a job with steady, high income. A larger percent- age of the former category saved more, spent more cash, and made slightly more installment purchases (But nearly twice as many individuals pre ferred steady income, rather than ad vancement.)

Katona figures, on the basis of his survey, that consumers don’t regard saving as a stumbling block between themselves and the good life.

“Both improvement of living stand ards and accumulation of reserve funds are viewed as positive goals which peo- ple in general wish to attain. Optim- ism, the feeling of security and con fidence, stimulate both.” Katona also concludes that it isn’t true that people no longer believe in saving, or that installment buving stifles the will to save END

BUSINESS WEEK e Oct. 27, 1956

PEPERONI

FORTE

64 LIRE KG

They get em while they’re hot

How Emery helped spread sizzling

sales ideas

When in Rome ... Romans now are doing as Americans do. Recently a modern American supermarket opened for business in the ancient city. In no time, ropes had to be put up to control crowds of delighted Italian housewives who formerly had to visit as many as 15 specialty shops daily to buy food. Our client, Fairchild Publications, decided this would be the perfect ox casion for distributing their weekly Supermarket News. Emery made pick

/ EMERY