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[blocks in formation]

1901 (shares traded 1901

10 includes unlisted

business) 1902 1903 1904 1905 1906 1907. 1908 1909 1910 1911 1912 1913 1914. 1915. 1916 1917 1918. 1919. 1920 (shares traded

through 1920 to 0000). 1921 1922. 1923.

[blocks in formation]

284, 044, 082
459, 717, 623
451, 868, 353
581, 702, 342

930, 893, 276
1, 124, 800, 410

810, 632, 516
576, 765, 412
425, 234, 294
651, 816, 452
323, 845, 634
381, 635, 752
496, 048, 869
409, 464, 570
297, 466, 722
262, 029, 599
207, 599, 749
170, 603, 671
125, 685, 298
278, 741, 765
263, 074, 018
377, 563, 575
363, 709, 312
253, 623, 894

Millions

433. O 491.6 585. 6 655

757.3 1, 218 1, 297 1, 297 1, 319 1, 312 1, 293 1, 305 1, 318 1, 360 1, 412 1, 424 1, 435 1, 455 1, 463 1, 471 1, 489 1, 492 1, 592 1, 771 1. 907

158

153 167 192 195 220

227, 636.000
172, 778, 535
260, 890, 802
236, 482, 731

381
301
370

416

Source: Courts & Co., Atlanta, Ga., Securities Research Department, Mar. 6, 1948.

EXHIBIT C.--Gulf Oil Corp.

Number shares offered

2, 269, 050 1 share for each 4 held at a price of ..

$51 per share Price of stock on Jan. 2, 1948, was 7514. Rights expired Feb. 10, 1948. Stock closed 5838. To low point, break amounted to 16.875 points or 22.43 percent. 16.875 X $2,269,050=$38,290,218.75. To offering price break amounted to 7514-51=2414 points or 32.23 percent. 2414 X $2,269,050=$55,024,462.50.

Points Dow Jones averages, Jan. 2

181. 04 Dow Jones ave ges, Feb. 10.

165. 65

15. 39

Total_-
Declined 8.50 percent.

EXHIBIT D.-Texas Co.
Number shares offered.-

2, 248, 932 1 share for each 5 shares held at a price of

$45 per share Price of stock Aug. 1, 1947, was 6658. Rights expired Oct. 8, 1947. Stock closed 57. Stock price break amounted to 978 points or 14.45 percent. 9.625 X $2,248,932=$21,645,970.50. To offering price, break amounted to 6678-45=215/8 points or 32.46 percent.

21.625 X $2,248,932=$48,633,154.50. Dow-Jones averages:

Points Aug. 1, 1947

183. 81 Oct. 8, 1947_

178. 78

5. 03

Total_
Decline equals 2.74 percent.

EXHIBIT E.-Cincinnati Gas & Electric Co.

Number shares offered_

204, 000 1 share for each 10 shares held at a price of --

$22 per share Price of stock on Oct. 31, 1947, was 27. Rights expired Feb. 2, 1948. Stock closed 2414. Stock price break amounted to 234 points or 10.19 percent. 234 X $204,000=$561,000. To offering price, break amounted to 27–22=5 points or 18.52 percent.

5X $204,000=$1,020,000. Dow Jones averages :

Points Oct. 31, 1947

181.76 Feb. 2, 1948

174. 92

Total.

6. 84

Decline equals 3.76 percent.

EXHIBIT F.-Individuals: Taxes on capital gains and losses, 1926–45
Estimated taxes on Calendar year-

Estimated taxes on capital gains and Calendar year:

capital gains and Continued losses 1

losses 1 1926_ $225, 485, 000 1935

85, 257, 000 1927 296, 879, 000 1936.

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201, 941, 000 1928. 576, 001, 000 1937

58, 188, 000 1929. 420,971, 000 1938.

52, 873, 000 1930. -15, 226, 000 1939

26, 995, 000 1931 -89, 001, 000 1940.

12, 868, 000 1932 -79, 917, 000 1941

2, 011, 000 1933. 16, 167, 000 1942

79, 952, 000 1934. 17, 197, 000 1943

160,000,000

EXHIBIT G.-American Telephone & Telegraph Co.

