Friday, January 23, 1931: Dow 168.46 +3.70 (2.2%)

Assorted historical stuff:

Editorial: Commission of the League of Nations, meeting in Geneva to consider Briand plan for European union, took dramatic step of acknowledging "widespread political anxiety" and issuing solemn declaration by representatives of 27 countries: "we are more resolutely determined than ever to use the machinery of the League of Nations to prevent any resort to violence." All very well, but in the past decade since the League has been established, treaties have been signed, nations have foresworn violence repeatedly, and all the while "widespread political anxiety" has increased. One effective settlement of an international dispute would do more good than "a dozen repetitions of threadbare phrases of pacific intentions."

Commission created by Congress to study methods for removing profits from war and distributing its burden equitably has its first meeting.

Washington report: Increasing possibility seen of subjecting Prohibition to national referendum following Wickersham report; Rep. Fort (R, NJ), a prominent dry, reportedly favors this. Nomination of Eugene Meyer to head Fed. Reserve resubmitted to Senate banking and currency committee after Sen. Brookhart (R. Ia.) complained he hadn't been given an opportunity to question Meyer; Senators supporting Meyer said he welcomed the opportunity to refute charges brought against him. Recent trend to govt. paternalism seen in $25M relief bill, tariff agitation, call for more Fed. Reserve authority on banks, public power development, etc.

NY Fed. Gov. Harrison testifies before Glass committe; favors control of brokers' loans to avoid speculation getting out of hand as in 1928-29, preferably by agreement of NY banks and NYSE rather than by law; says “we raised our rate too late” in 1928.

Argentine Finance Ministry says received offer of 40M pound loan from Paris, but refused because of lack of evidence lenders were financially responsible.

Canadian PM orders all Cabinet members' cars to be auctioned off.

French Premier Steeg's Cabinet defeated in Chamber of Deputies in connection with proposed increase in wheat prices; resignation obligatory.

Japanese Fin. Min. Inouye says believes worst of depression over, commodity prices can't go much lower; praises 1930-31 budget of 1.440B yen, down 320M from previous year; decries public borrowing to cope with unemployment.

Editorial by T. Woodlock: US shouldn't trade with Russia in spite of profits to be made doing so; while Russia isn't at war with us by common meaning of the word, it has made clear its intentions to destroy our social order; “has that government introduced for the first time in ... [history] a new kind of 'war'?”

Editorial: Trends in US auto exports are revealing. Total for Nov. was 6,039 passenger cars vs. 13,933 in Nov. 1929. Argentina and Australia have in the past been the top two buyers; Argentina declined to 820 from 1,502, while Australia fell off the list entirely; this is probably due to decline in wheat and other commodities. Every other country but Denmark also shows declines; since US cars have no serious competition, this indicates reduced buying power.

One of the first hotels to install elevators about 75 years ago was the US Hotel in Saratoga; these transported an astounded public at 50 feet/minute. Modern skyscraper elevators are capable of 1,200 feet/minute but restricted to 750 feet/minute by law.

Baltimore & Ohio RR orders air conditioning to equip all coaches on “Columbian” NY-Washington express.

Indiana Limestone Co. to start shipments for construction of Mellon Institute in Pittsburgh, including 62 columns, each 36 feet high by 5 feet 10 inches diameter; each column will weigh 142 tons when quarried and 64 tons when finished.

NY City Tenement House Commissioner Deegan says was misquoted in saying 40% of Park Ave. apartments unoccupied; was referring to tenements.

Irving Trust moves to their new building at 1 Wall St.; features include spacious 3-story safe deposit vault, largest in NY next to the Fed. Reserve one.

At least 57 people were lost in the dense US West Coast forests last summer, including several children, a policeman, and many hunters; to locate them, the Forest Service spent about $700.

Curtiss-Wright plans construction of small light plane to sell for $1,490.
Single men haven't always had it this easy. In 17th Century England, bachelors paid an annual tax on a sliding scale from 1 shilling for a laborer to 12 pounds, 10 shillings for a duke. In Rome, men were compelled to marry by a certain age. Unmarried Spartan women were "privileged to treat bachelors with indignities."

Edwin S. Votey, inventor of the pianola, dead at 74.

Market commentary:

Market wrap: Stocks worked higher throughout the session; bears made several attempts to stop the upturn, with little success, as leading industrials were able to resist pressure; brisk advances in trading favorites. Bond trading quieter but prices continued steady to higher in almost all departments. Commodities mixed; grains mostly down; cotton up moderately; copper slightly weaker in secondhand market.

