Wednesday, January 7, 1931: Dow 172.66 +1.95 (1.1%)

Assorted historical stuff:

Editorial by T. Woodlock: “so complete is the contempt of the Russian leaders for the rest of the world that they do not even pay it the compliment of lying to it.” They clearly announce their goal of world revolution, and their stand against everything our civilization is founded on - property, family, and religion. And yet even our supposedly hard-headed businessmen want to deal with them. “Is it any wonder that the Communist International has faith in the World Revolution when it finds in the US, of all places, such a combination of myopic ignorance, moral astigmatism, and business cupidity?”

Rep. LaGuardia (R, NY) asks Congress for vote allowing drought relief funds to be used for food loans to city unemployed workers.

NY Gov. Roosevelt asks D.A. Crain to "prosecute vigorously" the Bank of U.S. case. Bankruptcy hearings reveal $52M was placed in four bankrupt affiliates, not all of which has been accounted for.

Labor Sec. Doak asks additional appropriation of $600,000 to be used for deporting aliens illegally in the US; estimates there are currently 400,000 illegal aliens in the US, of whom about 25% are eligible for deportation.

Farm Board chair. Legge defends Board's policies to mass meeting of farm organizations; says wheat prices would be cut in half if US depended on the export market to dispose of wheat.

Editorial: Decision to allow meatpackers to make, distribute, and wholesale other foods will probably benefit the public in lower prices, but would have benefited them even more if the packers had been allowed to enter the retail field. The Court seems to have prohibited this because of the fear it would hurt the individual retailer, though there doesn't seem to be a solid legal basis for this decision.

British govt. confers with coal mine owners in attempt to end South Wales strikes. Coal miners claim owner proposals would mean 53,000 miners would be paid only $5 weekly after deductions, meaning "irretrievable ruin" for a community already "reduced to beggary."

Strikes declared by textile weavers in Sweden and Britain.

Illinois establishes "Buyers Buy Now Bureaus" keeping lists of bargains advertised by local stores.

Helena, Ark., a river port and agricultural center, now has no open banks; merchants report small bills scarce, trouble making change for customers.

Los Angeles Stock Exchange opens its new $1.65M building on Spring Street; main facade, 50 feet high, is limestone and polished granite, with base topped by scultures depicting the various stages of economic progress.

American Red Cross says spent $849,965 for drought relief in 1930.

US Army reports number of fatal flying accidents in 1930 was 37 vs. 42 in 1929 and 61 in 1928. War Sec. Hurley recommends adoption of seven-year motor vehicle replacement program for the Army to cost $2M annually; total of 6,139 vehicles to be purchased, mostly trucks.

World's longest single lift passenger elevator to be installed in Carlsbad caverns, running from the natural cave entrance to upper levels of the caverns 750 feet above. Seven miles of the upper levels have been made accessible to visitors; one chamber, called the Big Room, is almost 4,000 feet long, and has a maximum width of 625 feet and maximum ceiling height of 300 feet.

Market commentary:

Market wrap: Stocks were irregular in the morning, but then strengthened; good recoveries took place in the standard shares, and a firm tone was maintained to the close. Bond market rallied strongly through the day as call money remained at 1 1/2 percent; US and foreign govts. higher; corp. strong with sharp rallies in many speculative issues. Commodities firm, with good rallies in grains; however, silver hit another record low at 29 1/2 cents.

Rails and major industrials were strong. Tire shares remained weak after Goodyear of Canada announced 10%-15% price cuts. Warner Bros. advanced sharply as a new pool began operating in the stock.

Automotive stocks have been drastically deflated, with several leaders selling at 10% to 38% of their 1928 highs. However, investors who bought in 1923 have gotten very good results; in that period, in quite a few cases, the stock has paid out total dividends several times the original investment, and the stock itself is still worth a multiple of the original investment.

Conservative observers remain cheerful, noting recent profit-taking has been absorbed well; continue to advise picking up standard stocks on technical reactions.

Frazier Jelke survey of 100 leading common stocks shows 1930 decline in value of $8.7B to $20.7B. Largest decline was in mines, down 57.1%; smallest was in foods, down 6.6%.

Insurance cos. are reportedly increasing buying of railroad common stocks rather than bonds and preferred stocks.

A Sloan, GM pres., offers tempered optimism for 1931: "We should not be disappointed if the year 1931 is not as good as we have hoped and as some of the prophets say it is going to be ... For the long pull there is no question as to the future. I am sure that though 1931 may be disappointing, before we get through the year we will see a change in the trend. And we will be building the foundation for a still greater 1932 and 1933."

Those criticizing the recent market recovery have said many business adjustments remain to be completed. However, in all previous business depressions a stock market recovery has started before all adjustments were complete.

Broad Street Gossip: Rally in stocks and bonds since start of year has greatly improved public sentiment. Because of great prosperity of the last 25 years, few thrifty people are not owners of stocks and bonds; when these shrink in value every day, it must affect confidence and willingness to buy. Bear contingent is reported smaller, with several of the big operators having switched to the bull side or retired to the sidelines. One of the country's richest men told a friend that his fortune had shrunk to a third of what it was at the peak last year, but "I am not discouraged in the least. Over the last quarter of a century, my fortune has shrunk very badly on five different occasions, but I know this shrinkage is temporary. After every sinking spell, what I own always soars to a new high."

More companies are encouraging stockholders to become boosters of their products by sending them advertising and samples; for example, new holders of American Tobacco are sent a glass humidor containing Luck Strike cigarettes.

Investors are now disagreeing on how to value stocks. Price earnings multiples are not very useful because earnings are now so unpredictable; book value "has lost what little significance it had"; stock prices show no "semblance of order" even when compared to probable 1931 dividends.

Economic news and individual company reports:

Many industries report rehiring thousands workers laid off in the closing months of 1930; rails and automotive companies are rehiring particularly heavily.

Rail freight loadings for holiday week ended Dec. 27 were 538,419 cars, down 175,391 from prev. week, down 100,970 or 15.7% from 1929 week, and down 129,555, or 19.4% from 1928.

Oil refineries operated at 58.7% in the week ended Jan. 3, lowest rate on record; gasoline stocks increased 392,000 barrels in the week to 39.780M vs. 42.314M a year ago. Crude oil production was 2.082M barrels/day, down 44,650.

15 leading utilities earnings per share in 1930 were about 11% under 1929; shares sold on Dec. 31 at 15.6 times earnings.

Total market value of all NYSE-listed shares on Jan. 1 was $49.020B vs. $53.312B on Dec. 1. Total borrowings on securities by NYSE members were $1.893B, or 3.86% of total value, vs. $2.162B or 4.06%.

