Santa Barbara

-- "The present recovery movement will gather steady momentum to lift the economy to a new historic peak by this autumn", Beryl W. Sprinkel, economist of Harris Trust & Savings Bank, Chicago, predicted at the closing session here Tuesday of Investment Bankers Assn., California group, conference.

Another speaker, William H. Draper, Jr., former Under Secretary of the Army and now with the Palo Alto venture capital firm of Draper, Gaither & Anderson, urged the U.S. to "throw down the gauntlet of battle to communism and tell Moscow bluntly we won't be pushed around any more".
He urged support for President Kennedy's requests for both defense and foreign aid appropriations.

'not flash in pan'
Sprinkel told conferees that the recent improvement in economic activity was not a "temporary flash in the pan" but the beginning of a substantial cyclical expansion that will carry the economy back to full employment levels and witness a renewal of our traditional growth pattern.

"In view of the current expansion, which promises to be substantial" he said the odds appear to favor rising interest rates in coming months, but "there is reason to believe the change will not be as abrupt as in 1958 nor as severe as in late 1959 and 1960".

Thesis refuted

Sprinkel strongly refuted the current neo-stagnationist thesis that we are facing a future of limited and slow growth, declaring that this pessimism "is based on very limited and questionable evidence".

Rather than viewing the abortive recovery in 1959-60 as a reason for believing we have lost prospects for growth", he said "it should be viewed as a lesson well learned which will increase the probability of substantial improvement in this recovery".

Danger cited

He cautioned that "the greater danger in this recovery may be excessive stimulation by government which could bring moderate inflation".

The economist does not look for a drastic switch in the budget during this recovery and believes it "even more unlikely that the Federal Reserve will aggressively tighten monetary policy in the early phases of the upturn as was the case in 1958".

The unsatisfactory 1958-60 expansion, he said, was not due to inadequate growth forces inherent in our economy but rather to the adverse effect of inappropriate economic policies combined with retrenching decisions resulting from the steel strike.

Sacrifices needed

Draper declared, "As I see it, this country has never faced such great dangers as threaten us today.
We must justify our heritage.
We must be ready for any needed sacrifice".

He said that from his experience of two years with Gen. Clay in West Berlin administration, that "Russia respects our show of strength, but that presently we're not acting as we should and must".

He called the Cuban tractor plan an outright blackmail action, and noted that in war "you can't buy yourself out and that's what we're trying to do".

While he declined to suggest, how, he said that sooner or later we must get rid of Castro, "for unless we do we're liable to face similar situations in this hemisphere.
Its the start of a direct threat to our own security and I don't believe we can permit that".
New York (AP)

-- Stock market Tuesday staged a technical recovery, erasing all of Monday's losses in the Associated Press average and making the largest gain in about two weeks.

Analysts saw the move as a continuation of the recovery drive that got under way late Monday afternoon when the list sank to a hoped-for "support level" represented by around 675 in the Dow Jones industrial average.
It was a level at which some of the investors standing on the sidelines were thought likely to buy the pivotal issues represented in the averages.

Some good news

Although it looked like a routine technical snapback to Wall Streeters it was accompanied by some good news.
A substantial rise in new orders and sales of durable goods was reported for last month.

Treasury Secretary Douglas Dillon said the economy is expected to advance by a whopping 8% next year, paving the way for lower taxes.

The Dow Jones industrial average advanced 7.19 to 687.87.

Of 1,253 issues traded, 695 advanced and 354 declined.
New highs for the year totaled nine and new lows 14.

Trading was comparatively dull throughout the day.
Volume dipped to 3.28 million shares from 3.98 million Monday.

A $25 billion advertising budget in an $800 billion economy was envisioned for the 1970s here Tuesday by Peter G. Peterson, head of one of the world's greatest camera firms, in a key address before the American Marketing Assn.

However, Peterson, president of Bell & Howell, warned 800 U.S. marketing leaders attending a national conference at the Ambassador, that the future will belong to the industrialist of creative and "unconventional wisdom".

Creations needed

"As we look to the $800 billion economy that is predicted for 1970 and the increase of about 40% in consumer expenditures that will be required to reach that goal, management can well be restless about how this tremendous volume and number of new products will be created and marketed", Peterson said.

"With this kind of new product log-jam, the premium for brilliant product planning will obviously go up geometrically".

The executive paid tribute to research and development and technology for their great contributions in the past, but he also cautioned industry that they tend to be great equalizers because they move at a fairly even pace within an industry and fail to give it the short-term advantage which it often needs.

Nothing to fear

Peterson said America has nothing to fear in world competition if it dares to be original in both marketing and product ideas.
He cited, as an example, how the American camera industry has been able to meet successfully the competition of Japan despite lower Japanese labor costs, by improving its production know-how and technology.

He also used as an example the manufacturer who introduced an all-automatic camera in Germany, with the result that it became the best selling camera in the German market.

Election of Howard L. Taylor to membership in Pacific Coast Stock Exchange, effective Tuesday, has been announced by Thomas P. Phelan, president of the exchange.

Taylor, president and voting stockholder of Taylor and Co., Beverly Hills, has been active in the securities business since 1925.