Conservative observers more cheerful; advise scale buying with stop orders for protection, against taking short side.

Market observers encouraged by recent strength in rails, which hit new 1931 high Wednesday; rails are believed less subject to professional manipulation than industrials, and more accurately reflecting investment attitude of the financial world. Also encouraging was recent pattern of heavier volume as stocks rallied and lighter volume on dips.

Growing market resistance to pressure in past few days has caused some change in sentiment among traders from bearish consensus two weeks ago. Bears have operated aggressively, but made little headway in the main body of stocks; new lows have only been produced in isolated issues including Allied Chemical, Westinghouse, and GE. In fact, behavior of the general list since mid-Dec. has created some hopes of an extension of the new year's rally.

Several brokers advise taking tax losses now since market may be doing much better by end of year, the normal time for taking losses.

Broad Street Gossip: Some market observers marvel at ability of many high grade stocks to make new lows while shareholder lists increase and floating supply drops to record lows. One investor recently sold a block of US bonds at a near record of 104 that he bought 10 years or more ago at 86. Many executives believe they're captains of industry in times of prosperity, when they are simply being carried along by the general business trend. “It is when the country is in the throes of depression that the true captain of industry stands out.”

R. Rutter, Spokane & Eastern Trust pres., says Washington state business conditions markedly improved; crop prospects good, little banking trouble, enormous construction just across border in British Columbia.

H. Hayes, Stone & Webster VP, says power utilities must inform public to counter misconceptions fostered by sensational newspaper articles and campaigning politicians; investors may be deterred by political agitation. Finds state regulation mostly but not universally adequate, accounting sound.

Owen Young says signs business more sensitive to improvement, near or past "dead center" of depression.

R. Whitney, NYSE pres., says the NYSE affects many aspects of US economic life; even farmers depend on and benefit from it; closely reflects business conditions; "It is a creation of the whole American people ... a supreme single expression of modern economic life ... a living pulsating mechanism by which the savings of the thrifty everywhere steadily pass into a practical effort to realize the dreams of science, invention and national well-being."

Lee, Higginson & Co. sees some precedent for favorable market action in face of poor earnings. Cites report by leading financial publication in June 1924: "The tone in the security markets has become positively buoyant. The movement is the more noteworthy as there is nothing in the condition of trade to justify rising prices. Nearly all the leading industries of the country are in a state of utmost depression. The complete collapse in business ... ranks as the most pronounced in trade annals." [This was, of course, followed by the roaring 1920's bull market.]

Economic news and individual company reports:

Special Assistant D.A. Steuer charges Bank of US directors didn't lose money in the failure because all had loans from the bank exceeding deposits, many granted on doubtful security; “If the bank failed, the people who were safest were the directors.” Also outlines circuitous transaction that wiped off an $8M debt to the bank from its affiliates before a bank examination.

Oklahoma proration fight appears to be brewing in state House of Reps.; resolution introduced charging "stagnation, manipulation, starvation and discrimination."

Fed. Reserve reports money in circulation Jan. 21 down $56M to $4.593B, total Reserve Bank credit outstanding down $91M to $1.020B. Member banks in NY City report brokers' loans down $63M to $1.757B; loans on securities to non-brokers down $32M to $1.960B.

Dept. of Labor reports Dec. building activity in 293 cities was $128.9M, up 8.1% from Nov. and up 2.6% from Dec. 1929, first increase recorded in 1930.

Dow steel and iron average holds at 1931 high of $44.56/ton. Scrap markets less active after a week or two of stronger buying.

NYSE firm of Lorenzo E. Anderson suspended, alleged insolvent; little market impact seen.

Farm Board chair. Legge asks Congress to appropriate $100M to complete $500M authorization; sees little recovery yet in general business; Board's money tied up in commodities will only be liquidated slowly.

Canadian wheat surplus as of mid-Jan. estimated at 253M bushels.

Bank of Switzerland joins France and US in reducing rediscount rate to 2%.

British gold losses to France resume, on smaller scale. Bank of England reserves now 142.9M pounds, or 31% of notes in circulation; Bank of France has reached more than triple British gold reserves, at 54.4B francs, 70% of circulation.

Some top officials in Chinese govt. at Nanking said ready to accept US silver loan, though businessmen are opposed, believing it would further depress values.