End of year NY bank statements show remarkably strong condition; "cash" (immediately salable) assets are generally well over 50% of demand and time deposits combined. Chase National Bank statement of Dec. 31 shows it to be "by far the largest bank the world has ever had," with deposits of $2.074B.

R. Stephenson, Amer. Bankers Assoc. pres., says banking situation sound. Calls on public to help uphold high standards in banking by patronizing banks that practice careful policies; criticizes popularity of "easy" bankers who offer unsound loans or unjustifiably higher rates and free services.

Steel industry, while refraining from public predictions, has privately been guardedly optimistic on 1931. Consensus is for a slow recovery, gaining temporary momentum in the spring, but not reaching definite improvement until midsummer; from that point, things are expected to compare very well with 1930. US Steel to report year-end unfilled orders Saturday; some expect substantial gain of 300,000 to 400,000 tons, but year-end adjustments make things uncertain.

Banco Pelotense, a Brazilian bank with $16M deposits, closed; govt. says will protect creditors and depositors.

Metropolitan Miami building permits for 1930 totaled $7.375M; 93 residences, costing $1.671M, were built in Miami Beach.

S.S. Kresge Dec. sales were $23.4M, down 1.1% from 1929; year's sales were $150.4M, down 3.8%.

Movie:

The Right to Love, starring Ruth Chatterton - takes an interesting approach to talkie production by reviving two old silent cinematic devices to good effect: the double exposure, by which Miss Chatterton plays a mother and her daughter, both on screen at once, and the flashback.

At the galleries:

Marie Harriman Gallery is showing a portrait by Henri Rousseau from 1901, of his friend Joseph Brummer. Brummer originally got the painting in exchange for a tube of paint and some canvas. He sold it to a German collector in 1910 for $60. A noted Russian collector acquired the portrait during the war. Five years later, the Russian collector was forced to sell, and Mr. Brummer attempted to buy the painting back for $6,000 but was outbid by the celebrated Japanese collector Fukushima. Estimates are that the painting if sold today could command about $15,000.

Joke:

"A small boy asked his father how wars begin. 'Well,' said his father, 'suppose that England quarreled with France -' 'But,' interrupted the mother, 'England mustn't quarrel with France.' 'I know,' he answered, 'but I am taking a hypothetical instance.' 'You are misleading the child,' said the mother. 'No, I am not.' he answered. 'Yes, you are.' 'No, I am not.' 'Yes.' 'No.' 'All right, dad,' said the small boy, 'I think I know how wars begin.'”

Tuesday, January 6, 1931: Dow 170.71 -1.41 (0.8%)

Assorted historical stuff:

Washington report: Congress back in session, "with the usual fanfare of oratory, insurgency, resolutions, inquisitorial proposals and denunciation." Renewed talk of extra session; Pres. Hoover said ready to appeal to country to avoid this. C. Dawes mentioned as possible new GOP chair; would indicate an intention to deal with insurgents aggressively.

300 armed and hungry farmers demonstrate in Arkansas Saturday, threatening to seize merchant supplies. Ark. Sen. Caraway will introduce a bill to increase $45M drought relief funds by $15M to be used in supplying food and clothing.

Editorial: Farm Board chair. Legge has just issued a long defense of their operations against criticism from J. Simpson of the Farmers Union. The Board's operations "apparently appear to him to be worthwhile, but to others look like simply temporary expedients that later will prove to be worse than the ills they were meant to alleviate." Said operations require accumulating large stockpiles of wheat and cotton. What is to be done with these stockpiles? "It is easy for the Board to store up commodities, but to get rid of them may baffle its best efforts."

Editorial: Striking British miners are again asking the Labour government to intervene and, effectively, help sell more expensive British coal to Europe. This is similar in principle to our Farm Board situation. Some British mine problems, such as antiquated equipment, are not the fault of the miners. However, political intervention won't help connect buyer and seller but will impose new barriers between them. "If British mining ... had not been subsidized at any time, it might by now have accomplished its rationalization and modernization and be on something like equal terms with its competitors."

US Circuit Court of Appeals decides, contrary to earlier decision by Fed. Judge Clark of Newark, that Prohibition was adopted constitutionally.

Editorial by T. Woodlock: Financial statements issued by the [govt.-supported] Inland Waterways Corp. understate expenses, since they don't include taxes, maintenance, and requirement for return on investment; even so, they show an operating deficit. This is therefore an unfair government subsidy of railway competition.

Sen. Ashurst (D, Ariz.) introduces bill authorizing negotiations for US to purchase Lower Calif. peninsula and 10,000 sq. miles of Sonora from Mexico.

A West Coast man has tackled a neglected niche by opening a junkyard for old planes.

Breaking news: Agriculture Dept. reports honeybees can fly at a top speed of 25 mph, though they seldom go above 15. Loaded bees often fly as fast as unloaded ones, though they sometimes stop to rest. Average bee load of nectar is 40 mg, or about half the bee's weight.

Auto Show had over 25,000 visitors Sat. night and Sunday afternoon, considered a good showing. Studebaker hosted 800 at its banquet Sat. night; Notre Dame was well represented by Father Cavanaugh, Knute Rockne, and several former football players who are now Studebaker dealers. Toastmaster was the genial Studebaker VP Hoffman, who exercised his talent for humorous remarks at the expense of the visiting clergymen and the sparsely attired actresses.

New Yorkers bequeathed a total of $36.985M to altruistic interests in the year ended Dec. 15; this was up $10M over 1929.

NY freight terminal served by 12 railroads to be built on block bounded by 15th and 16th St. and Eighth and Ninth Ave.; to cost $13M.

Market commentary:

Market wrap: Stocks opened week with considerable selling; however, enough scale support came in to prevent sharp declines. Bond market active, strong; US govts. firm; foreign generally strong; corp. firm, with high-grade up moderately but sharper rallies in many lower grade and recently weak issues. Commodities weak, except for wheat futures supported by Farm Board. Silver falls 1 cent to record low of 29 7/8 cents/ounce; Hong Kong and Shanghai currencies follow.

Conservative observers quite cheerful, not disturbed by selling yesterday, favor accumulating standard stocks on reactions; most look for gradual uptrend until "something happens to give the market its needed impetus in either direction."

Stock selling was attributed to profit-taking and renewed bear operations; weakness was pronounced in stocks that led the recent recovery, and in tires and chemicals; meat packing shares and banks and trusts were relatively strong.

Market observers tend to believe recent advance was largely due to technical factors, not business improvement; look for further advance to about early Dec. level of 185; best authorities believe trading should be highly selective, though "investment purchases could be made with the assurance of ultimate profits."

Some recent buying said coming from short-sellers who waited to the new year to realize profits.

