Friday, January 9, 1931: Dow 173.04 +1.18 (0.7%)

Assorted historical stuff:

Washington report: Pres. Hoover may appeal to nation to avoid the renewed looming menace of an extra Congressional session; current legislative activities strongly suggest a “studied campaign of delaying essential legislation.” Rep. Parker (R, NY) defends Pres. Hoover: not one scintilla of evidence he's dictating rail consolidation plan to the ICC; no truth to charge that rails are being rescued after getting into trouble by engaging in “high finance.” Rep. LaGuardia (R, NY) blocks drought relief bill, seeking agreement that additional $15M added by Senate will be used to supply food not only to farmers but to industrial workers in cities. Some executive officials are rumored to want greatly increased Federal unemployment and drought relief efforts. Democratic party seen deeply obligated financially to its chairman, J. Raskob; his main issue is repeal of Prohibition.

Editorial: Senate is discussing a large loan to China. The idea is worthwhile; if China can be stabilized, "a field for foreign trade will be before us, the development of which will be of incalculable benefit to the people of the US." Part of the reason for China's troubles has been its silver-based currency; price of silver has declined from 69.4 cents in 1925 to under 30 cents now. However, judging by experience of other loans, "unless the money is applied under competent American supervision, it would be as useless as pouring water through a sieve."

Editorial by T. Woodlock: NY City transit unification bears close watching as a test case for “social” (public) control and planning. Current mess has a checkered history extending fifty years. All three of the private transit cos. have a past history of misdeeds; all parties have also failed to plan ahead for the city's needs, mainly due to “unmitigated demagoguery” of city politics. This has brought us to the current state where a passenger is lucky to get a strap, let alone a seat. Fundamental problems are not difficult, but politics has stood in the way of solutions.

Editorial: Gov. Roosevelt is abstaining from investigating corruption in the New York City government, saying this should be done by the legislature in a way free of political tactics and that the accused are entitled to protection from "suspicion and innuendo through publicity." He should apply the same standards to utility corporations and the hundreds of thousands of investors in them, rather than losing all impartiality and endorsing “ill-digested and in part grotesque measures.”

B. Marcus, Bank of US pres., testifies at bankruptcy hearing; says every physical asset of bank and affiliates can be accounted for, only losses sustained were due to depreciation.

German Fin. Min Dietrich says was misunderstood on elimination of unemployment insurance, wants to arrange with industry to employ more jobless men at lower wages, while reducing prices.

Sir Bhupendra Nath Mitra asks financial independence for India under new constitution; Mitra is leading financial authority at current round table conference organized by British govt.

Shawnee and Cherokee tribes claim over 1M acres in Northeast Texas valued at $50M; Land Commissioner J. Walker says tribes have valid claim, state should reach settlement.

P. Weidert, an Oregon farmer, reports using threshed wheat for fuel; at $16 a ton it's cheaper than coal at $20 delivered to his ranch, and it makes a hot, even fire.

New law in NY City requires many stores to have fire retardant ceilings and walls; expected to cost at least $75M and employ thousands of workers.

On Jan. 25, 1830, sales of stock on the “NY Stock & Exchange Board” totalled 465 shares; 16 issues were listed. This was considered a big day.

Market commentary:

Market wrap: Stock trading was much quieter, and mostly range bound; prices were lower early but staged good recoveries in the afternoon; trading picked up ofwhen prices were advancing. Bonds active, mostly firm; US govts. strong; foreign mostly higher; corp. high grade firm, speculative irregular. Commodities weak; grains mostly lower, cotton down slightly, copper buying sharply lower. Silver broke to new record low of 28 3/4 cents, down 1 1/4; attributed to heavy Chinese selling to finance imports and by speculators.

Sugar producer shares were strong; coppers were weak.

Conservative observers continue to recommend buying standard stocks on a scale during reactions; some favor stop-loss orders to protect currently held stocks.

Widespread reports since the beginning of the year have indicated rehiring of industrial workers; observers are awaiting the effects of this on business.

Stock market observers have been keeping an eye on commodities. While recent action in grains and cotton has been satisfying, continued decline in silver is somewhat disturbing. Much US export business depends on conditions in the Far East, where low price of silver has curtailed buying power.

It's uncertain if Bethlehem Steel will appeal the decision blocking the Youngstown merger; some expect Bethlehem interests to drop the plans due to changed conditions since last April.

Vanadium seems to be subject of a new contest between bulls and bears, judging by various rumors and market action.

Some companies with strong cash positions are maintaining dividends even though current earnings failed to cover them, being confident they can earn dividends when normal conditions return. Recent examples include Nash Motors and Goodyear.