Mexican oil exports to US in 1930 valued at $40.5M.

American Tobacco reports sales of Lucky strike cigarettes in Dec. were up 653.1M over 1929, full-year sales up 6.220B.

Sales at the NY Motor Boat show reported better than last year.

Companies reporting decent earnings: General Parts (servicer for about 30 discontinued car lines, including Rickenbacker and Locomobile), Household Finance, National Dairy, US Pipe & Foundry, Montreal Light Heat & Power, Italian Superpower.

Lambert (toiletries and medicinals) stock about 79, annual div. $8, 1929 earnings $10.04/share, 1930 earnings $9.50/share.

Movie:

How He Lied to Her Husband - First talkie made from a George Bernard Shaw play. Very unsatisfactory; bad sound and photography; cast fails to enter into light cynical spirit of the play; female lead, Vera Lennox, rather than leaving impression she's had several previous affairs, seems like a "silly school girl afraid to be caught in the arms of her first beau."

Jokes:

"Soprano - Did you notice how my voice filled the hall last night? Contralto - Yes, dear; in fact, I noticed several people leaving to make room for it."

"Customer - I don't like the flies in here. Waiter - Sorry, sir, there'll be some new ones in tomorrow."

Thursday, January 22, 1931: Dow 164.76 -1.06 (0.6%)

Assorted historical stuff:

Editorial: The Wickersham commission report seems honest and unbiased; while favoring enforcement as long as Prohibition exists, it also "deals it a blow which is likely to lead to outright repeal or extensive modification." Enforcement conditions were found "bad, or in fact evil." Opinion on what to do was diverse; of the 11 members, 2 favored outright repeal, 4 revision, and 5 a continued period of testing, followed by revision if adequate enforcement fails. From this diversity, a consensus emerges pointing to unenforceability of the present law and its likely repeal or modification. Reaction to the report seems a bit confused; a surprising number of drys praised it, while quite a few wets criticized it for not advocating outright repeal. Sen. Tydings (D, Md.) introduced bill asking Wickersham to testify whether commission was influenced by non-members; says recommendations in report were so confusing that they puzzled members of Congress who might be called on to base legislation on it.

Red Cross contributions are reportedly down as Congress considers its $25M appropriation proposed in the food relief bill.

Dreaded extra session now appears more likely as Congress has gotten into a snarl that “seems hopeless,” with a filibuster active in the Senate. However, 6 weeks remain, which could be adequate time for things to get sorted out.

Elihu Root appears before Senate to urge approval of World Court protocol.

Commission on European union at Geneva drafts trade proposals; invites Russia, Turkey, and Iceland to future discussions.

Russia has reportedly approached Canadian officials on combining to stabilize wheat prices; grain trade skeptical.

Editorial by T. Woodlock: Recent [rather convoluted] decision by the ICC allowing some lines to lower rates illustrates current degree of competition between rails, which is keener than ever. Law on rates is somewhat contradictory, saying competition should be preserved but also that the entire national system should be run efficiently. The ICC should go for competition, allowing it even when it leads to some excesses and inefficiencies; curbing these should be up to the rails.

Farm Board chair. Legge says govt. shouldn't write rules for grain exchanges; instead, exchanges should write them, but in a manner acceptable to the govt.

Italy reports record population increase of 515,000 in 1930 (rate of 12.3 per 1,000).

The business of salvaging waste material, "started by an itinerant immigrant with his clanging bell," has grown into a huge industry; aside from hundreds of other junked materials, the US consumes over 30M tons of scrap iron and steel annually. The business also plays an important role in conservation of natural resources.

NY City Commissioner of Tenement House Dept. reports about 40% of Park Ave. apartments are currently unoccupied.

NY State Legislature calls for study of water supply problem; last summer many areas suffered from dried up wells and were forced to plead for barge canal water.

Federal govt. has spent about $8.5M to construct 15,000 miles of lighted airways throughout the US.

Detroit Aircraft to start work on planned $4.5M dirigible designed to act as flying air base for large fleet of airplanes. To have eight motors of 600-800hp each, top speed of 100 mph.

Work on the 465-foot tall heads of Lincoln and Jefferson cut into the granite face of Mount Rushmore has been completed; sculptors are now working on Washington, whose nose is to be 60 feet long; after Washington, Roosevelt is to be carved.