Auto industry is being watched closely for clues to business trend. Car makers are large consumers of other products, and the industry was an early indicator of the depression in 1929. Much depends on public reaction to new models.

Brokers report private long-range forecasts received from various industries have been encouraging.

Broad Street Gossip: In view of tendency toward overproduction, a new system may develop to regulate production to match requirements. Steel industry is closest to doing this; as a result it's been doing much better than in past years of "cut-throat competition." Fourth quarter earnings reports are likely to be poor, but will be ignored if business starts to show definite improvement in the next few weeks. Editor: “I was in Los Angeles 20 years ago and some of the pessimists said 'growth of the city has been too rapid, the bubble is likely to burst anytime.' I have been out there almost every year for the last 20 years and pessimists have been saying the same thing.”

R. Stephenson, Amer. Bankers Assoc. pres., urges public to disregard "baseless rumors"; says elimination of weaknesses in banking structure by "curative conditions" of 1930 will result in strongest banking situation in history of country.

W. Butterworth, US Chamber of Commerce pres., calls for halt to new regulations imposing burdens on business, praises US business for showing strength in 1930 by keeping decline gradual and orderly when it might have been so sudden as to lead to panic.

Sir Josiah Stamp, noted economist, doesn't believe there's hope of immediate business recovery, though bottom may be hit in April or May; even if an uptrend occurs, a year would probably be needed before any "material recovery."

W. Joyce, Nat'l Surety chair.: depressions, though disagreeable, are necessary, and in fact it would be better if they would occur more frequently, i.e. every 2 or 3 years instead of the current 7 or 8. Periods of excessive optimism and pessimism alternate; calls current pessimism overdone. "I have just returned from California, and it looks to me as though 90% of all the pessimism is located on Manhattan Island and the other 10% is distributed over the balance of the country."

Economic news and individual company reports:

90 leading economists endorse $1B prosperity loan proposed by emergency committee for Federal public works chaired by H. Buttenheim.

Administration said concerned about possibility of wheat imports, may seek quick preventive measure from Congress through embargo or raising tariff.

NY Grand Jury begins hearing on affairs of Bank of U.S.; D.A. Crain outlines results of his investigation. Bankruptcy proceedings also continue. I. Kresel, Bank of U.S. counsel and director, says proper disposition of Bank of US assets will yield more than enough to pay depositors in full.

Manufacturers Trust gets new management: H. Gibson appointed pres. Manufacturers has lost $109M in deposits since Sept. 24, due to heavy withdrawals following collapse of four-bank merger and Bank of U.S. failure.

Final Dec. income tax receipts were $496.8M vs. $516.5M in 1929, and about $12M over earlier estimates; for year to Dec. 31 receipts were $1.107B vs. $1.185B, almost exactly as budgeted. Total ordinary receipts in Dec. were $717.1M vs. $742.9M.

Bond Buyer reports state and local govt. borrowing in 1930 was $1.382B vs. $1.442B in 1929 and $1.390B in 1928.

Venezuela said planning to wipe out last of foreign bond obligations by repaying less than $5M outstanding in London.

German financial circles generally praise govt. regarding its new budget, which cuts spending to 10.4B marks vs. 11.6B in 1930, 10.2B in 1929, and 8.8B in 1928; budget is seen as conservative, unlike previous over-optimistic ones. German Federal Railway System 1930 revenues were about $1B, down $190M from previous year.

European steel cartel prolonged to June 30; directors hope to make it a powerful organization again when depression passes; further cut needed in current output.

World sugar producers' negotiations with German producers seen continuing for some time, though prospects of agreement are thought lower.

Canada index of employment was 108.5 on Dec. 1 vs. 112.9 on Nov. 1 and 119.1 on Dec. 1, 1929. Canadian wheat acreage this year is expected to increase at least 1M acres over the 22M acres planted in 1930; yields are also expected to improve by better fertilizer usage.

US meatpacking companies win significant victory as DC Supreme Court modifies Consent Decree; still not allowed to enter retail store field, but now able to enter other businesses aside from "meat and allied products," including cereals and canning.

Alaskan minerals produced in 1930 were valued at $13.6M vs. $16.1M in 1929; reduction largely due to lower prices.

Companies reporting decent earnings: Middle West Utilities, Travelers insurance companies, Altorfer Bros. (electric washing machines).

F.W. Woolworth Dec. sales $42.3M, down 4.1% from 1929; year's sales $289.3M, down 4.5%. Sears-Roebuck Dec. sales $39.1M, down 22.4% from 1929; year's sales $390.4M, down 11.4%. Montgomery-Ward sales from Aug. to Dec. ranged from 16%-20% below 1929, reflecting poor rural buying power; year's sales $272.3M, down 6.6%.

Swedish Match [an Ivar Kreuger co.] declines after announcing it will raise over $52M by issuing new stock and bonds.

Movie:

Night Birds, a British mystery. Faster pace than usual in British pictures; maintains interest to the final scene. All elements of a thriller present: gunmen, Scotland Yard detectives, pearl neckaces, hold-up men in dress clothes, and night club girls.

Monday, January 5, 1931: Dow 172.12 +2.28 (1.3%)

New York Auto Show special:

[This one is kind of sad.]

US car and truck exhibitors at the annual New York Show include:

GM - Buick (20 models, sees long hold-off in buying leading to greater rebound), Chevrolet (sees 1931 as return-to-normal year), Oldsmobile (over 40 new features including beautiful bodies), Oakland/Pontiac, La Salle, Cadillac.

Ford - Lincoln (new low-slung chassis and 120hp engine), Ford trucks (23 new body types for specialized commercial needs).

Others - Chrysler, Dodge (latest models are lower and longer), Plymouth, De Soto (nine-stage rustproofing process), Auburn (new features include silent-mesh synchronized transmission and "free-wheeling"), Peerless (new de luxe line, wide variety of colors, only existing co. that exhibited in 1900 NY show), Pierce-Arrow (extended line now featuring "free-wheeling"), Reo (now in 26th year), Hudson/Essex (in 23rd year), Franklin (advanced airplane inspired design), Stutz (new 20th anniversary models, up to 145 inch wheelbase), Studebaker (set new world record last year by climbing Mt. Washington in 14 minutes 23 seconds), Hupp (adds noise eliminators and "free-wheeling"), Marmon (three entirely new lines), Duesenberg, Packard, Graham-Paige, De Vaux-Hall, Mack Truck, Checker Cab, Nash, Willys-Overland.

