Thursday, May 7, 1931: Dow 149.73 +0.84 (0.6%)

Bear rumor special:

The bear camp seems to be splitting up to some extent. At least two of the largest operators "continue to anticipate further immediate declines" based on seasonally unfavorable business prospects. However, some of the more technically oriented bears who turned aggressively short in Aug. 1929 have covered based on the prevailing extreme pessimism, and on the view that the extent of the depression is already well known; these interests believe a good-sized rally may be more likely than a further bad decline; recent low trading volume is also seen indicating an oversold position. As still another wrinkle, some of the bear traders who reportedly covered last week and went on vacation [see May 5] are now sneakily putting sell orders in again from their vacation resorts. To complicate matters even further, some large foreign interests who were short most of last year but covered two months ago are said to be heavily selling again.

Assorted historical stuff:

Editorial by T. Woodlock: "Post-War War" - Bank of England Gov. Montagu Norman's "dark secret" that he successfully concealed during his recent visit turns out to be a plan for an international bank offering long-term credit to European countries in need. This is a hopeless project when the two countries (US and France) with the most resources are unwilling to join. Simplest way of describing current world economic condition is that end of fighting 12 1/2 years ago didn't end the war, since "the power which dominated the making of the treaty did not intend that it should end it. The treaty left Europe covered with an ice mantle of war psychology, much as it was buried thousands of years ago in the last glacial period." In other words, the "war to end war" didn't even end itself; it's now being fought with debts, tariffs, and closed purse strings. Ferrero warned this would be the result of wars between peoples instead of princes; these wars might be harder to start but would be infinitely more difficult to stop, since they would be ended by imposed treaties, which settle nothing. A better alternative for an international bank would probably be for big international corporations such as GE, Kreuger & Toll, the German dye trust, etc. to combine their resources to finance loans to smaller govts. Finally, recalls remark of "a shrewd American 'observer'" who said the current determination of America to avoid all foreign entanglements "was in fact the surest way to becoming 'entangled' in foreign affairs at the worst possible time and in the worst possible manner"; the US needs more of a "planetary consciousness."

Editorial: British Chancellor Snowden reopens the Domesday Book [list of land owners compiled by William the Conqueror in the 11th Cent.], this time for the purpose of taxation. The tax is very small, but "the camel's nose is in the tent." The House of Lords is threatening resistance, but is certain to lose in a showdown. This is another milestone in the funeral procession of the British ruling class. Until a generation ago, there was a "certain fundamental homogeneity" in the members of this class, whether they call themselves Whigs, Tories, Liberals, or Conservatives; things seem to have started disintegrating when members of the House of Commons started recieving a salary. "But a tax upon landed estates! That strikes at the heart of the 'ancien regime' with a vengeance!"

Pres. Hoover's speech to Int'l Chamber of Commerce [May 5] greeted very enthusiastically in Germany; "It is believed the present Washington discussions on world affairs will facilitate international understanding about reparations." US Ambassador to Germany visits White House; sees improvement in German economy, though unemployment is still high.

Market apparently reacted unfavorably to Sec. Mellon's speech Tuesday, with heavy selling breaking out afterwards. Reference to readjustment of prices and production costs seemed to be taken badly, though "a detailed study of Mr. Mellon's speech reveals no reason for fresh concern over the economic situation."

Commerce Dept. reports China is likely to start a five-year govt. controlled industrialization plan.

Los Angeles - Kansas City section of midcontinent airway to be first equipped with visual radio range beacons, a device for guiding pilots by radio beams.

A creative theatre manager has started offering, free of charge, a small packet of cough drops to patrons who have colds. If someone in the audience, having failed to procure this safeguard, inadvertantly coughs an usher "rushes first aid to him in the form of the soothing menthol candies."

When gaslight was introduced over a century ago, it triggered an intense conflict. Some “conservatives” refused to embrace the 'new-fangled gas lights,' sticking to candle and crude oil lamps. One incensed “progessive” wrote to the US Gazette in Jan. 1828, "If any of these old-fashioned gentlemen would visit NY or Baltimore and contrast the light of the gas there, equal almost to perfect day, with our own murky, dismal streets, their opinions might ... change. - Old Citizen". A century later, the current “modern street flooded with electric light” would surely delight “Old Citizen.” [Upon seeing Times Square today, he'd probably go back to candles].

Thomas Jefferson is credited with inventing both long pants for men (before which knee pants with stockings were the style for both boys and men), and the swivel chair. The next Congress will be asked to appropriate funds to restore Jefferson's workshops at Monticello, including the tailor shop and woodwork shop where the aforementioned were invented.

Market commentary:

Market wrap: Leading industrials opened under pressure, with US Steel dropping below 111 to a new post-1924 low and severe pressure also directed against American Can. However, efforts to broaden the selling were frustrated, and trading slowed progressively; the general list settled into a narrow range. Another spurt of selling came into Steel in early afternoon on news of likely drop in unfilled orders, but weakness again failed to spread; some short covering appeared and a better tone developed in the last hour. Bonds generally weaker; US govts. quiet, firm; foreign fairly active and weak, particularly German and S. American; domestic corp. list lower, with some softness extending to high-grade issues. Commodities strong; grains firm with corn up sharply; cotton up substantially after early dip. Copper sold in small amounts at record low of 9 cents/pound; buying demand uncertain; larger producers still asking 9 1/4 - 9 1/2. Cocoa hit another record low of 4.90 cents/pound.

Market observers continue to favor waiting attitude, advising against both long and short sides; "many admittedly are puzzled by the developments."

Some chart students have been accumulating stocks the past few days on the theory that short, sharp swings over the past week point to change of trend. While believing the rally will be technical, they contend the present market position calls for rally regardless of longer-term trend. The Dow, after hitting a high of 194.36 on Feb. 24, has lost about 25% since; this has typically been followed by a rally recapturing about half of the loss.

Although freight car loadings report for Apr. 25 week was disappointing since it failed to show the usual seasonal increase, May 2 week is likely to be higher based on individual rail reports. Rail equipment makers have suffered severely from the depression; orders for cars and locomotives have almost disappeared, and many shops are working at 5%-10% of capacity. However, fundamental forces suggest an improvement is now likely, though it may start unimpressively; situation seen similar to 1921; there's a large surplus of cars but many deteriorate while idle. Oil observers perturbed by dividend cuts, including Vacuum reduction from $4 to $2 rate, and Ohio Oil omitting dividend; recent reductions in gasoline prices also disappointing since consumption should be seasonally increasing.

Great Northern was probably the only major rail showing a gain in first-quarter earnings vs. 1930 [benefits from new East Texas oil area]. W.T. Grant seen doing relatively well this year; has consistently reported higher sales. Nat'l Cash Register reports upturn in business and return to profitability in April. Pullman experiments with weekend bargain fares to increase ridership are showing some promise; present status of railcar building industry indicates Pullman will have to look to its sleeping car business for most of its earnings this year. Montgomery Ward seen likely to have returned to profitability in April based on sales figures.

Outlook for second-quarter earnings "not bright" for many major industries; in particular, steel, copper and oil are suffering lower output and price shading.

German bonds fell sharply this week, with many issues down 5%; attributed to upcoming treasury financing and 150M mark Post Office issue.

Yet another opinion piece by D.C. Harrower decrying price-fixing by the Farm Board [this now appears to be a daily feature].