Market commentary:

Market wrap: Stocks opened with a spurt, and rails continued strong, but most industrials settled into a narrow range until after midday. A lower than expected US Steel earnings estimate was then followed by profit-taking across the list; many issues closed down, though rails stayed relatively firm. Bonds continue firm in quiet market, with investment grade issues rising to year's highs; general list steady. Commodities somewhat higher. Silver rallied to 30 cents.

Market observers now inclined to remain on the sidelines until reports of leading companies are out of the way; selling induced in standard stocks might then present scale buying opportunities.

Rail strength attributed to expected favorable ICC ruling on valuation.

Wall Street is now skeptical about news pointing to moderate business improvement. "Traders, who a year ago were decidedly optimistic, are inclined to be pessimistic now and disregard favorable straws when they appear."

Some interests have recently been borrowing time money for 3-4 months and investing it in standard bonds yielding considerably more than the time money rate.

Investment Bankers' Assoc. says investors need have no fear Germany will repudiate securities or breach reparations plans; budget problems are due to political conditions, not to inherent inability to balance finances.

Broad Street Gossip: If overproduction was main cause of the depression as economists say, the situation is improved now since in many industries production is running below consumption. Merchandisers have also been running inventories down, in some cases to the lowest levels in 10 years. Market observers say rally starting the year has failed to hold due to combination of "persistent hammering" by bears and lack of support by "big interests"; many big banking houses "admit they are doing nothing to support the stocks they are supposed to sponsor." A leading bear confirms high grade stocks "are getting very little support. We know what the specialist's 'book' is, and usually find few buying orders on the way down"; in normal markets, higher grade stocks have good supporting orders, usually every eighth of a point down.

E. Mills, Nat'l Assoc. of Book Publishers pres., says 1930 depression didn't affect book publishing as much as other industries.

E.F. Hutton notes many conflicting factors in current market, making it difficult to read. Investors must know if they're long-term or short-term. For long-term investors not insistent on recovery at a definite time, important signs suggest buying, including deflated market, extreme money ease, and low level of business. For short-term traders, market has presented trading opportunities to those "closely and constantly in touch with the market."

H. Alloway recalls the boom period half a dozen years ago "when all sorts of ... trouble were being courted by the ladies in multitude, out for a fling in the stock market." One “responsible” estimate is that in the years from 1927-1930, "it is within bounds to put the 'security' robberies practiced against women at a round billion of dollars."

H. Sinclair, chair. of Sinclair Oil, hits Oklahoma oil proration program: “working a great injustice to the people of this state ... a travesty on conservation.”

Guardian Detroit Bank suggests banks throughout the US give local auto dealers “a lift at this particular juncture” in order to do “something constructive for the whole business situation.”

H. Johnston, Chemical Bank pres., says believes “depression has about run its course”; sees recovery and return to sounder principles, “where wealth is created by work and endeavor, and not by the process of marking up values over night.” Says banks must operate conservatively, not “put the money of Peter into the speculations of Paul.”

Irving Trust monthly bulletin says business “skies are slowly beginning to clear,” sees possible end to “most drastic depression since 1875”; however, many unsolved problems remain, including decline in silver and farm commodities, gold distribution, and political unsettlement; hits US tariff.

C. Schwab, Bethlehem Steel chair., calls for every energy to be exerted to crush Communism; says more optimistic on next 50 years of US industry than on past 50 years; defends executive bonuses but says will be more open in future.

Economic news and individual company reports:

Total internal revenue collections from Jul. 1 - Dec. 31 were $1.396B vs. $1.503B in 1929.

BLS reports cost of living down 3.6% in second half of 1930 and down 6.2% in the full year; largest decliner in the half was food, 7.2%; rents were down 2.1%.

Total corp. financing in US markets in 1930 was $5.9B vs. record $11.0B in 1929, $8.5B in 1928, and $7.8B in 1927.

Fed. Reserve open market committee meets to discuss credit conditions; Fed. has purchased over $500M of US securities in open market since Oct. 1929 as part of easy credit policy.

Bank of US hearings continue to question various matters, including alleged misrepresentation by directors of the bank's condition, reporting a $10M surplus and $7M undivided profits when neither existed.

US Steel earnings estimated at $0.30-$0.40/share for fourth quarter; about $1.00 had been expected. This would compare with $2.06 in Q3 and $4.14 in Q4 1929; net for the year would be under $9 vs $21.18 in 1929. Steel production this week is about 46%, up about 2% over last week. However, buying is reported cautious, and inventory replenishment slower than expected; all indications point to gradual rather than rapid recovery. Machine tool buying notably improved.