Union Oil Co. of California Tuesday offered $120 million in debentures to the public through a group of underwriters headed by Dillon, Read & Co., to raise money to retire a similar amount held by Gulf Oil Corp.

Gulf's holdings could have been converted into 2,700,877 shares of Union Oil common upon surrender of debentures plus cash, according to Union.
Under the new offering, only $60 million in debentures are convertible into 923,076 common shares.

Due in 1986

The new offering Tuesday consisted of $60 million worth of 4-7/8 debentures, due June 1, 1986, at 100%, and $60 million of 4-1/2% convertible subordinated debentures due June 1, 1991, at 100%.
The convertible debentures are convertible into common shares at $65 a share by June 1, 1966;
$70 by 1971;
$75 by 1976;
$80 by 1981;
$85 by 1986, and $90 thereafter.
New York (AP)

-- American Stock Exchange prices enjoyed a fairly solid rise but here also trading dwindled.
Volume was 1.23 million shares, down from Monday's 1.58 million.
Gains of 2-3/4 were posted for Teleprompter and Republic Foil.
Fairchild Camera and Kawecki Chemical gained 2-1/2 each.
Question

-- I bought 50 shares of Diversified Growth Stock Fund on Oct. 23, 1959, and 50 more shares of the same mutual fund on Feb. 8, 1960.
Something has gone wrong some place.
I am getting dividends on only 50 shares.
In other words, I am getting only half the dividends I should.
Answer

-- Write to the fund's custodian bank -- the First National Bank of Jersey City, N.J.
That bank handles most of the paper work for Diversified Growth Stock Fund, Fundamental Investors, Diversified Investment Fund and Television-Electronics Fund.

The bank installed a magnetic tape electronic data processing system to handle things.
But it seems that this "electronic brain" wasn't "programmed" correctly.

This resulted in a great number of errors.
And letters began to come in to this column from irate shareholders.

I visited the bank in March and wrote a story about the situation.
At that time, the people at the bank said they felt that they had the situation in hand.
They indicated that no new errors were being made and that all old errors would be corrected "within 60 days".

That 60-day period is over and letters are still coming in from shareholders of these four funds, complaining about mistakes in their accounts.

Maybe it's taking longer to get things squared away than the bankers expected.
Any shareholder of any of these funds who finds a mistake in his account certainly should get in touch with the bank.

Doyle cannot undertake to reply to inquiries.
He selects queries or general interest to answer.
Washington (AP)

-- Alfred Hayes, president of the Federal Reserve Bank of New York, said Tuesday "there is no present need for far-reaching reforms" which would basically alter the international financial system.

Hayes said that if a way can be found to deal effectively with short-term capital movements between nations, "there is no reason, in my judgment why the international financial system cannot work satisfactorily for at least the foreseeable future".
Washington (UPI)

-- New York Central Railroad president Alfred E. Perlman said Tuesday his line would face the threat of bankruptcy if the Chesapeake & Ohio and Baltimore & Ohio Railroads merge.

Perlman said bankruptcy would not be an immediate effect of the merger, but could possibly be an ultimate effect.

The railroad president made the statement in an interview as the Interstate Commerce Commission opened Round 2 of its hearing into the C & O's request to control and then merge with the B & Aj.

"All these kind of things weaken us", Perlman said.

Bad condition

Board Chairman Howard Simpson of the Baltimore & Ohio Railroad Co., testified the B & O was in its worst financial condition since the depression years and badly needed the economic lift it would get from consolidation with the Chesapeake & Ohio Railroad.

"The financial situation of the Baltimore & Ohio, has become precarious -- much worse than at any time since the depression of the 1930s", he told the hearing.

C & O president Walter J. Tuohy was summoned back for cross-examination by New York Central attorneys before examiner John Bradford who is hearing the complex case.

The New York Central also has asked the ICC to permit it to gain control of the B & Aj.

Central was rebuffed by the other two railroads in previous attempts to make it a three-way merger.
The proposed C & O-B & O railroad would make it the hemisphere's second largest.
Washington (AP)

-- The government's short-term borrowing costs rose with Tuesday's weekly offering of Treasury bills.
On $1.1 billion of 90-day bills, the average yield was 2.325%.
The rate a week ago was 2.295%.
Washington, March 11 (UPI).

-- "Consumer uncertain about economic conditions".

This was the chief reason for a so-so sales outlook given by two-thirds of 56 builders polled by the National Housing Center.

Other reasons mentioned by one-third or more of the builders were "resistance to high interest rates, cost advantage of buying over renting has narrowed, shelter market nearing saturation and prospects unable to qualify".

Increase expected

The poll was taken at the Center's annual builders' intentions conference.
It disclosed that the builders:

Expect their own production volume, and presumably sales, to jump 30 percent in 1961.

Look for home building nationally to advance less than 10 percent this year from 1960's 1,257,700 non-farm housing starts.
The industry has said 1960 was a poor year.
Starts were down 20 percent from 1959.

Why the discrepancy between the builders' forecasts for themselves and for the industry?

Leaders of industry

The reason, says the Housing Center, is that the builders invited to the intentions conference "are generally among the more successful businessmen, and usually do somewhat better than their fellow builders".