Auto industry slowed substantially in 1930, with production down about 38% to 3.5M, and the downtrend worsening later in the year. However, auto executives including A. Sloan (GM), W. Chrysler, C. Nash, and L. Miller (Willys-Overland) are more optimistic on 1931. Sales in 1930 are seen below replacement demand, so should increase. Auto companies have adjusted well to changed conditions; their financial condition is strong, with low inventories, high cash on hand, and almost no bank debt; efficiency has increased and prices have been lowered on new models; overhead has been cut to allow profitability at lower production levels.

Assorted historical stuff:

Washington report: Talk of extra session again springs up; only 8 weeks remain to pass appropriations bills. Controversies flare on Eastern rail consolidation, Power Commission, and Sen. Norris [Republican insurgent]. Action uncertain on World Court and Muscle Shoals. Some Senators expected to renew opposition to US occupation of Nicaragua after killing of Marines there.

Editorial criticizing Sen. Couzen's skeptical stand on Eastern rail consolidation and insinuation that "high finance" is behind the recent agreement; the Senator's stand may "prolong the existence of a handicap upon the transportation and industrial development of nine states, including his own."

Wickersham commission's report on Prohibition nears publication; conclusion uncertain, though it's thought unlikely to recommend legalization of beer or wine. Most logical guess is that it will recommend remedies for previous abuses, more efficient enforcement. General dissatisfaction with report expected.

H. Stevens, Canadian Trade Min., initiates project for granting of $1B loan to China in order to "place China on her feet as a huge and profitable market for British, Canadian, and American goods."

Yet another editorial by T. Woodlock against “social” [public] control of business and for “individualism” [selection of business leaders by competition]. “We confront sooner or later the fact of human inequality. To most of us, who fill the middle class and lower brackets of the scale of competence, the fact is not pleasant.”

Reichs-Kredit-Gesellschaft of Berlin attributes much of current world crisis to "uneconomic movements of capital ... being driven from centers in which it is scarce to places where it is abundant." Considerable interest drawn by reports of meeting between French and British Treasury officials, reportedly to lay groundwork for later meeting to discuss gold problem.

Communist leaders call strike of 40,000 Ruhr coal miners despite plea by other parties to wait for arbitration negotiations.

Gov. Roosevelt's commission presents plan for development of about 2M hp of electric power on the St. Lawrence River.

Impasse persists in NY transit unification negotiations on price city is to pay for independent transit cos.

Dr. H. Eckener, Graf Zeppelin commander, will sail for NY to negotiate for use of helium gas on his proposed transatlantic dirigible line.

White House has had telephone communication for 45 years, the first one being installed by order of Pres. Grant.

Viennese chemist invents match capable of lighting up to 600 cigarettes, although no longer than ordinary; US and Japanese syndicate said to be negotiating for rights to the invention.

Stock clerks at Studebaker factory increase efficiency 50% by using roller skates to fill orders for service parts.

Universal Pictures will make no more films in Germany and close Austrian branch as result of German and Austrian ban of "All Quiet on the Western Front."

Market commentary:

Market wrap: Stocks continued upward in short weekend session; rails, leading industrials, and utilities were strong; chemicals remained weak. Profit taking caused come irregularity toward the close. Bonds continued strong on moderate volume; US govts. firm; foreign mixed; corp. strong across the list. Commodities firm; cotton, grains up moderately.

Week in review: Stock market reversed direction and rallied on New Year's Eve. Bond market showed pronounced strength throughout the domestic list, though foreign loans were irregular. Interest rates had year-end flurry but quickly eased again; period of very easy money seen. Bank of France matches NY Fed rate cut to 2%. Steel production rises. Grains up sharply, cotton up moderately.

Bears convinced the recent rebound was technical indulged in considerable short selling, but this was absorbed easily.

In the recent rebound, both rails and industrials have broken through the upside resistance encountered on Dec. 20; this is believed to indicate "further early progress on the upside."

Predictions for a stronger market around the new year have been borne out, though there have been few business developments to base the advance on aside from progress on Eastern rail consolidation.

Almost $1B has been paid out in the first of the year in interest, dividends, etc.; this should be a potential backlog of money to be invested in securities.

Broad Street Gossip: Developments continue to indicate floating supply of stock has been reduced greatly. There were no new stock offerings in Nov. and only $35M in Dec.; this contrasts with 1928 and most of 1929, when new stock offerings were running at $300M to $500M per month. Also noteworthy is the large increase in shareholders of record at most big corporations. Ability of stocks to decline to new lows in face of this shrinkage in floating supply is "strange, indeed."

Brokers report a large number of clients switching funds from bonds into stocks they believe are cheap, and likely to appreciate more rapidly when the turn comes.

Managed investment trusts [similar to mutual funds] face difficult period after a trying year. Efforts to cultivate investor goodwill have suffered from the severe market decline and loss of confidence; the situation has been aggravated by careless promises made by some sponsors that “with their supervision the investor's worries ... were at an end completely. In some cases investors complain that their worries really only began with that investment.”

Amusement stocks appear to be selling at a price that more than discounts somewhat lower earnings this year. For example, Paramount will earn over $6/share in 1930, down about 15% from 1929; its annual dividend is $4, for a yield over 10%. Loews earned $9.90/share in its 1930 fiscal year, also down about 15%, and has an annual dividend of $3 for a yield about 6%.

G. Putnam, Incorporated Investors pres., expects recovery in 1931; "The very extent to which the depression has gone is one of the strongest factors making for recovery." R. Ballard, So. Cal. Edison pres.: “insofar as California is concerned, there is no question that there will be an early return to normal conditions.” F. Merrick, Westinghouse pres., notes worsening industry downtrend in past year and poor short-term outlook, but believes business fundamentals “are working themselves out as must ever be the case ... This is too large and too fundamentally prosperous a country to stand still for any long period.” C. Nash, Nash Motors pres.: “That we are well past the valley of depression and are definitely on the economic upgrade can hardly be questioned by the most gloomy of our alarmists.”

Economic news and individual company reports:

Most recent weekly banking statements show some encouraging trends. Decline in money in circulation of $123M was partly seasonal but also indicates bank run situation is quieting down. Banks have begun purchasing non-government securities again, possibly accounting for some of recent bond market strength. Fed. Reserve continues easy money policy, bringing portfolio of open-market holdings to record high of $1.093B.

Successful Eastern rail consolidation would be expected to jumpstart important construction that has been deferred for many years, with estimates of expenditures ranging up to $500M.

Total current wheat crop in 41 countries excluding Russia and China is 3.650B bushels, up 9% over 1929; Argentina's crop is up 66% to 271M.

Signs of improvement in steel; Youngstown district operations are at 39% this week vs. 37% last week and 23% two weeks ago; automotive steel demand has increased substantially in past few days.

Some improvement in gasoline price situation reported; while there has been no general rise in prices, "dumping" at distress prices had stopped in many areas.