US electric output for week ended Jan. 17 was 1,727 GWHr, down 5.4% from 1930.

Middle West Utilities Dec. 26 survey of business conditions in its territory finds trade generally slack; some improvement in New England, NJ, Penn., Texas.

Dec. output of cigarettes was 8.675B vs. 8.261B in 1929.

New life insurance bought in 1930 was $22B; payouts were $2.2B, $238M higher than in 1929.

Bond houses say market in sound condition after absorbing over $250M in new offerings in a week.

Mexican Finance Sec. Montes de Oca reportedly negotiating for modification of Mexican debt plan agreed to last July.

South African gold mine company shares selling at average yield of 12% in spite of generally favorable conditions; depression has relieved labor shortage.

French tax collections in Dec. were 3.629B francs ($145.2M), down 212M from 1929. French imports in 1930 were 52.3B francs, down 5.9B from 1929; exports were 42.8B, down 7.3B.

NYSE seat sold for $232,000, down down $18,000 from previous sale.

Companies reporting decent earnings: IBM, Lambert (toiletries and medicinals), National Biscuit, Chesapeake & Ohio (against industry trend), Amer. Bakeries, Chicago Towel.

Movies:

Beau Ideal - a sequel to Beau Geste, starring Ralph Forbes and Loretta Young. Yet another depiction of life in the French Foreign Legion; superior to predecessors in photography but story is even more implausible and confused.

Illicit - "trials of a conventional young man who tried to reconcile his beliefs with those of a girl who fears marriage will blight their love." Girl capitulates to forces of of convention in the end.

Jokes:

A small merchant uptown needed a loan, and put up a valuable painting as collateral with a loan shark. The loan shark would only agree to lend 10% of the painting's price, and charged 15% for a 6 month loan. "But money is lower than it has been in years, down to 1 1/2% in Wall Street," said the borrower. "I know it," said the loan shark, "but 42nd Street is a long way from Wall Street."

A certain tabloid offered readers $1 each for "embarrassing moment" letters. One reader replied: "I work on an early night shift in a steel plant. I got home an hour early last night, and there I found another man with my wife. I was very much embarrassed. Please send me $2, as my wife was also embarrassed." The editor reportedly sent a check for $3, admitting the possibility that the stranger, too, might have been embarrassed.

Wednesday, January 21, 1931: Dow 165.82 +4.37 (2.7%)

Assorted historical stuff:

Wickersham report on Prohibition was "surprise of a decade" to Washington. Rumors in the past few weeks, based on hasty reading of advance confidential copies, indicated a dry stance. The actual report did emphasize need for better enforcement as long as Prohibition lasted. However, a majority believed adequate enforcement to be unobtainable and called for revision of Prohibition; some believed a further test with better enforcement should be made. A proposed alternative plan was for a joint Federal and state liquor monopoly to handle alcoholic beverages; states could then choose to be dry or wet. Report seen opening a loophole for Republicans to possibly take wet stance in 1932 election. Pres. Hoover backs call for better enforcement, but sees "serious objections" to revision.

Glass committee seen aiming strongly at regulation of security (investing) affiliates of large national banks. In the hearing yesterday, it was suggested to Currency Comptroller Pole that these affiliates be separated from the parent bank; he was non-commital in response. Panel is mostly composed of conservative Senators, and questioning so far has been friendly rather than using "the badgering tactics often employed by Senate committees." NY Fed Gov. Harrison testified, disagreed with Glass plan to prevent discounting member banks from lending for speculation.

Editorial: Issue behind the food relief bill is much more than short-lived politics; at stake is question of "establishing the dole as an American institution." All agree suffering should be relieved; question is whether to start down the "steep descent through successive and uncontrollable appropriations from the public purse for the temporary benefit of one after another group ... " It's now up to those opposed to the dole to contribute heavily to the Red Cross and avoid that national dishonor.

Editorial: A US embargo on import of foreign grains, currently supported by some Congressmen and the Farm Board, would be folly; it would threaten to isolate the US from all foreign trade, import or export, worsen unemployment, and damage the general welfare of the US people.

Sen. Hawley says has no plans to consider oil tariff.

Henry Morgenthau urges revision of European debts, tariff revision, and US guarantee of aid to France in event of unjustifiable invasion.