Issue

Dated

Amount

Deb., 256's, 1986
Cv. Deb., 234's 1961.
Deb., 234's, 1982
Dec., 278's, 1987
Cv. Deb., 234's, 1957

July 1, 1946
Dec. 15, 1946
Apr. 1, 1947
June 1, 1947
Dec. 15, 1947

$125,000,000
343, 087, 700
200,000,000
200,000,000
357, 532, 600

Stock price:

July 1, 1946..
Dec. 15, 1947-

Points 198. 50 150. 875

47, 625

Decline (23.99 percent)
Dow-Jones averages :

July 1, 1946_
Dec. 15, 1947-

206. 47
179. 69

ine (12.97 percent)Capital stock outstanding Dec, 31, 1946

26. 78

Share 20, 606, 999

DOLLAR DECLINE IN STOCK VALUE

$198.50 X 20,606,999=$4,090,489,301.50
150.875 X 20,606,999= 3,109,080,974.13

Decline

981,408,327.37

a

The CHAIRMAN. Thank you for coming to give us your observations. Are there any questions?

Senator GEORGE. I have no questions but, Mr. Courts, you are in daily touch with what we call down our way, “the trade.”

I suppose it is called "the trade” everywhere, the investing public, the people who have a little money and want to buy?

Mr. Courts. Yes, sir.

Senator GEORGE. How many cities in the Southeast do you operate in ?

Mr. Courts. We have offices of our own in 20 cities in the Southeast and we have 7 correspondent offices in 7 cities.

Senator GEORGE. Is it your deliberate opinion and judgment based on your own experience that the equity capital is becoming scarcer and scarcer?

Mr. COURTS. Yes, sir.

I do not care what economists might say, I think economists are necessary and I want to be able to ask them questions, but I am talking from the actual feel of this thing. I have been in the field 28 years. We started this business from nothing. And we could not have built it up under this tax structure. I know from the field that the money is not there.

We are preparing to go to registration on an issue of $1,500,000 of common stock of a company with its headquarters in Atlanta and many other cities in the Southeast. It happens to be one of the best-managed companies in our territory. They started with $40,000 in 1928 and they have a net worth today of $3,000,000. They have always needed money because the business was growing and today they need more money. We are ready to go and file for registration and I do not have any more idea whether we can put that piece of business over or not.

I am perfectly frank with the management; they have known it and I have told them for 8 months. I told them that unless we got a new tax bill they were not going to be able to do this financing. We propose to go to the market with that stock to yield nearly 7 percent and nothing ahead of it, no senior securities and there will not be any debt. The stock will be offered to the public at just slightly over book value.

Probably the real book value is in excess of what we will offer it at.

So, the man that comes in today is coming in and paying just book value and these people who build this magnificent business, they do not get a thing for good will or their sweat. They are taking in partners today when their business is sound and letting them put their dollars in side by side with them. Even with a piece of business like that, that has never had a loss excepting for the first year when they lost $2,000 and after that it has always been up and up and up; it has been the result of nothing but good management and profits.

All of the men have been taking an active part in civic affairs. There is a corporation we are ready to go ahead with. I do not have the slightest idea whether we will put it over.

Senator GEORGE. You have other instances of that kind all the time? Mr. Courts. Yes, sir; everywhere.

Senator GEORGE. You are speaking from actual experiences in working out and handling these problems?

Mr. Courts. Yes, sir.

а

you why.

We have letters here that I could give you.

Senator GEORGE. I am not asking that; I just simply want to get your own experience.

Mr. Courts. We have plenty of them. You just cannot do it and our bread and meat depends on it. We want to do it; there is where we make our money. We have had a terrible struggle making money, We want to do the business. I just see this continual excess of demand for equity capital over and above the savings that are available to go into it.

Senator GEORGE. You think that this bill, even though it does not actually afford any large reservoir of money that could go into equity financing, would have a fine, direct, and immediate effect on the psychology?

Mr. COURTs. Yes, sir; it would certainly have some, and I will tell

For the last 2 years you have had a steadily declining market and your amount of new securities coming out was declining so that there has been some accumulation of capital. Even the capital that does exist today to go into risk or venture capital has been timid because they see that the supply is not sufficient to take care of the demand, so it has been timid and has not gone to work.