Inquiring Investor column responds to beginning investor's question on stocks vs. bonds; seems to give preference to sound bonds and preferred stocks under current conditions, though in a good-sized investment account "it would not be outside the bounds of conservative investment policy to place 30% or more of available funds in common stocks, a limited proportion of this to include issues of a somewhat speculative nature." Another question concerns Argentine bonds; response notes Argentina's top place among S. American countries in investors' esteem; has met every obligation promptly since 1901; "there appears to be no danger of default through financial weakness."

Many advisers in the financial district are now recommending companies that have already cut dividends and wages, in preference to ones maintaining them.

Historical study of investment trust [similar to mutual funds] development some 60 years apart in England and the US finds striking similarity in conditions; in both cases, investment trusts gained momentum during the boom years following a war, when the countries were established as creditor nations.

Editorial: The "traditional American management rule of 'plowing back earnings into the property' [rather than paying them out in dividends] is seriously under fire." This worked well in the past, because the typical company could over time "be sure of satisfactory returns upon a constantly increasing capital investment." However, if we are now at the point where we've built all the facilities currently needed, the fiscal policies of many corporations will have to be reexamined.

J. Parmentier, Credit Foncier of France dir., says consumers benefit from organization of cartels thanks to guaranteed quality, lower cost of production, elimination of wasteful transport, and restraint of the role of middlemen.

A. Meyer, European Steel Cartel pres., hits US high wage theory as out of economic balance and giving poor results in Germany and Britain. Conversely, G. Swope, GE pres., defends worker protections, higher wages, and improved machinery as lowering unit production costs.

Economic news and individual company reports:

Florida Bankers Assoc. deplores current local bond situation within the state, calls for solution to repay defaulted obligations in full and maintain state credit. West Palm Beach Bondholders' Protective Committee says it will launch drive to compel city officials to enforce tax payments. Chaos threatens Nebraska finances after July 1 as Gov. and legislature deadlock on upcoming budget; Gov. has refused to compromise on campaign pledge to cut state taxes and budget.

April auto production is now estimated at over 340,000 cars and trucks; this is a gain of 18% or more over March, the best April gain since 1922. Based on April and prospects for the next 2 months, it's likely Q2 production will be 900,000 - 1M units, up 30%-40% from Q1; a normal seasonal trend over the rest of 1931 would then give total production of about 3M units vs. 3.5M in 1930.

Fed. Reserve cut buying rate on bills for third time in 2 weeks, by 1/8% to record lows of 1 1/8% - 1 1/4%. After the close, the Fed. Reserve of Philadelphia cut its rediscount rate 1/2% to 3% and Boston 1/2% to 2%; this raised expectation of a cut in the 2% NY rate at the meeting late this afternoon. These actions were seen as a concerted effort to drive away the “enormous quantity of funds choking” US money markets; gold has also continued to pour in due to the favorable US trade balance. Other money market departments were extraordinarily easy; call money had large offerings below the official rate of 1 1/2 percent. Sterling was up strongly after the Fed. actions, though other currencies didn't respond as much.

Steel production for week ended Monday was 47% vs. 48 1/2% prev. week, 49% two weeks ago, 76% in 1930, and 97% in 1929. US Steel seen likely to show decline in unfilled orders as of Apr. 30 despite curtailed production; decline estimated at 75,000 - 100,000 tons; report on Saturday. Weekly steel reviews report mixed demand picture; automotive appears stable and construction higher, but tin plate and rail lower; overall production seems to be nearly stable. Scrap prices continue to weaken, while finished product prices appear somewhat soft, with planned increases not holding and some discounting.

US electric output for week ended May 2 was 1,622 GWHr, down 3.0% from 1930, vs. a 3.1% decline prev. week and 4.6% two weeks ago.

Market value of NYSE-listed shares on May 1 was $48.470B, down $4.866B from Apr. 1. New bond offerings in NY in April were $440.3M vs. $661.9M in March and $581.1M in 1930; half of the total was in utility issues.

Rail executives reportedly leaning toward asking ICC for "emergency" 10%-12% general increase in rates. At hearing on petition of Western rails for injunction against ICC order to reduce grain rates, L. Wetting, statistician for the rails, estimates new rates would cut total revenue from grain transport by 11.3%.

Oil States Advisory Committee approves tentative plan for conservation of oil and gas; plan will be studied with view to drawing up uniform laws for oil states at next meeting of governors' representatives Aug. 10. Gasoline price cuts made by Standard Oil of NJ and by Sinclair Refining in Chicago. Importance of new natural gas field in Tioga County, Pennsylvania should be established soon; at least 50 wells are now being drilled over a wide area.

Reports from 25 cities to President's Emergency Committee for Employment showed little change during last week in April. Detroit index of industrial employment Apr. 30 was 83.5 vs. 83 a month earlier and 110.5 a year earlier.

Australian govt. announces about 13.5M acres to be planted with wheat in coming season vs. 18M last year.

Soviet Commissariat of agriculture reports 33.7M acres of grain planted up to May 1, or only 13.7% of plan for 1931, vs. 81.4M or 51.1% a year earlier. Poor showing attributed to late spring, insufficient industrialization and collectivization.

About 6,000 workers now on strike at 40 silk mills in Allentown, Pa. and vicinity.

Companies reporting decent earnings: Public Service of NJ.

New books:

Wall Street and Lombard Street, by F. Hirst - history of the almost coincident Hatry crash in London [Sept. 1929] and US market crash of late 1929, covering events leading up to the crashes, the crashes themselves, and consequences up to a year later.

Success in security operations, by F. Bond - "Written for the nonprofessional speculator who hopes to profit from the secondary movements in listed stocks."

Practical Stock Market Forecasting, by W. Dunnigan - Fuses eight barometers into a "composite major trend barometer."

Forecasting Business Cycles, by W. Persons - "Presents data aiming at estimating future business trends."

Movie:

Student Sein, wenn die Veilchen Bluhen (Student Days When Violets Bloom) - German musical, based on story by Joseph Buchhorn, at the Little Carnegie Playhouse. "The kind of wholesome entertainment that makes a 57th Street pilgrimage pay pleasurable dividends." Set in university city of Wurzburg, with its “student prince” atmosphere of “duels and drinking bouts set to melodious music”; story of a romance between Gert Simmers, son of a wealthy industrialist and Aenne Winter, daughter of his landlord at the university, and another between Lisbeth, Gert's sister and Fred Droysen, a penniless student. Film ends on sad note as Gert must leave university and sweetheart due to reverses in father's business. “Lacking the usual ornate Hollywood embellishments and unbowed by the weight of a lengthy scenario, but possessing a delightful score and capable cast of songsters." Sure fire hit in Just Say That you Love Me. Mary Wigman, leading German modern dancer, performs on screen for the first time in a series of four dances; her Witch Dance is “singularly effective.”

Vaudeville:

Ed Wynn is MC at the Palace this week, "appearing before the curtain after every number to tell a crazy story, explain an 'invention,' or enact a sketch." His piece de resistance is the "Drug Store Scene" from Simple Simon [a broadway musical he wrote in 1930], assisted by four Ziegfield showgirls, whom he embarasses with adlibs, and Harry Shannon, to whom he offers to sell his amazing mousetrap with no doors, sure to drive mice away in frustration at not being able to get at the bacon. Acts include "new sailor act of Buster and John West, the comic songs of Rosetta Duncan, the romantic singing of Peter Higgins and the noisy jazz of those '21 girl Paul Whitemans of syncopation,' called 'The Ingenues.'"

