Pension Funds Investing In
Stocks as Hedge on Inflation
TJPI Financial Editor
New York - (UPD - Pension
funds are the fastest growing
group among the institutional
f-y " .f l n vestors, ac-
cordlng to
PnVmrt TilnvA
y senior vice-
s 4i . .
I Spres ident of
i rriMartin E-Se"
X4,-1al&Co.The
W - firm, acts as
c o nsultant to
welfare, health
and pension
pr o g rams. It
seems as if every one wants
a pension-but no ones seems
to be worrying about an in
flation that could cut the pen
sion buying power down
sharply when the pensioner
begins to collect it years
hence.
. Tilove explains why the
Dension funds are investing!
more heavily in common
KUner Waller
stock, a factor that may be
involved in thinking of the
will-be pensioners:
"Money invested in bonds
-government or corporate -represents
fixed dollar invest
ments. You buy a $1,000 bond
today and 20 years from now
it will mature at .exactly
81.000-no more, no less-no
matter how the price level ort-gays Tilove, their operations
Nickerson fo Talk
At Career Program
Francis B. Nickerson, exec
utive secretary of the Oregon
state system of higher educa
tion, will speak on career
planning at the Jackson coun
ty career program for parents
and students at Medford High
school Feb. 3. The program
will start at 7:30 p.m.
Seven guest speakers .will
talk briefly about various ca
reers, and participate in dis
cussions of the subjects in
rooms devoted to the subject
area.
Those attending will have
an opportunity to meet two
career speakers, according to
Dr. Leonard B. Mayfield, sup
erintendent of the Medford
schools, who will welcome
parents and students.
Speakers, and the vocation
al area include Dr. Eva Seen,
Oregon state college, teaching;
R. L. Richardson, Oregon
State college, engineering; Dr.
Bernd Craseman, University
of Oregon, physical science;
Dr. W. D. Richins, University
of Oregon, business adminis
tration; Frank Stanko, Oregon
Technical institute, techni
cians; Dr. Arthur Kreisman,
Southern Oregon college, hu
manities; and Miss Guhli Ol
son, University of Oregon
medical school, nursing.
cost of living has changed.
Hedge Against Inflation
"On the other hand, com
mon stocks, with some excep
tions, tend to increase in mar
ket value as prices go up.
Consequently, common stocks
are regarded as a hedge
against inflation.
"For pension funds the ap
proach is this: if part of the
assets of a fund are invested
in common stocks,, then over
a long period the value of
the fund is likely to keep
pace with the cost of living.
"Ultimately, the reasoning
goes the increase in value
will either allow for neces
sary impairments in pension
benefits or the companies in
volved will be able to mini
mize any additional contribu
tions that otherwise might be
required of them."
Tilove citea the recent sur
vey of the Securities and Ex
change Commission which re
ported assets of pension funds
at $19.3 billion. If funds of
non-profit organizations are
included the total exceeds $20
billion, he says.
Reserves Increase
And he notes further the
SEC study estimated reserves
of pension plans underwrit
ten by insurance companies
at more than $14 billion at
the end of 1957.
He notes that since 1951
the pension fund swing to
common stocks has been
sharp. Seven years ago, the
average fund had 12 per cent
of its assets in common
stocks. At the end of 1958
this had risen to 25 per cent
with common stock assets at
book value at $4.8 billion.
This figure of $4.8 billion
has since grown to $6 billion
market value because of the
market's advance. Thus the
percentage of common stock
holdings can be placed at 32
per cent instead of 25.
He indicates that pension
fund investment in stocks has
centered von the blue chips
some 200 to 250 stocks.
Penson funds are only one
group of institutional inves
tors. There are the mutual
funds, banks, insurance com
panies, universities and foun
dations. Helped Bull Market
These, it is explained, have
played a big part in making
the present bull market. And,
have raised some big ques
tions:
-Have these purchases tend
ed to increase the price of
blue chip issues at a faster
rate than the price of com
mon stocks generally?
-Have the purchases tended
to put a floor under the price
of blue chip stocks?