US motor vehicle exports in 1930 were 561,000, down 43% from 1929 and lowest since 1924.

Chevrolet Dec. production of cars and trucks was 64,018 vs. 26,000 in 1929, and a record Dec. output. Company has 32,101 employees at work and expects to advance to normal level of 40,000 employees in Jan.

Three companies operated by S. Insull offer stock to public on 10% down, 9-month installment plan.

F.W. Dodge reports NY metro area construction started in Dec. was $62.3M vs. $56.7M in Nov. and $106.1M in 1929; year's total was $938.7M vs. $1.242B.

Rumored major biscuit merger comes to pass: Wheatsworth directors approve plan for acquisition by National Biscuit Co.

New orders for yacht construction in 1931 have already passed the total of $20M built in 1930.

Jokes:

"'Now,' said the college man to his dad at the football game, 'You'll see more excitement for two dollars than you ever saw before.' 'I don't know,' replied the old gent; 'that's what my marriage license cost me.'"

"Shaw - How's business with you, old man? Pshaw - Oh, lookin' up. Shaw - What do you mean, lookin' up? Phaw - Well, it's flat on its back, isn't it?"

Year in review (3) Jan. 4, 1931

No Journal was published Sunday, Jan. 4, 1931. More year-in-review: some industry snapshots.

Basic industries:

Rails suffered drastic decline in traffic in 1930, with smallest revenues since 1919 (down 15.8% from 1929) and smallest net operating income since 1922 (down 30% from 1929). Industry also had largest capital outlay since 1923 (due to promise to Pres. Hoover in Nov. 1929) and lowest return on investment since 1921 (3.30%). Decline was attributed to both depression in general business and increasing competition from alternatives including trucks, buses, cars, pipelines, waterways, and airplanes. Decline was so serious that rails began to take concerted action against unregulated forms of competition and “constant whittling away of rates.” Outlook seen depending on general business conditions; positive factors include increased efficiency and recent Eastern rail consolidation agreement.

Rail equipment makers had poor year; while earnings held up well, particularly in the early part of the year, orders fell off drastically through the year, leaving many companies with bare order books and shut-down production by year-end. Attempts were made to stimulate buying later in the year by offering 75% financing to railways, but with little success. Outlook is uncertain and depends on return of spring buying.

Steel had disappointing year, with production peaking in Feb. at 84.88% and declining sharply as the year progressed, hitting a low in Dec. with production at less than half the Feb. level. Industry has tried to blunt impact on workers by distributing hours among the most possible men. Among major industrial consumers, demand from auto and rail was down, while structural, pipe, and tin plate held up better. Earnings trended down through the year, with many companies unable to cover dividends. Product prices were irregular, though down less than 15% from the 1929 peak. Outlook for 1931 seen better, though immediate improvement isn't looked for; authorities look to mid-Feb. for significant uptrend, with a spring peak of 65% hoped for. Positives seen in low inventories and recent action to set minimum product prices.

Oil industry suffered decline in product prices and earnings in 1930. Proration/conservation (controlled production) was successful in reducing huge inventories at end of 1929 to more reasonable levels, though further cooperation is needed. Profits were down an average of 30%-35%, with some companies having to cut dividends. Several mergers and acquisitions took place, with further ones awaiting court approval. Increasing foreign production has brought growing movement for domestic oil tariff. Outlook by industry authorities is conservative, but hopeful continued cooperation will bring better results in 1931; encouraged by political and judicial support for proration, better prospects for unit (cooperative) development of new fields.

Coal industry suffered poor year; home demand was only slightly affected, but industrial demand was down, leading to considerable dumping of coal on the market. Increasing use of competitors including oil, natural gas, and hydroelectric power is also noted; rapid growth in natural gas lines is causing particular concern. Coal operators have launched extensive advertising campaign highlighting advantages of coal, including low cost; have also consolidated companies and automated to reduce cost of production. Decrease in coal consumption affected rail traffic, coal being one of the largest items transported by rail.

Copper industry went through one of its worst years, though things weren't as bad as 1921 when mines had to be shut down. Prices underwent wide swings, with a high of 18 cents and a low of 9 1/2, closing the year at 10 1/2. Overproduction continued through most of the year; producers said “deceived by their statistics” and hoping for improvement in world conditions; also said afraid to undertake coordinated action due to Sherman antitrust law. Future prospects depend on curtailing output and on whether world continues to expand electrical facilities as in past 5 years.

Construction has been declining for past 3 years, with total new construction of $8.5B in 1928, $7.8B in 1929 and about $6B in 1930. However, industry figures including Col. W. Starrett and A. Dickinson, Indiana Limestone Co. pres., see a revival in 1931 based on postponed demand and huge public building programs. Also seen favorable is a large decline in building costs, including materials, labor, and mortgage rates.

Electric utilities had remarkably good year, with revenues about 3% above 1929, home usage up 14%, 550,000 new customers, and $850M of new construction; total power generated was 1.6% below 1929 and industrial use down 7.5%. About 70% of US homes are now wired, with farms making up a large percentage of the unwired. While there have been some political discussions on regulation, local customer relations are said to generally be excellent. Good outlook seen for 1931; while some areas are approaching saturation in terms of adding customers, good prospects are seen in increasing usage per customer. Also positive are lower costs and systems substantially built-up so new business can be added with little capital expenditure.

Newfangled industries:

Electrical equipment makers maintained their business reasonably well in 1930; this was attributed to diverse operations and development of new products. The largest company in the field, GE, will show earnings down about 14% from 1929 but up 7% from 1928; the second largest, Westinghouse, will do worse, with earnings in the first 9 months down 42% from 1929 and 20.6% from 1928.

Wire (communications) companies had difficult years but generally still earned enough to cover dividends. AT&T showed increase in revenues after a large expansion program, but per-share earnings will be down about 20%; it has by far the most security holders of any corporation in the world, with 580,000 registered stockholders and probably close to a million stock and bond holders combined. Western Union and I.T.&T. suffered more severely from the downturn, but are likely to earn enough to cover dividends by a small margin. Due to recent radio telephone development, 30M of the world's 35M telephones can now be connected.

Office equipment industry looks to brighter 1931, encouraged by improving export trade and historical trend of improved earnings as business recovers from depression. [Note: The review doesn't say this, but I believe most office equipment companies remained profitable in 1930 but showed lower earnings vs. 1929, with the notable exception of IBM which had higher earnings.]

Aviation manufacturing suffered poor year, hampered by excessive inventory of planes and engines. Industry is more hopeful for 1931; inventories have been reduced due to drastic cuts in production, but remain excessive (about 2,800 planes were made in 1930, or about a fourth of industry capacity). Only Douglas Aircraft (military planes) and North Amer. Aviation (specialized instruments) showed increased earnings vs. 1929. With slump in transport and recreational plane sales, military orders are increasingly important.