Paris report:

Interesting history of circus and sideshow “freaks.” Current case in the French courts concerns US woman claiming share of her French father's 2M franc estate; said father was known “a generation ago in half the tiny hamlets of Europe as the 'man with a head like a cow.'” Deformities have attracted the curious for many generations, inspiring Victor Hugo's tale of “the man who laughed,” the star of a nomadic cirque whose face had been distorted into a “hideoous and perpetual grin” by a knife wound; John Barrymore later starred in a dramatization [note to Hugo estate: possible lawsuit concerning the Joker]. Sideshows have become less popular in the US, giving way to the “healthier entertainment” of movies, but in Europe and particularly France the travelling circus and its traditional sideshow accompaniment remains in style. Sideshow salaries vary widely. Small people were and still are the stars; “Tom Thumb” and his wife drew $1,000 a week each, and “Admiral Dot” $700. Giants also have been in demand, including Chang ($500), Hassan ($400), and the double threat giant-strongman Joe Dortel ($400). Unusual rearrangements of body parts can command high fees, including Millie Christine “the two-headed nightingale” ($1,000) and Francisco Lentino, the three-legged boy ($350). By contrast, the “old side show favorites, such as the ossified man, the man with rubber skin, ... the tatooed man,” etc. only commanded $30-$50 in prewar days. Of course, many fortunes were also made by fakes created by Barnum and imitators, including 40 copies of Jojo, the original “dog faced boy.”

Jokes:

A British epitaph in the village cemetary of Dagenham Essex: "Here lies John Steere, who when living, brewed good beer. Turn to the right, go down the hill; his son keeps up the business still."

"'What kind of a fellow is Brown?' asked Smith. 'Well,' replied Jones, 'if you see him carrying an umbrella, you are safe in betting the owner ... is getting wet.'"

The players - an Omaha wholesaler and a merchant in an "Iowa cross-roads town." The merchant rejected a shipment of goods. The wholesaler, incensed, took decisive action, writing to to the town's bank president about the merchant's financial standing, to the mayor asking him to recommend a good lawyer, and to the merchant himself, threatening suit, if he didn't pay at once. The reply: 'I received your letter telling me I had better pay up. I am the president and sole owner of the local bank and can assure you as to my financial standing. As the mayor of the city, I hesitate to refer you to a lawyer, since I am the only member of the bar in this vicinity. As to your request, if I were not the pastor of the only church here, I would tell you to go to hell.'

Wednesday, May 6, 1931: Dow 148.89 -1.61 (1.1%)

Assorted historical stuff:

Treasure Sec. Mellon makes first public speech on business since start of the depression, and one of very few he's made since taking office [in 1921]. “The world is passing through one of the most extensive depressions it has ever known.” Almost all countries have falling prices, unemployment, lower consumption, govt. fiscal problems, and, in some cases, political revolution. Must not underestimate seriousness of the situation, but also must not lose perspective; crisis isn't unprecedented, but “one of those transition stages which come from time to time and entail drastic ... economic adjustments.” Crisis is exacerbated by effects of earlier war, as in 1873. Prices must be readjusted, and costs of production must be brought down to a point where demand is again stimulated; "in short, a balanced condition must be restored." This can be done without general wage cuts provided business can cut costs through greater efficiency. Country has made a "concerted and determined effort" to maintain wages and keep as many as possible employed, stimulating consumption. Capitalism, while it has defects, has had indisputable success in producing an abundance of life's necessities and goods to satisfy human wants. We still have much to learn about maintaining the system on an even keel, but will gradually overcome the defects in time. However, this “will be done in the future, as in the past, by individual initiative,” not imposed by authority. “Conditions today are neither so critical nor so unprecedented as to justify a lack of faith in our capacity to deal with them in our accustomed way.” On international matters, predicts world trade will increase in spite of tariff and other barriers; “all-important factor is purchasing power ... ultimate solution of the world's difficulties seems to lie in the possibility of building up a higher [living] standard, especially in the great, and as yet, undeveloped consumer areas.” Thanks to central bank cooperation, reconstruction of sound currency systems, Young plan, and B.I.S., confidence has been established in willingness and ability of European nations to pay debts. Doesn't know how long recovery will take, "but I do know that, as in the past, the day will come when we shall find ourselves on a more solid economic foundation and the onward march of progress will be resumed."

A simple funeral service was held for George F. Baker, attended by over 500 of the nation's banking, industrial. and public leaders. In keeping with his wishes, there was only a short prayer and no eulogy. Business leaders described Baker as an optimist who didn't get alarmed during panics and didn't believe in speculation.

Editorial: M. Traylor lays much of the blame for the business depression on the stock market decline of 1929-30, which he in turn largely blames on the management of security and commodity exchanges. This charge is unfounded. The stock market in 1929 was "merely the most conspicuous ... expression of a speculative fever that ran through almost every field of activity." For a few years, the US was supplying the world with all types of goods, "practically on its own terms"; this resulted in too much optimism, and excesses in "production, in capital investment, and in every kind of planning for the future. ...To hold the governing authorities of the exchanges responsible for such a universal loss of perspective by a whole people is unfair."

Editorial: Pres. Hoover, in his speech against competitive armament, said "no one would suggest ... that national defense should be abandoned." However, it's certainly worth suggesting that we try to define "national defense" more explicitly; this might "confirm or dispel the widespread suspicion" that in much of European politics national security is identified with competitive armament. The situation demands "critical and unblinking examination"; "tariffs and inter-government debts are not the only obstacles to the recovery of world industry, nor the most troublesome."

Pres. Hoover appoints Wayland Magee of Neb. to the Fed. Reserve Board, satisfying requests of farm organizations for a representative on the board. There is one more vacancy to fill, in the Chicago district; Pres. Hoover can now meet requests of financial interests in Chicago for representation.

Yet another editorial by T. Woodlock contending inland waterways are unprofitable and unfairly subsidized (at expense of rails) - this one questions accounting of the Inland Waterways Corp. 1930 annual report that shows a small profit, not neglecting to point out the gall of printing this misleading report at public expense.

French scientists discover common Paraguayan plant known as "kaabee" contains 300 times as much sugar per gram as sugarcane; "must determine effect of plant on human organism before adapting for manufacture."

11 new central telephone offices will be added in NY City in next few months using the new numerical naming system, including MUrray Hill-4 and GRamercy-7.

Travelers to Beijing tell of an old Mongolian known as Mr. Cigarette Factory who sits outside the Chienmen Gate, ready to supply any popular brand of cigarette on request. While the cigarettes are authentic and well-made, the more fastidious may not care to smoke them; they're made from butts discarded around the city and gathered by Chinese children working for Mr. Factory. On receipt of the butts, he unravels them, carefully keeping the different brands separate, though he also offers a custom blend mixing several of the brands.

Market commentary:

Market wrap: Stocks opened with continued rallying throughout the list on low volume; however, early gains were wiped out by renewed selling in late morning, and a general decline set in around noon, with US Steel particularly weak; volume rose on the reaction. Pressure slackened around two o'clock, but the decline picked up again during the last hour; with US Steel almost down to last week's low, the whole market closed with a nervous tone. Bond market more active, with a substantial number of domestic corp. issues closing higher; however, improvement was concentrated in highest-grade bonds; US and foreign govts. narrowly mixed. Commodities soft; grains irregular, with wheat down substantially on favorable weather but other grains narrowly mixed; cotton down substantially. Copper buying remained quiet; buyers are apparently unwilling to pay above 9 cents, and some sales are rumored to have taken place at that price. Zinc down to new post-1900 low of 3.25 cents. Cocoa down to new low of 4.95 cents/pound; coffee higher.

Conservative observers point to market action as indicating wisdom of remaining on sidelines. However, some noted that the rail average managed to close with a small gain, a possibly significant development since rails have predicted market action well during in the past 18 months; rails will continue to be watched closely.