Denmark abolishes capital punishment. For past 38 years Denmark has not inflicted the death penalty, though official law provided for execution by guillotine.

Gov. Roosevelt says Commission report has removed all doubt on feasibility of St. Lawrence power projects, urges creation of power authority to carry out plan. Editorial by T. Woodlock: A recent study by W. Mosher comparing the public Ontario Hydroelectric system with the NY system found Ontario consumers paid somewhat less for comparable services. While this study was more careful than usual, differences in means of power generation may account for the result.

NY City 1930 expenditures were $1.334B, receipts also $1.334B, and bonded debt increased to $2.128B.

Bill introduced in NY State legislature requiring stock brokers and salesmen to be licensed and bonded.

Chemical industry is in rapidly changing state; aggressive research has lead to stream of new discoveries upsetting monopolies of older products.

A Paris bookstore has started a new tradition of launching books like ships. In presence of friends and admirers, the author breaks a bottle of champagne over the first copy to be formally placed on sale. Afterward, each buyer is given a glass with which to toast the author's health and success of the book.

61 years ago today, the first brokers' office operated exclusively by women was opened at 44 Broad St. The firm, Woodhull, Claflin & Co., was composed of two sisters, Victoria Claflin Woodhull and Tennessee Claflin. The New York World in 1870 describes the scene at their offices: "Outside on the walk there is gathered throughout the day an assemblage of men, who look anxiously in at the windows, ... and utter expressions of surprise and pleasure if they can but catch a glimpse of one of the members of the firm. Inside the office a doorkeeper has been placed who excludes those who have no real business with the firm." The door of the private office holds a sign saying "All gentlemen will state their business and then retire at once."

Market commentary:

Market wrap: Stocks up early (attributed to speculation on Wickersham report), sold off, then rallied impressively after steel production figures were released. Bond market strong on higher volume; US govts. firm at new highs; foreign steady to firm; corp. high grade active around yearly highs, rally in lower grade. Commodities mixed; grains down following Wickersham release; cotton up.

Conservative observers warn against reaching for stocks, advise buying on a small scale during reactions and taking profits on rallies.

Support again came in just as bears grew confident they could force prices through the mid-Dec. lows.

Considerable outside short selling reported in recent sessions by "traders who frequent customers' rooms"; as result, short interest is believed larger and weaker.

Decline in Gillette early this week said due to pool operations, though accounts are conflicting. General Railway Signal outlook considered encouraging; rails are continuing to install safety devices since since they reduce cost of operation.

Gillette seen likely to cut dividend, add to surplus reserves to fortify financial position after Autostrop merger. Steady earnings improvement seen likely, though it may take a year to realize full benefits from the merger.

Rail stocks have performed the best since year-end; may be partly due to Pres. Hoover's Eastern rail consolidation announcement on Dec. 30. This is encouraging to Dow theory adherents, who believe major upturns or downturns are indicated when both industrials and rails break into new high or low ground; this theory is believed to have forecast the major movements since the fall 1929 panic, including the Dow industrials' rally of almost 100 points after the panic.

Broad Street Gossip: Current market requires a lot of patience; decline has been more persistent and pronounced than any time in more than 25 years. As one broker advised: "If you haven't strong nerves, keep out of this kind of market." European newspapers writing of bread lines in the US might be surprised to read that in Dec., the worst month since the decline began, NY savings bank depositors added $75M; 90% of that money came from the worker.

A firm specializing in bank stocks points out total market value of 25 leading NY banks shrank from $10B in Oct. 1929 to $3B at the 1930 low, although “the banks ... are as strong as, if not stronger than, they were in Oct., 1929.” Bank earnings fell off markedly in 1930, particularly in the second half; attributed to recession, lower rates, decline in security prices, and need to maintain “unusual state of liquidity.” Following each panic year since 1905 (1907, 1914, and 1921), bank earnings have immediately returned to normal in the following year.

F.C. Goodenough, Barclays Bank pres., criticizes US hoarding of gold, calls for cancellation of war debts to US; calls for France to loan surplus funds or allow debtors to repay in goods; blames US boom and bust on tariff wall and accumulation of gold, allowing large credit expansion.

J. Farrell, US Steel pres., says opposed to wage cuts, would set recovery back two years; minimizes effect of tariff on manufactured exports.

J. Gorman, Chicago, Rock Island RR pres., believes depression starting to end; “People everywhere are feeling better, and that is a good sign. Things are at rock bottom and they certainly cannot continue that way. There is only one way out now, and that is up.”