Air transport continued to show mostly losses, though operations improved markedly over 1929, with number of passengers carried up sharply, mail poundage roughly stable, and an improved safety record. South America is an increasingly important area for US aeronautical companies, with Pan American Airways developing lines encircling the continent. Pan American is also negotiating with Imperial Airways of Britain for a transatlantic route via Bermuda, though this is though to be a few years away; most aviation officials believe dirigibles are the most practical way to transatlantic service, despite the R-101 disaster.

Radio industry suffered one of the worst years in its short history. A huge $300M inventory of unsold radio sets was carried over from 1929, and mostly dumped on the market in early 1930; large losses were suffered, with some companies bankrupted and almost none showing profits. Holiday sales were lower than expected and 1931 outlook is for lower sales; most companies are now keeping a very tight leash on inventories, though the radio tube situation appears unsettled. Practical television for the home is still seen many years away; however, companies hope to reach new markets with “midget” (compact) radios, automobile radios, and automatic record-changing phonograph-radio combinations.

Retailing:

Chain stores suffered a generally poor year in terms of earnings, though sales held up well. Many chains suffered sizeable losses on inventories due to declining commodity prices. A few chains including Woolworth, Great Atlantic & Pacific, and Grand Union Tea will show profits comparing favorably with 1929.

Mail order houses, including the two leaders Montgomery-Ward and Sears-Roebuck, have suffered a poor year, with sales and earnings both lower; Montgomery-Ward has in fact run a deficit for the first 9 months. Main factors are inventory losses and unfavorable farm situation.

Other:

Shipbuilding experienced substantial revival in 1930, helped by the Merchant Marine Act of 1928. This law allowed private operators to borrow up to 75% of the cost of new ships at low interest rates, and required new ships to qualify for mail contracts. Number of workers employed at 20 coastal shipyards was 26,000 on Jan.1, an increase of 4,000 over Jan. 1, 1930.

Tire industry had one of its worst years. Inventory depreciation was dramatic due to falls of 43%-47% in rubber and cotton prices during the year. Also hurting were excessive competition and sales below expectations; while the decline in sales to carmakers was to some degree expected as auto production fell from about 5.6M to 3.5M, replacement tire sales were surprisingly low. Industry underwent some significant consolidations and bond defaults.

General publishing held up relatively well; first half profits said about equal to 1929, but second half earnings down about 25%. Outlook for 1931 is for first half below 1929 and 1930, but second half about equal to 1929.

Cigarettes were still able to show an increase in production in 1930 of about 1%, though this was down from the 8%-12% increases seen in recent years. Production has become more concentrated in the four largest makers (Amer. Tobacco, Liggett & Myers, Lorillard, R.J. Reynolds). American Tobacco in particular, (maker of Lucky Strikes) has shown large sales gains throughout the year, though all four will show higher earnings in 1930 due to price increases. Cigar industry suffered due to lower cigar consumption and increasing popularity of the five-cent cigar; almost all companies showed lower earnings.

Saturday, January 3, 1931: Dow 169.84 +5.26 (3.2%)

Assorted historical stuff:

Rep. McFadden, House Banking and Currency Committee chair., says recent reduction of New York Fed's rate rediscount rate to 2% will not help industry and employment, but instead stimulate "artificial business" and start new era of speculation in stocks. Fed. Reserve officials deny cut will lead to orgy of speculation, say easy money due to natural economic conditions.

Editorial: This year's crop of year-end forecasts has been more conservative than that of a year ago, which was dominated by false hopes for quick and painless recovery. While we appear to be well on our way out of the worst phase of the depression, we must as in previous depressions follow a gradual and realistic path out of this one.

Coal strikes threatened in Welsh (British) and Ruhr Valley (German) mines.

Premier Mussolini, in radio broadcast to US, says Italy has no desire for war but is interested solely in peace and prosperity.

Editorial by T. Woodlock: US should grant debt relief to Europe not out of altruism or to create goodwill, but because it's in our interest. Combination of intolerable poverty and unstable political units is likely to threaten peace. Unlike previous wars between kings, modern wars between peoples "must go to the bitter end, the complete vanquishment of one party by the other." The peace that follows is usually imposed and, unless victors are very generous, breeds a new war.

New Yorkers began a new era of telephone dialing Dec. 16, the two letter-one number era (MUrray-hill-2 instead of MURray-hill). It's claimed this system can support the present rate of telephone expansion for 154 years. On the first day, only 12.1% of verbal calls and 21.7% of dialed calls were handled correctly. This improved to 20.4% and 29% on the second day; on the third day, dialed calls continued improving to 31.3% but verbal calls suffered a relapse to 17.5%.

Vatican establishes monetary system with unit of gold lira.

Greenwich, Conn. takes first place from Brookline, Mass. as world's richest town per capita after upward revaluation in property value to $192.4M.

New census figures show Juneau, Alaska has nine single men to every single woman.

NYSE sends out New Year's greeting to its members containing idiomatic Latin phrase "Sursum Cauda," free translation of which is "Keep Your Tail Up."

Market commentary:

Market wrap: After irregular morning, "stimulating behavior" in leading stocks gave rise to urgent short covering; upturn gathered momentum in midday and was maintained to the close; strength in leading industrials, oils, autos, rails, banks; chemicals weak. Bond market rallied strongly on increasing trading; almost all parts of the list higher. Commodities strong; grains up sharply.

Improved market tone attributed to drop in call money rate and end of heavy tax telling.

Positive market factors at start of year include easy credit, drastically deflated securities, and high dividend yields; negatives include continued weakness in commodities, likely bad earnings statements, and uncertain timing of business improvement.

Period of extraordinarily low interest rates expected in coming months, seen benefiting bonds. "Dominant banking interests" apparently feel most of the necessary deflation has been accomplished, and time has come to "furnish every inducement to business revival."

Broad Street Gossip: A “large operator” intends in 1931 to switch from selling on rallies and buying on breaks to buying on breaks and selling on rallies. Total shrinkage in all NYSE and Curb listed stocks from 1929 peak estimated at $55B, or about 1/7 of total US wealth. However, “there has been no depreciation in actual value of mine, mill, factory or railroad”; in fact, there has been appreciation because of new construction and improvements.

Hornblower & Weeks note similarity between Fed rate increase to 6% in Aug. 1929, which came close to signaling top of market, and current rate cut to 2%, signaling bottom is near. Deflation in security values has reached "amazing" proportions; deflation in brokers loans has been even more dramatic; oversold condition makes it safe to predict first quarter of 1931 will see at least a "substantial intermediary recovery movement."