-Have the heavy purchases
of some stock issues by funds
and other institutional inves
tors tended to reduce the
floating supply of these se
curities? And has this result
ed in making the stocks high
ly sensitive to any changes
in supply or demand?
-Are self-insured pension
funds by themselves, produc
ing a major change in the
behavior of the stock market.
Wall Street has been dis
cussing those very questions.
Solutions may be forthcom
ing through a trend toward
more equity financing.
Exams Announced
For Civil Service
Examinations for several
civil service positions have
been announced recently.
Examination is now open
for laborer, custodial, at the
Veterans administration Do
miciliary, Camp White, Enid
Li. Brown, executive secretary
for the board of civil service
examiners at the Domiciliary,
has announced.
New examination for filling
positions in several agencies
have been announced for med
ical officers. Apprenticeship
and training representatives
are being sought by the de
partment of labor for filling
positions throughout the country.
Additional information may
be obtained from Leonard
Nelson at the Medford post
office.
Polaris Missile
'Downgraded' To
Speed Development
(Continued From Page 1)
McElroy also jevealed that
the Navy's Polaris missile has
been "downgraded" somewhat
in order to speed its develop
ment. He said there has been
"some sacrifice in range."
Edwin Weisel, attorney for
the subcommittee, said he had
been told that the Polaris'
range is now to be 800 to
1,000 miles instead of 1,500
miles as originally scheduled.
McElroy -did not confirm the
figures, saying they were
classified.
The defense secretary said,
however, that the U.S. will
have submarines "fully load
ed" with Polaris missiles by
the fall of 1960. He pointed
out that the original operating
date for Polaris was in 1963.
Under further questioning
McElroy conceded that Rus
sia has an ICBM more power
ful than any produced by the
U.S.
Atlas Has 'Adequate Thrust'
He said this helps the Rus
sians in outer space experi
ments but not in missile
strength, because the U.S. At
las has "adequate thrust" to
reach any target.
McElroy , also insisted that
the Polaris will have "ade
ruate range to reach any tar
get that would be assigned to
it." He reported that five nuclear-powered
Polaris subs are
under construction.
Cancellation of the Regulus
II missile after $290 million
had been spent on its devel
opment, McElroy said, was
due to the great superiority
of the Polaris and the great
acceleration in the Polaris
program.
At the outset of the hear
ing, McElroy said in a pre
pared statement that the Joint
Chiefs of Staff have pledged
in writing to support Presi
dent Eisenhower's defense
budget. He added that each
of the service chiefs have
"some reservations" about the
amount provided.
Unvarnished Account
Johnson led off the hearing
by asking for a "plain, un
varnished and unadorned" ac
count of the nation's prepar
edness. Informed sources said Mc
Elroy was primed to tell the
group that U.S. intelligence
estimates on Russian progress
have been downgraded re
cently while U.S. progress has
exceeded expectations. That
was not covered, however, in
McElroy's short prepared
statement.
Johnson in his opening
statement said the Senate
group was "not interested in
defense as an 'issue.' We want
to know where we stand, and
this is a question to which
there should be a clear-cut an
swer." '
KETCHUP MEANS STOP
Memphis, Term. -(UPD- Bev
erly Lyons says a woman she
saw at a Memphis supermar
ket gave hand signals for all
turns and stops as she went
around with her food cart.
NEW DIMENSIONS
Redwood City, Calif. -fDPD-Sign
over a half -gallon jug of
whiskey displayed in the win
dow of a liquor store here:
"ALASKA PINT formerly a
Texas Fifth."
MAIL TRIBUNE, Medford, Oregon, Thursday, January 29, 1S59 11
Rochester, N. Y. -(UPD-Mrs.
Effie Cutting, a clerk at the
Olmsted County courthouse
here, decided to put the com
bination of the safe in a se
cure place. Officials were un
able to open the safe the fol
lowing day because Mrs. Cut
ting had locked the combina
tion inside it.
THE
e
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Revolutionary
Progress Stressed
In Farm Message
(Continued From Page 1)
He stressed in his 1,500
word message to the House
and Senate that revolutionary
progress made in farm produc
tion over the last 50 years
make changes in the govern
ment program essential.