Market observers disturbed by pattern of low volume during rallies and higher activity during declines. However, other market students believe recent irregular action, in particular resistance of general list to attacks on individual issues, may indicate market is establishing base for a technical recovery. Still other market students contend that some issues were definitely oversold during the March-April reaction. In any case, there's a general consensus that any rally is likely to be technical and a sustained market recovery will depend on improvement in business; an increasing number now feel this is unlikely to come until early next year.

Heavy May total of about $422M in bond interest payments and maturities seen possibly generating some reinvestment demand.

US Steel weakness attributed to disturbing decline in the preferred to a new 1931 low. GM has been a favorite in the past few weeks, strongly resisting bear pressure; public is reportedly buying the stock based on strong Chevrolet production and sales. Goodyear responded well to reports of increased production, rising almost 10 points from last week's low. Grand Union was also strong after favorable earnings report. Reynolds Tobacco sales have reportedly shown good increase in March after extensive advertising campaign. Anaconda is subject of some concern after reporting increase in notes payable (bank loans) during 1930 of $12.5M to $47.5M; this year's results are expected to suffer from low copper prices. National Lead has moved in a much smaller range this year than comparable stocks; this is attributed to a wide bid-ask spread, making it more difficult for bears to attack the stock.

Yet another opinion piece arguing that Farm Board actions have harmed all interests connected with grain.

A. Pirelli, Italian industrialist, questions how long US can continue to run surpluses on balance of payments of both goods and capital with Europe; this is only possible if US can reinvest the growing sums it receives.

D. Sarnoff, Radio Corp. (RCA) pres., says operations in the first quarter improved vs. operating loss shown in 1930. Company making "important forward strides" with television; expects broadcasting stations in New York and elsewhere before end of 1932.

Labor Sec. Doak says resumption of buying and continuing regular way of living by the employed will do more than anything to restore normal conditions; believes gratifying increase in employment will be seen due to great building and highway projects now under way.

Economic news and individual company reports:

S. Singer, Bank of US VP, testified he and bank pres. Marcus shared profit of $580,000 from organizing City Financial Corp. and selling its stock to the bank.

Amer. Bankers' Assoc. commission comes out against "trade-area" branch banking proposed by Comptroller Pole that would allow national banks to put more branches in country districts; calls it "anti-state bank policy" that in practice "would mean the destruction of our dual banking system." Calls for "evolutionary" change state by state rather than Federal action, moderate extension of allowed branch banking for both state and national banks.

Rail freight loadings for week ended Apr. 25 were 759,272, down 730 from prev. week, down 16.2% from 1930 week, and down 27.8% from 1929.

Refineries ran at 67.2% in week ended May 2; stocks of gasoline dropped 838,000 barrels to 45.613M. Crude oil production in week was 2.475M barrels/day, up 50,800 from prev. week but down 120,100 from a year ago.

April auto production by makers other than Ford was 231,017 units, up 20% from Mar. but down 12% from Apr. 1930.

NYSE bond trading in April was $227.8M vs. $247.0M in Mar. and $274.6M in Apr. 1930; with exception of 1929, this was lowest Apr. total since 1921.

State and municipal bond issues in April were $107.4M vs. $46.6M in Mar. and $149.0M in Apr. 1930; first 4 months a record high of $556.3M vs. $446.9M

American Metal Market says steel production little changed this week; buying as a whole continues sluggish but only slight further decrease seen in operations; automotive buying “hardly promises as large total automobile production this month as last.” American Machinist reports April machine-tool trade "brought no showers of orders to drench the somewhat arid ... markets"; orders for the month were below expectations, with the overall trend slightly down, and there are few indications of improvement before the fall.

Italian War Ministry budget presented to Chamber of Deputies with proposed spending of $156.8M; memorandum said French war budget was 77% higher. Italian cabinet approved issue of a new $209.2M bond to be issued internally; there will evidently be no new external borrowing by Italy in spite of many reports to that effect in the past few months, particularly of a loan from France.

Panama Canal tolls in April were $2.014M vs. $1.964M in March and $2.233M in April 1930.

3,000 employees of 15 Allentown silk mills went out on strike against recent wage cuts. Employees of 20 Philadelphia upholstery mills returned to work after three-month strike, accepting 14% cut in wages.

Tobacco tax collections for first months of the fiscal year totaled $328.4M, down $4.8M from previous year.

US shoe production is up sharply to about 24M pairs/month currently, vs. 17.5M in Dec.; current output is about 18% below a year ago, and about 13% below the average monthly output for the past eight years.

Florida passes inheritance tax bill designed to make effective a constitutional amendment approved last Nov. allowing such a tax.

Mississippi general fund deficit rose from $2.346M to $2.564M in April in spite of emergency $500,000 bond issue bought by banks. Deadlock continues between governor and legislature on extra session to issue state bonds. Asheville and Buncombe County, N. Carolina default on bond interest due May 1.

NY State is likely to receive substantial fiscal help from estate of George Baker; estate value may be about $200M, which would give the state govt. $31.5M and the Federal govt. $7.9M.

Ohio Oil omits quarterly dividend of 25 cents, becoming the first major company in the Standard Oil group to omit its dividend in the current depression, though several have reduced them. Co. is mainly a crude oil and gas producer.

April chain store sales vs. 1930: Woolworth $23.830M, down 2.2%; S.S. Kresge $12.590M, down 1.0%; W.T. Grant $6.402M, up 11.7%; McCrory Stores $3.703M, up 1.4%;

At the galleries:

The Knoedler Galleries are showing a comprehensive group of 86 Durer etchings and engravings, including the finest and best known of this master's work. The John Levy Galleries continue their "Mexican cycle" with an exhibit of Rufino Tamayo and Joaquin Claussel, two contemporary Mexican artists with widely differing styles. The Rinehart Galleries feature a loan exhibition of landscape paintings covering a long time range, starting with Cuyp, Gainsborough, and Turner, proceeding to "the Courbet-Corot-Renoir-Monet coterie," thence to Cezanne, Seurat, Van Gogh, Gauguin and Rousseau, and, after many more stops, eventually winding up with Georgia O'Keefe and Maurice Sterne.

Movie:

Ladies Man - Paramount film, adapted by Herman Mankiewicz from a novel by Rupert Hughes. William Powell gives another intriguing performance as "a man who lived from the generosity of women ... and whose life was finally ended by the husband of the latest of his female supporters." Supporting cast also fine, including Olive Tell as the benefactress, Carole Lombard as her daughter, and Gilbert Emery as "a convincing jealous husband of the dignified variety."

Poem by J.Q. du Pont:

"In nineteen twenty and twenty-one, our uncle had a fire;
His house, with all its furniture, burned almost to the mire. ...
When the fire was out and every one had gone back to his work,
Our uncle vowed he'd build a house that'd make his bankers perk. ...
A sprinkler pipe was then installed in every room and pantry;
A golden pipe called 'Cash Surplus,' the dream of Uncle Sammy.
With valves and silver polished bright, and pumps of purest gold,
The system was the new delight for both the young and old. ...
Ten years passed quickly by, and then the cry of 'FIRE!' was heard ...
'Turn on the pumps, turn on the cash! Turn on the valves!' cried Sam.
The guards, they simply smiled and said, 'We're sorry, sir,' each man.
'Why NOT?' our Uncle sternly asked. 'Ye Gods, my house is burning!'
The guards, defiant, answered thus, (the crowd, meanwhile, was churning):
'You hired us to guard the pumps and keep them ever polished;
If we should start them for this fire their looks would be demolished!'
And so the crowd stood helpless there; the year was 1930.
The house burned down, the guards were pleased; their pumps had not got dirty."