Broad Street Gossip: An optimistic broker points out people's stock buying power is as great as in 1929 - at least in terms of number of shares. Charles M. Schwab sold his stocks long before the market hit its peak in 1929; the market continued to soar, leading Mr. Schwab to think he might be too old fashioned. But time proved Schwab right; “the 20 times earnings per share theory has been smashed ... and we have the same old market.”

P. Warburg, Manhattan Co. chair., blames depression on overproduction and artificial price support measures; discounts gold shortage as factor. Calls for US cooperation with other countries, criticizes tariffs. However, sees recovery ahead, believes current security prices will seem “incomprehensibly low” in a few years. J. Barnes, US Chamber of Commerce chair., says govt. and business must combine forces to assure recovery; two main problems are relieving individual anxiety about employment, and reassuring investors and industrialists on govt. attitudes toward investment of effort and capital in industry. R. Stephenson, Amer. Bankers Assoc. pres., says business must solve own problems to avoid attempts at govt. control.

Economic news and individual company reports:

National Auto. Chamber of Commerce recommends industry announce all new models in Nov. or Dec. each year; custom of announcing new models at various times has been very costly in recent years. C. Nash of Nash Motors says the one essential missing in current business situation is confidence. "I am sure that every sound business man will agree with me that we have scraped the bottom and are now returning to normal, healthy conditions, although a too rapid recovery is not to be anticipated." NY Auto Show committee says pleased with show attendance and reaction from around the country.

Ford worldwide production of cars and trucks in 1930 was 1.500M vs. 1.948M in 1929; industry share was about 42% vs. 35% in 1929. Chevrolet reports record-setting Dec. retail sales; total by all dealers was 46,753 cars and trucks, almost twice as many as any previous Dec. Review of new car registrations in first 11 months shows urban sections held up relatively better than rural districts; of geographic areas, Eastern US held up best, followed by Far West; South did the worst.

Fed. Reserve reports money in circulation Jan. 7 down $107M to $4.782B, total Reserve Bank credit outstanding down $125M to $1.248B. Member banks in NY City report brokers' loans down $47M to $1.879B; loans on securities to non-brokers down $90M to $2.027B.

New bond offerings in 1930 totalled $5.171B vs. $3.462B in 1929, $4.860B in 1928, and $6.687B in 1927. Largest borrowers were public utilities, accounting for 28.6% of total; next largest were municipalities at 20.3%.

Investment trust change in fashion is evident in offerings for 1930; new managed investment trusts (similar to mutual funds) were $263.4M, down sharply from $2.038B in 1929; new fixed investment trusts (similar to ETF's) were $400M vs. a nominal amount in 1929. Managed trusts are resorting to decisive measures to reassure investors, including regularly disclosing their holdings. Nevertheless, composing annual reports, after proving awkward enough for 1929, is doubly so for 1930; “so awkward is the situation that some reports are appearing without any remarks from the president whatsoever.” with

States with highest ratio of net debt to assessed valuation: North Carolina, 5.54%, Tennessee 5.50%. New York's ratio is 0.97%, California 1.19%.

Banking situation reportedly creating increased demand for Farm Board credit by individuals unable to get credit themselves, who seek it through cooperative marketing associations they belong to. This is happening particularly in the South.

Farm Board reportedly buying cash wheat over extensive area to avoid “demoralization of entire wheat price structure.”

Reduction of French bank rate to 2% has so far failed to put a stop to British gold drain; Bank of England holdings are now 146.6M pounds vs. 148.3M last week. British and French representatives continued discussions while awaiting results of French rate cut.

Japanese Fin. Min. J. Inouye sees definite business improvement; worst of gold drain over, buying stimulated by low commodity prices.

Tentative world agreement reached on sugar production after compromise between T. Chadbourne, chair. of Cuban delegation, and Germany; anticipated to be "vital factor in the revival of the world's sugar industry."

Curtis Publishing reports circulations of its three magazines (Saturday Evening Post, Ladies Home Journal, Country Gentleman) are up over this time last year.

Companies reporting decent earnings: Swift & Co. (meat packing), Douglas Aircraft (military planes).

Movie:

The Criminal Code, a prison film. Although Walter Huston is distinguished as the warden, best performance is by Phillips Holmes as young man imprisoned for an unpremeditated crime who falls in love with the warden's daughter. Also excellent in minor roles are Boris Karloff as a murderer and Clark Marshall in a hysterical performance as Runch, the "squealer." [Note: A small segment from Youtube - by some accounts, this performance led to Karloff being cast in Frankenstein later in the year.]

Jokes:

"Willis - Hello, old man, where have you been? Gillis - Just got back from a camping trip. Willis - Roughing it, eh? Gillis - You bet. Why one day our portable dynamo went on the bum, and we had no hot water, electric lights, ice, heat, or radio for almost 2 hours."