National City Bank criticizes capital gains tax as having inhibited selling of stock during the boom, and increasing selling now.

W. Rankin says depression will cause closer tracking of advertising results, benefitting newspapers and localized media.

Frazier, Jelke believe annual New York Auto Show opening today may be positive for motor stocks due to large number of new models and better atmosphere.

H. Firestone, Firestone Tire pres., says tire industry adjustment to lower commodity prices probably complete by end of first quarter, industry entering 1931 in a much healthier condition.

A. Erskine, Studebaker pres., calls for price stability; "continuous liquidation of property at sacrifice prices" has been debilitating to almost everyone; "We have been liquidated to a frazzle. Confidence awaits the pulmotor of stability in present price levels and our national psychology needs a doctor."

A. Robertson, Westinghouse chair., and A. Lehman of Lehman Brothers see reason to expect general improvement some time in 1931, though recovery is likely to be gradual. E. Walker, Transamerica chair.: Prosperity will return if "businessmen of America will apply themselves with renewed energy." W. Kellogg sees 1931 as bringing “the most exceptional rewards to virtually all sound and aggressive lines of business”; says Kellogg Co. has gone after business aggressively and will spend even more in 1931 on production, advertising, and sales. E. Beatty, Canadian Pacific Rwy. pres.: Canadian business declined this year but held much of gains made in past 5 years; sees signs of improvement now, has no doubt they will strengthen as year progresses. J. Speyer of Speyer & Co. says recovery will come as in the past if “we continue to work and save”; recovery may have been delayed due to worldwide weakness; warns against “'investigations' and short-term remedies”; notes problems of gold imbalances, overly severe antitrust laws, rail situation, tariffs.

Economic news and individual company reports:

Fed. Reserve reports money in circulation Dec. 31 down $125M to $4.889B, total Reserve Bank credit outstanding down $52M to $1.373B. Member banks in NY City report brokers' loans up $6M to $1.926B vs. $3.424B in 1929; loans on securities to non-brokers up $13M to $2.117B. Call money dropped to 1 1/2 percent, lowest since Sept.; attributed to return flow of year-end interest and dividend payments.

Leading NY bank and trust year-end statements show "exceptionally liquid condition," indicating "essentially sound" position in spite of disturbing events of late 1930, though earnings are generally down due to depression.

Total loans applied for by Bank of U.S. customers under 50% loan plan was $38.1M as of Dec. 28. D.A. Crain to begin investigation Jan. 5.

E. Goldenweiser, Fed. Reserve statistician, says best indicator of local bank conditions is level of indebtedness to Fed. Reserve. Reviews banking figures for year ended last Sept.: member banks reduced loans to customers $2.5B while increasing securities $1B and loans bought on open market by $1B.

Editorial: Commerce Dept. survey of trade among 62 countries for the first half of 1932 shows decline in total trade of 14% to $27.3B. The countries suffering the worst are those that have indulged in government price-fixing, as tried for coffee, rubber, etc. These plans “boomerang” against those who try them.

Farm Board calls for drastic and permanent cuts in acreage by cotton growers to avoid continued low prices.

Iron Age reports steel industry capacity only increased 845,000 tons in 1930, well below the 4.690M projected at start of 1931. However, work is far along on some new furnaces, and capacity will increase substantially early in 1931.

B. Flynn, VP Travelers Insurance Co., reports insurance policy payouts of all kinds in 1930 were $2.8B, a record total and up $300M from 1929.

US new investments abroad in 1930 estimated at $1.550B, up 5.74% over 1929; investments outstanding at end of year $17.528B.

Survey of expected financial advertising budgets for 1931 finds 38% expect an increase, 51% no change, and only 12% a decrease.

Oklahoma Att'y Gen. announces inquiry into reasons why retail price of gasoline hasn't gone down along with crude oil price.

Major oil producers raise wholesale price of gasoline to 7 cents/gallon on East coast, increase of 1/4 - 3/4 cent. Prices in the Chicago market remain at 4 - 4 1/2 cents.

Chemical manufacturers drastically cut prices as they compete to line contracts up for the new year. Soda ash cut from 1.32 cents/pound to 0.70-1.00, believed below cost of production; chlorine from 2.75 cents a few months ago to 1.80.

World's main diamond producers agree to cut output by half to maintain prices.

Bank of France cuts discount rate 1/2% to 2%; attributed to desire to stop inflow of gold and retail inflation.

Bolivia says unable to meet Jan. 1 bond payment due to worldwide depression; representatives in NY negotiating new arrangement.

Argentine provisional government prohibits import of yerba mate tea from Paraguay to protect domestic yerba mate industry.

Theater:

Five Star Final, a newspaper play by L. Weitzenkorn. "Many may find in the play an echo of the lively newspaper comedies of two years ago. But it is clear that Mr. Weitzenkorn intended his play to be less of an echo than an answer. ... [his] especial target is a tabloid press whose reporters are porch climbers. But it is impossible not to recognize in the play an indictment of tendencies in news-gathering methods that are affecting all papers to a certain extent."

Joke:

Restaurant proprietor: "I can't see what them epicures has got to complain about with this soup." Waiter: "They wouldn't have no grouch coming, sir, if only the cook would admit it's soup. He says it's coffee."

Year in review (2) Jan. 2, 1931

No Journal was published Friday, Jan. 2, 1931 following New Year's Day. More year-in-review: assorted opinions and forecasts from business leaders and authorities (some repeated from 12/30 and 12/31).

Note: For your convenience, I've marked the ones that are at least moderately pessimistic with [***] - almost all of these still anticipate a recovery sometime in 1931.

Industrial executives:

G. Swope, GE pres., says expects electrical mfg. industry in 1931 should be somewhat better than 1930.

R. Duepree, Procter & Gamble pres.: From history of previous depressions, believes “we must be very close to, if not actually in, a turning point.” Production has exceeded consumption in 1930, and inventories are now low; other good factors for business include low interest rates, low material costs, and increased efficiency

A. Sloan, GM pres.,: 1931 should be met with different approach, "new ideas, new measures, new confidence and new hope ... if our attitude towards the new problems of the new year is constructive, rather than critical, we shall make greater progress in 1931 than we did in 1930."

W. Chrysler estimates 1931 auto production at 4M cars vs. 3.5M in 1930; estimates inventories 35%-40% below a year ago; increased consumption of gasoline shows people have been using up cars and postponing normal replacements; “year just ending has been one of intense preparation for a business revival” that will demand larger volume of production and reward those developing new ideas and better values.