Tuesday, May 5, 1931: Dow 150.50 +3.01 (2.0%)

Assorted historical stuff:

[Note: Strangely unfamiliar dept.] Obituary: George F. Baker, dean of US bankers, dead at 91. One of the founders of First National Bank, [a forerunner of Citibank] chartered in 1863; called frequently to Washington to advise the Lincoln Administration while in his early 20s. Credited with meeting the panic of 1873 with the astonishing principle that "any panic could be averted if banks stood ready to pay out their resources rather than holding them." First National has enjoyed a phenomenal record of profitability and payments to shareholders. Trademarks of Baker's leadership were "simplicity and solidity"; these traits also anchored his directorships of about a dozen of the largest US corporations over most of the past 50 years. "It is not without meaning that one of the largest and strongest of the world's banking institutions was the creation of a man who cared so little for complexities and so much for what was simple and secure."

M. Traylor, First Nat'l Bank of Chicago pres., assigns some blame for the depression to the country's financial leadership; "not one had the courage to fight in the open against the tendencies he knew were wrong, and to demand a right-about-face." However, "aiding and abetting, if not leading, the financial group" were those leading the country's security and commodity exchanges. While these institutions are necessary, we've paid too high a price to maintain them; in the past 30 years, every major depression has followed a stock market collapse. Calls for reforms including ending floor trading ("has about it most of the characteristics of plain crap shooting, and few, if any, more redeeming features than that delightful Ethiopian pastime"), disallowing margin on small accounts to avoid "wreck and ruin of people of small means which followed the last crash," and ending daily call money settlement so the Fed. Reserve can more effectively regulate credit.

"Baltimore tax party" - a new national movement for tax relief will convene in Baltimore on May 28, bringing together from 35 cities "housewives, skyscraper owners, ... school teachers, doctors, dentists, business executives, young woman and middle-aged men." This will probably be the first national meeting of property owners; it was called by the Nat'l Assoc. of Real Estate Boards in connection with its own annual meeting May 27-30.

Pres. Hoover, addressing Int'l Chamber of Commerce meeting, says competitive spending on arms is gigantic waste and obstacle to recovery. Points out world spending on arms is now $5B/year, about 70% over the prewar level; armed forces of 5.5M active and 20M reserves also greatly exceed prewar level, in spite of the Kellogg-Briand pact renouncing war. In addition to economic burden, threats and fears arising from large militaries contribute to political instability. Points to example of naval arms limitation agreement; calls success of upcoming conference on reducing land arms most important issue for world economic recovery.

Editorial by T. Woodlock (formerly of the ICC): Two proposals have been made regarding the rail situation by undisputed experts on the subject. Prof. Ripley suggests the ICC duties be assumed by a new Cabinet post of Transportation Secretary, while Mr. Lisman suggests the rails themselves agree on a "czar" or "umpire" to resolve "conflicting individual interests looking to the common good." Lisman's idea is sounder. In current system, the ICC has complete control over every important decision the rails make except declaring dividends; they can't build or remove a yard of line, issue a dollar of securities, or change any rates without ICC oversight; "regulation in their case is a garment that covers the whole body." However, the ICC has a "remarkable record" in its 44 years of freedom from scandal and politics thanks to its status as an independent commission reporting directly to Congress; this would be endangered by bringing it into the Cabinet.

Extremely sarcastic editorial: To paraphrase Mark Twain, everyone complains about democracy but nobody's doing anything about it, except "a pitifully small number of Mussolinis, Stalins, and Sir Oswald Mosleys." One explanation for the poor state of democracy may be that our elected representatives, being the "pick of the citizenry," speak a language that goes over the head of "us groundlings." For example, a Western Progressive Senator recently said: "The insidious encroachment of the predatory privileged class upon the rights of the individual challenges the very perpetuity of our institutions." While sounding impressive, it would help if "we were told, in words of one or two syllables, who or what the predatory privileged class is and exactly how it is tampering with perpetuity."

Canadian govt. to use airplanes to count population in the "far stretches of the North." Commerce Dept. announces temporary ban on carrying passengers in all Fokker tri-motored planes made in 1929 until reliability tests can be completed. It was in this type of plane that Knute Rockne and seven other passengers recently crashed and were killed.

Spencer Trask & Co. is one of the few Wall Street houses that has lasted 50 years without any name changes. Firm is now one of leading investment houses; played important role in early development of electric industry through financing of Edison Electric Illuminating Co. of NY, whose predecessor company was the first to offer commercial electric lighting on a permanent basis; Mr. Trask was made pres. of the company two years after it started operations at 257 Pearl St.

IBM acquired exclusive rights to Filene-Finley system for simultaneous translation, used at major international gatherings and to be installed at League of Nations. System was invention of Edward A. Filene, Boston dry goods merchant and economist.

Wages for unskilled workers on Hoover Dam construction set at $4 for eight hour day.

500 feet below the surface of NY City, its second water supply tunnel is being constructed (first one built in 1917). The tunnel will be 20 miles long, 17-20 feet in diameter, and lined with concrete about a foot thick. Currently about 3,000 men are blasting the tunnel through solid rock, progressing about 36 feet/day.

The Warner Brothers drama "The Steel Highway," featuring the story of railroad workers, went far for authenticity, compiling a complete glossary of railway jargon to be used in the film. Among the terms listed: engineer - hoghead; train master - wart hog; switchman - snake; executives - whiskers; locomotive - teapot; rails - ribbons; getting fired - pulling your pin; passenger coaches - varnish buggies; Pullman cars - snoozers; private cars - brain wagons.

Market commentary:

Market wrap: Leading stocks opened slightly weaker, but then improved. After “important banking circles" reassured the market that "there was no foundation for various disturbing rumors that had been afloat over the past week,” the upturn made continued progress. Some unsettlement was created by weakness in copper shares around noon, but selling didn't spread and rallying reappeared across the list in the afternoon; leading rails showed good gains, and major industrials reached their best level in the final hour. Trading volume, however, decreased sharply during the session in contrast with heavy volume during last week's decline. Bond trading very dull, prices mostly firmer; rails showed improvement in both high and second-grade issues; even the S. American list was "devoid of the usual sharp fluctuations." Commodities strong; grains higher; cotton up very sharply. Copper buying remained inactive; some metal offered at 9 1/4 cents but large producers still asking 9 1/2. Zinc hit new post-1900 low of 3.30 cents/pound. Coffee down sharply.

Market observers continue cautious due to lower volume on the rally; advise against both long and short sides; recommend stop-loss orders to protect accounts.

At least one prominent bear recently dropped out, in the belief he had too much company on the short side. One of the largest operators in the group hammering leading stocks for the past two months, he covered all his commitments late last week and left for a Virgina resort.

Market students see similarities between markets in April and first half of last Dec.; both featured consistent declines and very pessimistic sentiment. In mid-Dec. market suddenly turned without any apparent outside reason; it remains to be seen if this will happen again. Considerable support came in from traders who like to take positions for swings of 2-4 weeks, playing for an intermediate recovery; this was based on market action since last Wednesday's lows. Despite widespread poor sentiment, leading shares have developed increasing resistance; this reminded many of the middle of last Dec. when stocks turned around and staged fairly extensive recoveries. Standard Amer. Trust Shares says behavior of 25 most active NYSE stocks in April was typical of final stages of a period of decline, showing less active trading on each successive drop in the market; lower volume in April therefore "particularly significant" considering large decline in that month.