The young Scotsman had been out for the evening with his best girl. When he returned home, he found his father sitting up waiting for him. "Have you been out with your lassie again?" "Aye, dad. Why do you look so worried?" "I was just wondering how much the evening cost." "No more than half a crown, dad." "Aye? That wasn't so much." "Well, it was all she had."

Thursday, January 8, 1931: Dow 171.86 -0.80 (0.5%)

Assorted historical stuff:

Editorial: While the auto industry has been as hard hit as any by depression, the corrections the industry has made "promise that 1931 will write a more cheerful story than did 1930." Production has been tightly controlled; automakers have improved efficiency and lowered prices. Auto finance companies are in good shape, with low defaults. 1930 sales of about 3.5M vehicles are likely below replacement demand. "Thus the motor industry has promptly and courageously met the inevitable. ... This foremost of American manufacturing industries ... will in all probability set this year's industrial place for the country."

Editorial: Sen. Ashurst's inadvisable proposal for a large land purchase from Mexico is, thankfully, likely to be "entombed" in the Foreign Relations Committee along with its predecessors. However, it's sure to be "misunderstood, overestimated, and resented throughout Latin America."

Chair. Woods of the Pres. Emergency Employment Committee estimates US unemployed at 4M - 5M.

NY Gov. Roosevelt's annual address at the Capitol in Albany: Asks funds for commission to help maintain employment. Public works being speeded as far as possible; asks for more appropriations and elimination of "archaic" laws to speed things up. Urges old age insurance and labor protection laws. Recommends four-year Governor's term. Asks for action on public development of water power to provide cheaper electricity for people of the State.

German Fin. Min. Dietrich says unemployment insurance is mortal danger to capitalistic system, can't be maintained at present level of $750M annually; proposes replacement of dole with payment of premiums to employed workers, allowing companies to reduce costs and hire more. Govt. announces Dec. cost of living index 7% below 1929, proving campaign to lower prices making headway.

Editorial in Miami Herald praising E. Romfh, First National Bank of Miami pres., for calming public fears after the City National Bank failed: “the First National Bank is the Big Bank. If calamity had overtaken it, the entire financial structure of Miami would have been swept away.”

Lee Adam Gimbel, former NYSE member and onetime Gimbel Bros. VP, dies by falling or jumping from 16th floor window of Yale Club.

Filling out income tax returns has become "an annual bugaboo"; as March approaches each year, the air is full of complaints "and many hours are spent moiling over masses of figures." A particular complaint is that each source of income has to be specified; the return forms of 1871 gave taxpayers some relief by not including this requirement.

Telephone companies are reminding subscribers that they have 60 or 70 gadgets in stock to meet particular needs; for example, for 15 cents a month, you can get a switch letting you turn off the bell of your bedside extension phone when you go to sleep.

H.M.V. Gramophone Co. says has perfected television transmission to make tiny details clearly visible, transmit over practically unlimited distances.

The King Hotel opened for Christmas in Jerusalem; a modern hotel, costing $1M to build, with views of the Jordan River and its valley, the Dead Sea, and the hills of Moab.

Contract signed between King Ibn Saud and Marconi co. for 15 wireless stations to link important centers in Hedjaz and Nejd; Muslim engineer to install the equipment in Mecca.

Market commentary:

Market wrap: Stocks advanced most of the day on quiet trading; some resistance developed in midday and profit-taking in the late afternoon caused sharp recessions from the day's highs and some "cross-currents," but the selling was generally absorbed well; rails and banks strong. Bond market continued strong in almost all departments. Commodities also continued strong.

Recent sharp bond rally has been big help to market sentiment; Dow bond average has gained from 92.83 on Dec. 17 to 96.54 currently. Some are skeptical on whether the rally marks real improvement, attributing it to new-year reinvestment demand and relief from the Dec. bank disturbances that caused banks to liquidate bonds. Other possible factors are the New York Fed. rate cut to 2%, and the end of tax selling. Observers will be closely following bond action over the next week; continued advances "would suggest growing confidence in the longer financial outlook."

Short covering reported more urgent in past few sessions when market is rising, indicating bears who contested the upturns early this year are growing less confident. Some outside buying is also reported to be coming in when the market declines.

The Dow theory of averages, which successfully predicted all the major swings of 1930, now indicates both industrial and rail averages are headed higher. The latest signal was last Saturday, when the industrial average broke through the resistance of Dec. 18 while the rail average broke through that of Dec. 20. Both averages again reached new rally highs on Tuesday.

NBER review of the history of high grade rail bond yields since 1857 shows historical pattern that precedes business recoveries: peak in call money rates is followed by peak in time money and commercial paper rates, then peak in high grade bond yields, then peak in second-grade bond yields, then bottom in stock prices; this is generally followed by business recovery within months.