The President also announc
ed a , new, but undefined, pro
gram of surplus disposal over
seas which he said would
amount to "using food for
peace." He did not spell out
details, but said he is putting
into motion an exploratory
plan for cooperating with oth-
Fiscal Officer
Bill Discussed
By Committee
Salem - (UPD - Authorizing
of a state fiscal officer im
mediately was urged Wednes
day by Rep. Keith Skelton, (D
Sugene), cbchairman of the
Joint Ways and Means com
mittee. He appeared before
the Senate State and Federal
Affairs committee.
The committee decided to
table a bill offered by Sen.
Ben Musa (D-The Dalles) but
incorporate some amendments
suggested by Musa into a bill
introduced by Sen. Dan Thiel
(D-Astoria).
Thiel's bill was introduced
at the request of the Interim
committee on Government
Reorganization. Skelton of
fered some suggested amend
ments transferring certain
duties of the secretary of
state's office to the fiscal of
ficer and these too, will be
incorporated in Thiel's bill.
Meets Friday
The committee meets Fri
day and may pass the bill out
at that time.
Skelton said that with
every passing day members
of the Ways and Means com
mittee were coming to realize
that they do not have as much
financial information as they
would like in order to reduce
budgets in the least amount of
time possible.
Skelton's contention that
ignorance of finances had ex
isted in past sessions was dis
puted by Sen. Anthony Yturri
(R-Ontario), minority leader
in the Senate.
Would Program Changes
"There has been a director
of finance who is charged spe
cifically with going over state
budgets and eliminating any
'fat' found in them," Yturri
said.
Sen. Harry Boivin (D-Klam-ath
Falls) said he felt the big
value of a fiscal officer would
be to program changes in op
eration of state departments
between legislative sessions,
changes which would reflect
money savings in such depart
ments.
Secretary of state duties
that would be transferred to
the fiscal officer would be
furnishing of legislative sup
plies, storing of legislative
documents and preparation of
bills providing money for leg
islative expenses.
An oil tanker with a capac
ity of 145,000 barrels of fuel
oil carries the equivalent of
36,260 tons of coal.
er friendly nations in getting
the greatest possible use of
farm surpluses in each.
Stiff Opposition Certain
His proposal was certain to
run into stiff opposition in
Congress, however. The big
Democratic majority has re
sisted administration efforts
to lower farm price supports.
Eisenhower said that by the
start of the new fiscal year
next July 1, the government
would hold more than $9 bil
lion in farm surpluses. He said
the huge stock of government
wheat was so large that if
America -failed to harvest one
bushel this year, the surplus
supply was more than enough
for domestic use, export sales,
foreign donation and needed
carryover for an entire year.
"The price support and pro
duction control, program has
not worked," he said. The
President pointed out that
even though the government
recovers some of its invest
ment from surplus disposal
the final cost of fixed price
supports would be "impres
sively large."
Little To Help Farmers
He objected to the present
support program because
most of the federal money in
volved went to those storing
the surpluses and to "relative
ly few producers of a few
crops."
"It does little to help the
farmers in greatest difficulty,"
he said. v
Eisenhower's message, was
in keeping with the adminis
tration drive to balance the
federal budget in the neigh
borhood of $77 billion, partial
ly by cutting federal expenses,
and also, by getting more for
the federal dollar.
The message was accom
panied by a memorandum
from Secretary of Agriculture
Ezra T. Benson outlining spe
cific recommendations for a
new program.
Extension of Law
These called for changes in
the wheat, tobacco, and pea
nut programs; extension of the
surplus disposal law under
which this country sells farm
surpluses abroad for foreign
currency; a three-year exten
sion of the conservation re
serve; expansion of agricul
tural . research; participation
of the states in programs to
meet problems caused by
drought and other natural dis
asters; a change in the Rural
Electrification Adimini stra
tion program; changes in the
Farmers Home Administra
tion and . extension of the
Sugar Act.
HERTZ
TRUCK RENTAL
Available
at
HOPKINS RICHFIELD
SERVICE
McAndrews at Court
Phone SP 3-9068
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