Decline of $257.7M in brokers' loans reported by NYSE in April much larger than expected from bank reports showing $145M decline in 4 weeks to Apr. 29.

Remarks of E. Grace, Bethlehem Steel pres., on steel industry are drawing attention. Many considered him too gloomy last Oct., but subsequent events proved him right. Now he's said that new steel business wasn't supporting current production rate of 48 1/2%; he doesn't anticipate a sharp decline in steel buying but sees little prospect of a sizable increase in the near future.

Harvey Firestone approves of 5-day week and shorter hours to provide work for more men.

Brazilian coffee export tax seen encouraging shift to "mild" grades of coffee grown outside the country, threatening Brazil's 60% share of the world market.

Yet another opinion piece castigating the Farm Board for, in Oct. 1929, loaning $100M of public money on wheat on a basis of $1.18/bushel to farmers to help them hold back their crops and achieve "orderly marketing"; not only will the Board take a large loss on loans it called "completely safe," but this interfered with natural flow of US wheat exports and allowed other countries to get the business, leaving US wheat to pile up in the surplus and rack up carrying charges.

Wage cuts are now increasingly being considered in leading industries. Contrary to opinion of economists, many in the financial district believe cuts would be encouraging since in the past wage deflation has been among the last steps in a period of depression.

C. Howard of the Canadian Bank of Commerce calls for candid advertising to combat psychological uncertainty and revive business by unlocking "immense though latent demand." Sees some improvement in Canadian conditions; stability of its banks should help recovery earlier than other countries.

G. Theunis, former Belgian premier and outgoing Int'l Chamber of Commerce pres., hits high tariffs as one of fundamental causes of depression; also criticizes govt. agricultural price stabilization. However, believes if depression phase isn't over we've at least “passed through the greater part of it, and are about to enter on a more or less prolonged period of quiescence, preparatory to recovery.”

Harvard Economic Soc. says based on historical record, current declines in commodity and stock prices won't necessarily prolong the business slump.

Labor Sec. Doak says bottom of business depression has been reached and “an upward movement has started.”

Economic news and individual company reports:

Bank of US defense begins after denial of motion to dismiss charges; expected to complete case within two weeks. J. Hoyt, senior partner at failed Prince & Whitely firm, indicted for mail fraud based on firm's answer to NYSE questionnaire in June 1930. First Bank & Trust of Washington, Penna. closed Monday, total deposits $5.4M.

In spite of huge stock holdings valued at $109.6M, George Baker's death is seen causing little market disruption due to liquidation; he had long made arrangements to settle his estate with the same simplicity that marked his life. First National stock was up on increased possibility of merger with other banks.

Treasury deficit in 10 months to April was $879.0M (spending $3.559B, revenues $2.680B), vs. deficit of $145M a year earlier. US customs receipts in April were $31.8M vs. $41.1M in 1930; receipts for 10 months ended April $321.9M vs. $463.1M.

Ford worldwide production of cars and trucks in April was 117,891 vs. 99,035 in Mar. and 206,340 in Apr. 1930; highest total since July 1930.

Editorial: The ICC's acceptance of container-car service on rails as a "sound and useful" transport method should help coordinate rail and highway transport, reduce wasteful duplication, and give rails a larger part of total traffic.

European wheat interests seek services of T. Chadbourne to formulate international agreement on wheat curtailment similar to the one he negotiated for sugar.

Internat'l banking group including German and US interests makes $120M offer for Berlin Electric; city of Berlin is attempting to sell electrical properties due to large floating debt and difficulty of selling long-term bonds.

German banks reduced dividends this year after suffering heavy stock market losses; German banks generally have higher stock holdings than in other countries. However, despite 1930 losses the banks began 1931 with considerable reserves.

Ecuador considering 1 cent/word tax on cables passing through Santa Elena transfer station to close budget deficit. Costa Rica considering increase on import duties for many items imported from US.

Prof. Kemmerer and commission members return from 4-month trip to Peru to advise govt. on reorganization of financial system. Main recommendation made, and only one adopted so far by Peruvian govt., was return to gold standard; also advised were establishment of land taxes and revision of banking laws.

New South Wales Savings Bank reopens; depositors allowed to withdraw limited amounts, with funds supplied by the Commonwealth Bank.

Canadian report: Sir Josiah Stamp's report recommends continuing trading in wheat futures on grain exchanges but with more controls. Index of employment Apr. 1 was 99.7 vs. 100.2 a month earlier and 107.8 a year earlier; decline was less than usual in March. Construction contracts in first 4 months totalled $96.2M, down 30% from prev. year. Total bond offerings in year to Apr. 27 were $232.1M vs. $192.0M in 1930 and $140.8M in 1929.

Curtailment in East Texas oil fields reportedly making good progress in reducing production from 350,000 barrels/day last week to quota of 160,000.

Wm. Wrigley, in addition to accepting Southern cotton in exchange for gum, is increasing cotton consumption by using stationery made from glazed cotton cloth.

Westinghouse stock is now about 60, while value of net current assets plus investments in Radio Corp. and wholly owned subsidiaries is 63.

Goodyear increased tire production at Akron and Calif. plants for the second time in a week, to 59,000/day from 56,500,

Berkshire Fine Spinning Associates mill no. 4 reopened after 3 week work stoppage, during which most of 700 employees were unionized by the AFL [note: merged with Hathaway Mfg. in 1955, later bought by you-know-who].

Companies reporting decent earnings: Standard Power & Light, Pacific Telephone, Grand Union, Boots Pure Drug Ltd.

Theatre:

Devil in the Mind - revival by Leo Bulgakov of Leonid Andreyev's prewar Russian drama, translated to English. In spite of several weaknesses, "one of the more ponderable productions of our present ... season." Dr. Anton Kerjen is rejected by Tanya, the only woman he ever loved. In response, he makes the intellect supreme and tells himself he's superior to emotional longing. When after several years he kills the man Tanya has married, he contends it's a demonstration of the superiority of his mind over matter and passion. Question of whether he's a maniac or a murderer is left unanswered in the asylum to which he is committed.

Jokes:

"Betty - How did Mama find out you didn't really take a bath? Billy - I forgot to wet the soap."

'Seven cities claimed Homer.' 'Some of our citizens are wanted by more than that.'

"Mrs. A. - My husband has no idea what I go through when he snores. Mrs. B - Mine never misses his small change either."

Monday, May 4, 1931: Dow 147.49 +1.91 (1.3%)

Assorted historical stuff:

Amer. Bankers' Assoc. commission presents program for banking reform, but advises against going too far. "The first step in creating a period of prosperity, sounder and more enduring than the last, is to recognize and correct the errors of the past. Although we are thus willing to confess the errors of banking, we do not believe that their correction calls for drastic legislative measures, or for any revolutionary changes in banking practice." Point out that "bank success history under the difficult conditions of the past year was far more impressive than the bank failure history ... nearly 95% of the banks and over 98% of the deposits were not involved in the bank failure episode of 1930." Call for moderate program including bank consolidation, raising service charges to make all functions profitable, having Fed. Reserve exercise its oversight powers more freely, tightening granting of new bank charters, etc.

AFL reports improvement in employment "not as rapid as hoped, but gains are held"; estimated 5.5M-6M still unemployed.

Dr. H. Luther, Reichsbank pres., gives strongest hint yet that Germany plans to reopen question of reparations payments, calling them "blood flowing from an open wound" and citing Germany's "impoverishment." Letter to the editor: Mr. Woodlock's recent editorial on the surrender of world's "commercial hegemony" to Germany as necessary condition for it to be able to pay reparations is based on the assumption that Germany will pay. With difficult access to foreign capital, 5M unemployed, and severe distress affecting many aspects of its economy, "may I suggest that you ... explore the probability that Germany will not be able to pay?"