Economic news and individual company reports:

Rail freight loadings for week ended Jan. 10 were 714,251 cars, up 98,869 from prev. holiday week, but down 148,210 or 17.1% from 1930 week, and down 200,187, or 21.8% from 1929.

Steel production in week ended Monday was at 44.5% vs. 40% prev. week, 37% two weeks ago, 69% in 1930, and 83% in 1929.

Refineries ran at 62.1% in week ended Jan. 17; stocks of gasoline increased 799,000 barrels to 40.384M; oil production was 2.094M vs. 2.085M prev. week, but down 567,650 from a year ago.

Money rates continue decline; acceptances, time money, and commercial paper rates hit record lows; commercial paper rates for best names 2 1/2% - 2 3/4%.

January liquidation of bank credit seems of about normal seasonal proportions, but is taking place mostly in security loans; loans to non-brokers have started to decline drastically for the first time. Leading banks still seem eager to strengthen already very liquid positions.

Survey of 21 trades in Eastern states finds 40 firms see outlook for business in 1931 as good, 92 as fair, and 21 as slow; first quarter outlook is seen good by 37, fair by 81, and slow by 48.

National City notes passenger rail revenues declined $414M from 1920 to 1929, while service actually increased; the business as a whole is now unprofitable.

In spite of 1930 decline in US construction, Sears home construction business has increased substantially; Sears lends lot owners up to 75% of value of house and lot, then builds house from plans supplied by owner or Sears architectural dept.

R. Lyons, Nat'l Chain Store Assoc. VP, notes chain stores throughout US have lowered price of bread to 5 cents/loaf while other retailers still charge 8-10 cents.

British exports in 1930 were 570.5M pounds, down 21.7% from 1929; imports were 1.046B, down 14.5%.

Italy's budget year ending in June likely to show 900M lire ($47.1M) deficit despite cuts in spending of $29.2M.

Total Canadian bond offerings in 1930 were $763.0M vs. $653.4M in 1929.

Total French casino profits for year ended Oct. 31 were 337M francs vs. 413M prev. year.

Companies reporting decent earnings: Warren Foundry & Pipe, Hudson & Manhattan Railroad (commuter rail), Brooklyn-Manhattan Transit (subway), Lerner Stores.

At the galleries:

The Metropolitan Museum opens a remarkable exhibition of Russian icons in spite of vigorous protests; Bergdorf Goodman is also showing a collection of icons purchased from the Soviet govt. by James Amster. Frederick Wight has an exhibit of 10 recent portraits of clipper ship captains; for those who have never seen one under sail, it's hard to believe there are still men alive who commanded them in the day of their prime The youngest captain was born in 1851, so is now 80. Two important letters by George Washington come up for auction, including one offering the portfolio of Secretary of State to Thomas Jefferson; other interesting items in the sale include the most complete set of the Kipling school paper ever offered in the US.

Jokes:

"Sam - the doctor says he will remove my appendix for $1,200. Louise - Oh, Sam, I'd much rather have a new auto."

The well-dressed and coiffed applicant asked the railroad chief for a position involving light work and a sizable salary. The grizzled veteran sat back and looked him over. "You bet," he answered. "I'll keep you in mind, and when I find two jobs like that, you can have the other."

New customer to broker: "When you are sure bottom has been reached, you can buy for me 100 shares of Steel." Broker: "When I know positively the market has reached bottom, I will gladly execute your order. And I hope you don't mind if I buy 100 shares for myself."

Tuesday, January 20, 1931: Dow 161.45 -1.44 (0.9%)

Assorted historical stuff:

Editorial: An avalanche of "tax reform" propaganda is spreading across all parts of the US. Everywhere, public spending is going up at the demand of the people who want the best of services ... until the tax bills come in. Opinion is so diverse in different locales, there seems little hope of a general formula, but two obvious remedies are often overlooked: consolidation of communities that have grown together physically, and repeal of Prohibition allowing absorption in taxes of the many millions of profits currently thrown to bootleggers.