J. Scoville, Chrysler statistician, sees recovery to normal auto production by about Sept., 1931.

W. Teagle, Standard Oil NJ pres.: Cooperation by oil industry will help deal with problems more effectively. Points to sizable reduction in production and inventories during the year; if not for self-regulation producers could have doubled 1929 production. However, sizable additional curtailment needed by refineries.

E. Thomas, US Steel VP: Past pattern of steel industry is two excellent years to one moderate year. Future outlook promising, financial situation stronger than in previous depressions. Temporary restriction in demand leads to accumulated future needs.

E. Weir, Nat'l Steel chair.: Sees 1931 steel production considerably above 1930, general business closer to normal.

S. Ker, Sharon Steel pres., sees steel plants much better employed by mid-first quarter, gradual uptrend in general business in 1931.

[ *** ] Pres. Pelley of New Haven RR: Sees early part of the year probably continuing at low levels, but gradually improving trend leading to definite upturn sometime during the year. Cites very easy money, commodity price stabilization, consumption catching up with production.

M. Friedsam, B. Altman pres.: The boom had accumulated “many evils of extravagance and carelessness” than needed to be eliminated; unfortunately the “cleansing process” of the past year was too drastic, leading to some greater evils. However, “business in general is now in a good position to begin reconstruction, and ... will now start things moving in the right direction.”

D. Knott, Knott Hotels chair.: Currently unable to get normal delivery on large orders, indicating inventories are too low; “the law of demand itself is about ready to put an end to this unnatural economic condition ... It is inevitable that times are going to be better, and that the change is right upon us.”

[ *** ] N. Carlton, Western Union pres., says 1931 may be “very disappointing business year” based on usually accurate barometer of Western Union business, currently 15% below 1929. “ The headache following the late financial spree is far from over ... many inefficient and over expanded businesses which grew like mushrooms in the boom times remain to be liquidated.” The very form of the US govt. is endangered if we put too much of the burden on those least able to withstand the effects of reduced income and unemployment.

Financial executives:

[ *** ] L. Pierson, Irving Trust chair.: business fundamentals sound, but sees slow and irregular recovery; depression may not reach bottom before spring and may persist through 1931.

B. Smith of Cleveland Trust presented new forecasting index to Amer. Statistical Org. annual meeting. Index has been tested over past 30 years and has forecasted conditions a year in advance about as accurately as statistical measures taken in real time; it now indicates an upturn in US business is to be expected shortly (index combines interest rates, bond flotations, gold movements, and rapidity of change in stock and bond prices).

L Harriman, M&T Trust of Buffalo pres., says most drastic readjustments already accomplished; many products are selling below average cost of production, a situation that can't continue indefinitely. Remarkable number of corporations have maintained profits in spite of depression and are financially strong.

L. Wakefield, First National Bank pres., sees country working itself out of depression; “I am sure we can look forward to steady business improvement ... The greatest danger ... is that we may be drawn to unsound economics schemes” or cure-alls.

Central Trust of Illinois Jan. digest: Sees improvement slight early in 1931, unmistakable by end of winter. Smaller inventories of finished goods should improve demand for goods next year and “should mean a volume gain for 1931 almost equal to the volume loss for 1930.” Agriculture has good outlook for 1931.

Union Trust of Cleveland: “Financial situation contains the promise of better times ahead, just as do manufacturing and distribution.” Easy credit should prove real aid to business recovery. Recent decline in high-grade bonds unjustified.

Business associations:

P. Weld, NY Cotton Exchange pres., notes past year's oversupply and drastic price decline, but strongly believes this will be corrected by lower production and increased consumption, leading to price recovery.

J. Smull, NY State Chamber of Commerce pres.: “Tribulations of 1930” will exert influence on the new year; nevertheless, believes “1931 will develop into a year of great constructive effort ... which eventually will bring a safer, happier, and more lasting prosperity than we have enjoyed before.”

W. Booth, Merchants' Assoc. of NY pres.: US is resilient: “give us an orderly stock market and a fair prospect of business and we instantly forget the terrors of the past.” Sees banking situation being rapidly cleared up, possibility of returning to 1927-1928 level of business even before world recovers.

Assorted economists and blatherers:

[ *** ] Sir Josiah Stamp sees recovery in US before Europe; recovery unlikely to start before April, will start weakly and not gain momentum until 1932. Sees some 18 valid causes for the depression; immediate cause was overspeculation on NYSE, next was overproduction of raw materials, but an underlying problem has been the limited quantity of gold compared to production volumes. Calls for continued easy money, govt. economy and balanced budgets, assault on gold problem, and avoiding new Stock Exchange boom.

Harvard Economic Society: Based on historical pattern, commodity prices are unlikely to improve until after general business upturn.

Hornblower & Weeks: “The closing price levels of 1930, taken by and large, offer investment opportunities which will probably be considered the bargain prices of the coming decade.” At previous short-lived bottoms in Nov. 1929, June 1930, and Nov. 1930, dividend yields on high-grade stocks were still relatively low; now, out of a total of 853 common stocks listed on the NYSE, only 42 yield less than 5%.

[ *** ] Abreast of the Market column: Past year's depression has been much worse than predicted a year ago. Commodity prices, industrial activity, and earnings all declined much more than expected. “The deflation has been most complete.” Companies able to weather the storm should be in good position to benefit immediately from any upturn. Most industrial leaders expect considerable improvement in 1931, though possibly not until the second half.

Officials:

Commerce Sec. Lamont: Elements of recession appears to have “spent most of their force” based on slowing of downtrend toward end of year. Industrial production is down about 20% off peak but only 13% from 1928; trade has fallen 25%-30% in value but only 15%-20% in volume; factory employment fell about 15% but this is much less than in previous depressions. Encouraged by resilience in consumer buying, with value of retail sales only down 7%-10% from 1929. Appear to be in phase similar to recovery from previous depressions where savings are rebuilt and goods are wearing out. “While it is impossible to forecast at what time unmistakable evidence of improvement in business will occur, it is clear that we have reached a point where cessation of further declines and beginning of recovery may reasonably be expected.”

[ *** ] Dr. J. Klein, Asst. Commerce Sec.: European unemployed may exceed 7.5M by Feb.; unless ranks of unemployed decline “we may expect recurrences of political instability.”

[ *** ] C. Snyder of Fed. Reserve NY: Contrary to “phantasies of a 'new era' of unending prosperity so widely prevalent but little more than a year ago,” it's clear that the business cycle is still with us “in all its force.” Nov. was lowest point in the depression, with about the same decline from normal levels as in previous crises including 1921, 1907, 1893, etc. However, while not most severe, depression is clearly most world-wide on record. Part of cause must be accumulation of 2/3 of world's monetary gold in US and France. Disagrees with belief overproduction was cause of price declines, since commodities with no unusual production increases have declined along with those that seemed over-expanded.