If previous year's trends are followed, rail car loadings should improve in the next few weeks; in past 5 years, loadings reached their low in the Christmas week.

Broad Street Gossip: Increased efficiency has allowed some lines of industry to make relatively good showings in spite of lower prices for products, reduced production, and maintenance of high wages; these conditions would have caused very poor showings ten years ago. Automobile output last year was about 3.5M, and there are about 26M cars now in use in the US. "Figure for yourself the life of an automobile, and then reach a conclusion as to whether there will be an increase in the demand for them before the end of the current year." Some “very prominent financiers” reportedly buying stocks over the past several weeks.

Economic news and individual company reports:

Steel industry reports considered encouraging. US steel unfilled orders as of Dec. 31, to be announced Saturday, expected to be up over 200,000 tons to 3.850M. Current industry output estimated at 41% for the current week and 36% for the week ended Monday, vs. 24% previous week. Scrap prices up slightly. Gain in new steel buying reported so far this year, though a decline was expected; further gradual improvement expected this month and into Feb. Auto industry production improving more quickly than expected.

US and Canada car and truck production in Dec. estimated at 155,185 vs. 134,844 in Nov. and 125,502 in Dec. 1929; full year 3.505M vs. 5.622M; current inventories of new cars 25% below a year ago.

NY Auto Show seen exceeding expectations; public reception enthusiastic. Few outstanding innovations; “principal talking point ... is sensational value offered at new low prices.” Some reports of sales better than last year, but more significant sales are usually made when exhibits travel around the country. Pres. Hoover addresses show direct from Washington by radio: future prospects of auto industry don't warrant despondency, 1930 sales not cause for pessimism.

Bankruptcy hearings of four Bank of U.S. affiliates continue; testimony heard that of the total of $52M in assets at these affiliates that the receiver is attempting to account for, $44.570M consisted of Bank of U.S. stock. D.A. Crain announces he will make public the results of his investigation; bank officials expected to be called before the grand jury next week. A. Broderick, NY State Superintendent of Banks, proposes changes to State banking law giving Superintendent more power to force mergers in emergencies, and limiting investment of banks in affiliated corporations. Remarkable increases reported in deposits at larger banks as of Dec. 31; Chase National $2.074B vs. $1.691B on Sept. 24; National City $1.460B vs. $994M; Guaranty Trust $1.342B vs. $1.181B.

Eastern rail consolidation plan would keep the four main Eastern lines in in their current ranking in terms of revenue and earnings: Pennsylvania, New York Central, Chesapeake & Ohio - Nickel Plate, and Baltimore & Ohio. The B. & O. seen faring well in the plan.

Justice Dept. seen likely to appeal Packer Consent Decree modification directly to Supreme Court.

Agitation for oil tariff said gaining; administration is opposed.

Russian purchases of industrial equipment in US were $46.1M in year ended Sept. 30 vs. $11.4M previous year. Russian 1930 cotton crop estimated at 2M bales vs. 1.351M in 1929.

British registered unemployed on Dec. 29 were 2.643M vs. 2.408M on Dec. 22 and 1.510M on Dec. 30, 1929.

Chile ends 1930 with unexpected surplus of 2.5M pesos.

Panama Canal tolls in Dec. were $2.193M vs. $2.098M in Nov. and $2.309M in Dec. 1929.

Manhattan construction plans filed in 1930 were 560 buildings for $162.7M vs. 837 buildings for $543.9M in 1929. Plans filed in Dec. were 17 buildings for $2.1M, lowest for a number of years. Top month in 1929 was April, with 166 buildings for $176.8M.

NY Supreme Court Justice L. Faber issues ruling restraining Eugene McCann from circulating false rumors regarding securities. Mr. McCann, A.K.A. Stewart Brooks, A.K.A. John Clark, is a stockbroker with offices at 52 William St; action was the first of its kind undertaken by the NY Attorney General.

Companies reporting decent earnings: Wilson & Co. (meat products), Mathieson Alkali, Alaska Juneau Gold Mining, Blaw-Knox (steel and construction products).

Joke:

Judge, examining prospective citizen: "Can you tell me the difference between the powers and prerogatives of the King of England and those of the President of the United States?" "Yes sir - the King, he's got a steady job."

"I clung to him confidently. His strong, muscular arm encircled my waist and held me up as we waltzed and glided about. One of my hands laid upon his broad shoulder, the other rested in his, and from time to time he squeezed it and smiled. ... We knew everybody was watching us, but we didn't care. We were young, and happy. Youth never cares, does it? We danced and danced, gazing into each other's eyes. Then the bell clanged and the fight was over."

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.