If you do get this tax bill, that money will have some encouragement, I think, on capital to come in, but it would not be permanent. I think that somewhere over the next 12 months-it ought to be sooner-you ought to have a substantial change in the tax structure that will permit risk capital to exist in a proper supply, because if you do not I can well see that you could have corporations clamped down on their building.

I had a talk with the president of Southern Bell Telephone before I came here and he authorized me to represent him any way I saw fit. He said:

We have to have $175,000,000 of equity money and not far off. If we do not get it, we stop construction.

That is just one of the companies. They are all in that shape.
He said:

We can go to the American Telephone to get that common-stock money, but where are they going to get it? They already have $3,000,000,000 of debt built up.

I talked to the Georgia Power Co. the day before I came here and it is the same story. Those big companies, if they once stop construction you will have a depression in short order.

I do not want to see that sort of thing happen because it is not necessary.

The CHAIRMAN. We will recess until 3 o'clock at which time we will meet in the District of Columbia room.

Thank you very much for coming, sir.

(The following was supplied by John W. Hanes in response to questions on p. 116:)

EXPERIMENTS IN SOCIALISM

DIFFERENCES BETWEEN CAPITALISM AND SOCIALISM

The following definition by Prof. Ralph H. Blodgett, of the University of Illinois, appears in his book, Comparative Economic Systems (Macmillan Co., New York, 1944), pages 22–23:

*

“Differences in economic institutions are so important in connection with economic systems that definitions of these systems are usually stated in terms of institutions. A capitalistic system is defined in terms of private property, the profit motive, freedom of enterprise, the market mechanism, and competition, or some combination of these factors, while another economic system, such as socialism, is defined in terms of the modifications which it would make in some or all of these institutions

Such a system involves the elimination of private profit making, the public or collective ownership of the means of production, and central economic planning for the common good (in some loose sense)."

The basic institution of socialism is that all the means of production are publicly owned. It has its roots in the manifesto of Karl Marx. Specifically, some of the policy points set forth by Marx are

1. The abolition of property in land and application of all rents of land to public purposes.

2. A heavy progressive or graduated income tax. 3. Abolition of all rights of inheritance.

4. Centralization of credit in the hands of the state by means of a national bank with state capital and an executive monopoly.

5. Centralization of the means of communication and transport in the hands of the state.

6. The bringing into cultivation of wastelands and the improvement of soil generally in accordance with a common plan.

7. Equal liability of all to labor; the establishment of industrial armies, especially for agriculture.

8. Combination of agriculture with manufacturing industries; gradual aboli. tion of the distinction between town and country by a more equitable distribution of the population over the country.

Socialists look upon these as long-term goals and believe that certain intermediate steps are necessary in the gradual transformation of a capitalist system into socialism. A statement of these intermediate steps is the Socialist Party platform of 1932. A list of the principal points of this platform (omitting proposed constitutional changes, points on social ownership, points dealing with civil liberties, and points dealing with international relations) is as follows:

SOCIALIST PARTY PLATFORM, 1932 1

Unemployment and labor legislation

1. A Federal appropriation of five billions for immediate relief for those in need, to supplement State and local appropriations.

2. A Federal appropriation of five billions for public works and roads, reforestation, slum clearance, and decent homes for the workers, by Federal Government, States, and cities.

3. Legislation providing for the acquisition of land, buildings, and equipment necessary to put the unemployed to work producing food, fuel, and clothing, and for the erection of houses for their own use.

4. The 6-hour day and the 5-day week without a reduction of wages. 5. A comprehensive and efficient system of free public employment agencies. 6. A compulsory system of unemployment compensation with adequate benefits, based on contributions by the Government and by employers.

7. Old-age pensions for men and women 60 years of age and over.
8. Health and maternity insurance.
9. Improved system of workmen's compensation and accident insurance.
10. The abolition of child labor.

11. Government aid to farmers and small-home owners to protect them against mortgage foreclosures and a moratorium on sales for nonpayment of taxes by destitute farmers and unemployed workers.

12. Adequate minimum-wage laws. Banking

1. Socialization of our credit and currency system, and the establishment of a unified banking system with the complete governmental acquisition of the Federal Reserve banks.

1 Source : A Plan for America. pp. 10–16.

Official 1932 Campaign Handbook of the Socialist Party.

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