Russian wheat exports are down sharply this season. Russia's reentry into the wheat export market in Aug. 1930 resulted from extraordinarily large crop of 1.157B bushels; "heavy disappearance of the huge crop is placed to the increased rations of wheat now apportioned to the population"; also, a larger part of the crop than expected has apparently been spoiled due to inadequate storage. Germany cuts wheat duty 25% due to low domestic inventories.

Editorial: "Special groups," particularly farm organizations, are out of order in expecting to fill one of the Fed. Reserve board vacancies with someone they approve. There's no reason they should be favored over other industries and unions. The President's choice should be from those best qualified; "The banking system is for the country as a whole and not for any special class."

Washington report: Regardless of the merits, antitrust law modification seen unlikely in next session of Congress; repeal is out of the question, and best that can be hoped for is additional study. Congressional sessions immediately before Presidential elections are "notoriously timid." The upcoming one will also be evenly divided between the two major parties, giving Progressives the balance of power; there's little chance they would agree to antitrust modification except to make it stricter. Sen. Borah and Rep. Woods are trading charges on whether Congress or the executive is responsible for high govt. spending. Congress argues that it appropriated slightly less than the total given to it by the Budget Bureau; however, it has passed many laws such as the veterans' bonus over executive objections, which then must be incorporated into budget estimates.

Chinese generals supporting Southern secessionists plan to march North to attack govt. forces in Hunan province. Rebels said opposed to proposed adoption of Chinese Constitution creating office of President at People's convention opening Tuesday.

Irish Cosgrave govt. passes bill to make 70,000 tenant farmers owners of their land, ending 50-year fight against landlords; issuing $50M land bonds to cover cost.

Number of deaths in “miscellaneous flying operations” in second half 1930 was 258 in 1,116 accidents and 56.5M miles flown, vs. 271 in 873 and 63M.

Bell Telephone has developed a scrambling system for radio telephone communication across the Atlantic; works by interchanging frequency bands (for example, bass to treble and vice versa) and then reversing the process on the receiving end.

The Russian govt. is buying large numbers of commercial fur-bearing rabbits; the British Rabbit Farmers' Assoc. recently shipped 1,100 to Moscow on one day.

The Limehouse district of London is home to two families who make their livings waking up workers by pelting their windows with pea shooters. They charge 12 cents a week per home. The advantage over alarm clocks is that the "wakeners" don't leave until their customers show they're fully awake.

Organized slot machine gambling system in NY City illegally brings in $20M/year according to testimony at hearing of Appellate division investigation into lower courts. Owners of machines maintain staff of lawyers to protect arrested store keepers.

Week in review:

"When the history of the 1929-1931 bear market has been fully written, developments of the past week will command an important place." Stocks suffered heavy selling though the weak, climaxing when US Steel broke almost 10 points Wed. after reporting a drastic decline in Q1 earnings. Prospects for improvement in the steel industry appeared poor, and the burst of liquidation in stocks seemed to reflect widespread discouragement among investors. However, rail operating income in March showed substantial improvement from Feb. due to expense cuts. Stocks in Paris and Berlin declined, but not as badly as NY. Bond market continued to feature strength in highest-grade issues, but readjustment in lower-grade; much of the corporate list was heavily liquidated, though there was a substantial rally in the closing sessions. US govts. reached new 1931 highs; European were mostly steady but S. American fluctuated; Australian weak. Fed. Reserve continued easy money policy, cutting bill buying rates again to record lows with aim of stopping influx of gold and investment funds; rumored rediscount rate cut to 1 1/2% didn't materialize but is still anticipated. Foreign exchange market featured strength in sterling and weakness in francs; France expected to lose gold to England and Germany. Grains were mostly firmer in spite of high winter wheat crop estimate; corn was weak. Cotton declined sharply to new lows.

Market commentary:

Market wrap: Bears launched further agressive attacks early Saturday, concentrating on US Steel and American Can and forcing further sharp declines. However, weakness didn't spread and a sharp recovery took place in the second hour; Steel ended higher and the market closed with a steady tone. Bond trading quiet, prices irregular; US govts. steady in spite of report of large new long-term bond issue; foreign govts. irregular, Brazilian issues reactionary; corp. highest-grade firm but speculative and convertible highly irregular and mostly lower, though some second-grade rails were firmer. Commodities mixed; wheat up sharply; other grains steady to firm; cotton down substantially to new 15 year lows. Copper buying at a stand still; prices holding at 9 3/8 - 9 1/2 cents.

Market observers advise "watchful waiting"; concerned by inability of stocks to extend even technical recoveries.

Dow theory students are again closely watching the rails, which have accurately predicted the general market trend in the past 18 months and also predicted end of the 1920-21 bear market. If the rails developed effective support around the April 28 low of 85.51 on the Dow rail average, this would be "highly constructive," though no evidence has been seen yet that the rails have completed their downswing. One prominent wartime bear who denies being active now nevertheless predicts stocks will continue down until their decline off the peak is proportional to the decline in grain prices. Other observers also watch the grain markets for clues on stock movements, but see reason for optimism in recent apparent "bumping along bottom" in grain prices; expect similar pattern in stocks of irregularity but not a continued severe decline.

Weakness in steel scrap markets over past week seen as disturbing development. Conditions seen as ripe for merger of Southwestern copper producers though it's unlikely to be completed before year-end; combine would have 500M pound/year capacity, making it world's third largest.

American Can is unique among major industrials in holding well above its low of Nov. 1929 throughout 1930-31. While still above that low, it's recently come under pressure after persistent rumors of lower earnings. Atchison distinguished itself among rails by showing an increase in March income vs. 1930 in spite of large drop in revenues, due to sharp expense cuts. Noranda has been strong lately in spite of being a copper producer, due to its discovery of a new ore body with good gold content that may be producing within a year; this let it benefit from the current fashion for gold-related stocks.

Growth of fixed or unit investment trusts [similar to ETF's] continues strong; total shares are now estimated at $450M-$500M, the vast majority sold in the last 16 months; there are now over 125 large fixed trust organizations vs. only 17 in 1929. Shift from managed trusts is attributed to 1929 crash, which shattered "the illusion that managerial skill was capable of producing tremendous profits with comparatively negligible risk, due to the ability of managers to sense impending danger." Fixed trusts also appeal to dealers since they don't tie up capital or require waiting for new offerings (new units are created and sold as needed).

Editorial: If rail executives at their upcoming conference decide to ask for a general increase in rates, this will face the ICC and the public with a difficult issue. Rails have three alternatives - higher rates, cutting expenses through layoffs and wage cuts, or accepting even lower earnings, already at a level negatively affecting millions of rail stock and bond holders. If travellers and shippers believe rail wages are worth preserving, they must be prepared to pay their share of the cost.

Editorial by T. Woodlock on British electric utility statistics from the Electricity Commissioners 10th annual report; about 60% of British power is supplied by public plants, but rates to domestic (home) consumers are similar to US rates; "perhaps Governor Pinchot will take note of it."

Frazier, Jelke report value of 100 representative stocks on Apr. 30 was $20.338B, down $2.367B in Apr.; Mar. showed drop of 8.4% and Feb. rise of 11.2%.

Fellowes Davis & Co. recommend a list of 23 stocks selling at relative bargain prices; feel April "has exhausted most of the bearish ammunition for the time being ... while business conditions are not promising at the moment, a reversal of opinion and confidence may be close at hand."

National City Bank monthly review notes more manufacturers being forced to cut wage rates, but disagrees cuts proportional to lower costs of living are harmful; in broader view they may improve US living standard by increasing business and total wage payments; continuing technical progress will also support living standard.

Guaranty Trust Co. defends commodity future markets, says no evidence they made commodity price decline worse in past 2 years; points out declines have been as bad in some commodities that aren't traded on future exchanges.

E. Weir, Nat'l Steel chair., says steel demand slowly improving; large buyers confident we're past low point in general business; against wage cuts in steel.

Otis & Co. make another crack about the bears, observing that Friday's decline "does not guarantee a profit to the Indians who sold Manhattan ... 300 years ago."

Economic news and individual company reports:

April reports from carmakers continue to be favorable; so far, about half of companies reporting are matching their production in Apr. 1930, though conclusions for the industry as a whole can't be drawn until Ford reports information. Hopes are high that the seasonal decline usually starting about now won't take place this year due to low inventories and relatively few new models in June and July.

Dun's reports some improvement in business failures in April; total of 2,386 vs. 2,604 in March and 2,198 in Apr. 1930, and lowest total this year; total liabilities of $50.868M, down almost $10M from Mar., up only 3.5% from Apr. 1930, and lowest total since Sept.

NYSE reports brokers' loans at members April 30 were $1.651B, down $257.7M from Mar. 31 and a new low record; total a year earlier was $5.063B.

Youngstown district steel output to decline 1% to 42% this week.

Fisher's wholesale commodity index continued decline, plunging to another new postwar low of 73.1 vs. 74.0 prev. week and 89.7 a year ago.

Farm Board export sales believed to have totaled at least 20M bushels; Board also took delivery of 36M bushels, making total holdings over 200M.

Los Angeles Clearing House member banks cut interest rates on savings deposits to 3 1/2% from 4%; other sections of Calif. likely to follow.

Total gasoline taxes collected in 1930 were $494.7M, up 14.6% from 1929; gasoline consumption was 14.751M, up 3.5%; average consumption per vehicle 556 gallons vs. 538. Gasoline taxes were imposed in all states, ranging from 2 to 6 cents per gallon.

Bank for Int'l Settlements will discuss forming international short-term credit bank to function until world markets are ready to supply extensive long-term credit.

In spite of weakness in recent weeks, Berlin stocks are higher so far in 1931, showing a gain of 22% in Q1, though average yield on high-grade stocks is still over 7%, and many first-grade bonds still return 8%-9%. The rally has not been based on business improvement, which has been modest at best, but possibly on hopes of an influx of new capital into Germany in the near future, aided by the US or a European coalition.

French trade deficit in Feb. was 1.308B francs vs. 778M in 1930, and highest since Jan. 1929.

Chile national debt rose $328.4M in 1930, to $2.941B.

Textile World reports decline in cotton cloth prices is causing widespread apprehension. Lancashire (England) cotton industry had one of its worst years in 1930, with many companies liquidating; yarn exports were 136.7M pounds, down 18% from 1929 and 40% from the 1909-1913 average; cloth exports were 2.490B yards, down 34% and 70%. A govt. report last July outlined a reconstruction plan involving cutting costs through mergers and technical improvements, and cooperative marketing. Progress on the program has been limited; govt. has now asked an industry committee to propose a reorganization.

NY City Transit Commission reports 387.2M trips into and out of city on rail and ferry lines during 1930 vs. 400.2M in 1929 and 362.3M in 1928. Of the total, 307.7M were commuters. Trunk line rails had 265.8M trips, private ferries 41.4M, Hudson & Manhattan lines 103.9M. Holland Tunnel used by 12.1M vehicles.

Canada Dry Ginger Ale reports "tremendous response" to intensified selling and advertising campaign; sales in April were over three times best previous month in company history; "response is more than a tribute to Canada Dry's plans ... It undoubtedly indicates that the public at large is beginning to spend again."

Net income of 10 tobacco firms rose 13.5% in 1930, bettering the gain of 10% in 1929. Gains were unevenly distributed, with cigarette companies showing the greatest increase while cigar companies bore the brunt of the depression.

Companies reporting decent earnings: American I.G. Chemical, National Fuel Gas.

Paris report:

As since the Middle Ages, spring is the season in Paris for the street fairs, "which have raised their gaudy curtains in every quarter of the city." Early tourists, arriving in surprising numbers, saw the official opening of the fair season in a parade of over 100 former beauty queens escorted by firemen in brass helmets bearing torches and a great colonial band. The season lasts until the "grand finale" on Bastille Day (July 14). Among the choices is the fair aux jambons (Ham Fair); this takes place in the Place de la Bastille, which once ran red with blood, but now teems with "picturesque life," varied and colorful peasant costumes, and a great variety of hams and sausages; some of the latter seem to be of equine origin. Another is the Iron Fair of lower-end antiques, at which "the sub-stratum of Paris" rubs elbows with "the amateur antiquarians who abound in Europe, generally Anglo-Saxon woman of a class leisured by divorce." Also ongoing or about to start are dog and cat shows, and, in the Place de la Nation on the very spot where heads once fell into a basket, the Spice Fair offering ginger bread to the children of Paris.

Interesting recap of musical theatre history. Made-in-the-US musical comedy has long been mainstay of Broadway, but it wasn't always so. In prewar days, "made on the Continent" was a desirable label for Broadway musicals, giving greater cachet than US productions. These finally came into their own during the War, aided by the prolific Victor Herbert and the jazz band; stagecraft also improved, and the "young and lithe chorus girl ... succeeded the buxom beauties of the pre-war theatre." Some US musicals had good success in Europe, and jazz in particular swept the Continent, spelling "youth and life" for a war-weary people. This, however, generated strong resentment from native musicians unable to "get the 'swing'"; of late, their "vociferous agitation" has almost completely removed US musicians from French theatres and cabarets; visitors will note "the jazz band has been practically eliminated"; the old Viennese operettas and French opera bouffe have returned, along with more sedate dance music, "more tuneful than jazz, prettier and certainly less noisy, but ... also less virile."

The circus in France is very different from the highly consolidated US industry that made millionaires of P.T. Barnum, W.C. Coup (who built the NY Aquarium at 35th St and Broadway with Barnum and spent $5,000 on a Japanese three-tailed fish for the opening), and, most remarkably, of the five Ringling Brothers (of whom only John survives, now the richest showman in America). The French version has an esprit and luster all its own; unlike in the US, it's an essentially adult affair, and the French clown has been the hero of many dramatic romances. There are over 50,000 regularly employed in the travelling circuses that criss-cross France in a wide variety of sizes and conditions; to the US observer some may “seem like futile and out-moded entertainment, but even the least of them is finding some gold dust in the dust of the ring.”

Movie:

The Secret Six - an MGM film., at the Capitol. "Again proves that gangland provides sure-fire movie plot material." Title refers to group of businessmen who band together to rid their city of gang rule. Wallace Beery stars as gang leader, providing some comic relief in "generally gruesome story." He's ably supported by Clark Gable as reporter who cooperates with the secret tribunal, and John Miljan as rival gang leader who, like previous MGM gang leaders, also plays piano.

Jokes:

Teacher - When is the best time to pick apples? Little Johnny - When the dog isn't around.

"'I think she's as pretty as she can be.' 'Most girls are.'"

"First Sailor - What did you do with your bonus? Second ... - Well I spent 100 shooting crap, 50 in a poker game, 50 on likker, 25 on taxi fare, and 75 on a girl. First - But that only makes 300. What did you do with the other 200? Second - Oh, I don't know, I must have spent that foolishly."