Washington report: Pres. Hoover seen likely to take "one of the most politically courageous actions ever taken by a President" in vetoing the likely bill to provide relief from the Treasury for drought sufferers and the unemployed. This will be done knowing his enemies will charge he "lets abstractions stand in the way of relief of human suffering." The amount of money involved wouldn't strain govt. finances, but the precedent would be highly significant; Pres. Hoover is said confident the US doesn't want a dole even in emergencies. Public may support this stand by contributing privately to the Red Cross, particularly the wealthy. Sen. Reed (R, Pa.) warns against relief bill, says “we will have the worst shock of our history when we see the personal income tax returns in March.” House reapportionment seen likely to proceed; most state legislatures are dominated by rural members who will try to overcome the influence of growth in city population, but it won't be possible to do this completely. Wickersham report on Prohibition delivered to Pres. Hoover; weighs in at 90,000 words.

Farm Board chair. Legge says Board will sell commodities to Red Cross on interest-free credit basis.

Gifford Pinchot, Republican gov. of Pennsylvania, delivers blast to utilities in inaugural address, seen by some as opening salvo in 1932 Presidential run: utilities aim to be “invisible government to control the entire nation,” unjustly take many hundreds of millions each year from breadwinners. Reiterates stand favoring Prohibition.

Editorial: Recommendations of the Fish committee on US Communism are mainly sound, in spite of implication by Rep. Nelson (R, Maine) of overreaction. It's reasonable to deny aliens right to stay in the US if they're so profoundly dissatisfied they must advocate bloody revolution. However, Mr. Fish's proposal that the Communist Party be declared illegal is debatable, possibly bordering on government control over what the individual may think. Accuracy of the committee's estimate of 500,000 organized Communists in the US unimportant, since even a small fraction of that number, if fanatically devoted, commands serious attention.

Soviet rail conference orders all State enterprises to dismiss all employees with rail experience; employees must then report to labor exchange to get rail job or be sent where jobs are available. Hiding rail experience will be criminal act.

Editorial by T. Woodlock: US should not commit to any silver support plan requiring it to buy silver above normal coinage needs.

R. Brown, chair. of conference of Governors of oil producing states, urges limitation of imports by US of "blood-stained oil" from South America.

Agriculture Dept. reports per capita consumption of vegetables up 36% since 1915; sugar consumption up 33%, milk and dairy up 25%, meat up slightly. Consumption of grains for human food down 30% in past 5 years.

New Orleans to construct airport at cost of $1.5M.

Transcontinental & Western Air to immediately start air express service delivering coast-to-coast in 36 hours, soon to be cut to 24.

NY City Merchants' Assoc. committee approves legislation proposed by Comptroller Berry as step in clarifying the “intricate and incomprehensible accounting system of the city.”

Prof. Georges Claude, French scientist and inventor, to invest additional $2M for construction of plant in Santiago, Cuba to generate electric power using differences in temperature of tropical waters.

London buses end experiment with providing vanity mirrors for some seats. Patrons focusing on their reflections neglected to remain alert for sudden swerves or stops, and wound up being thrown on the floor. In the interests of safety first, no more mirrors are to be installed.

Market commentary:

Market wrap: Stocks sagged early on very dull trading; a number of leading shares hit new lows for the bear market, and some trading favorites broke sharply. Support came in around mid-day, followed by tentative rallies and retreats for the rest of the session. Bond trading quiet; US govts. firm, some new yearly highs; foreign steady; corp. mixed with higher grade firm but speculative irregular. Commodities quiet, little changed.

Weak spots included GE and Gillette; leading issues declined, and market was generally heavy at close.

Conservative observers now generally advise staying out of the market until something definite happens in either direction; most believe commitments can be delayed until earnings reports are out of the way.

Brokers that lend stocks privately to short-sellers report heavier demand than in some time, indicating short interest is extensive again.

Some traders believe banks will support stocks if they again approach mid-Dec. lows. This may be done since they banks have a great volume of bonds to distribute, and this would be more difficult if stocks are declining.

Stock valuations undergoing "realignment," with issues selling at a high earnings multiple coming down, while lower priced issues are holding better.

Caterpillar Tractor's 1930 net estimated at $4.25/share; at that figure, stock is about 7 times earnings and yields 10%.

Otis & Co. explain recent weakness of leading stocks - earnings in 1930 held up better for leading cos. than smaller ones; as a result their stocks were better supported while many smaller stocks were thoroughly deflated. Now, however, it's becoming apparent 1930 earnings may not be the bottom.

Broad Street Gossip: With production below consumption in many lines, prices are bound to improve; scarcity has never failed to correct a deranged price situation. The same rule may apply to stocks, since the floating supply of higher-grade stocks is smaller than it's been in years. Many traders are now looking to trend of steel production as indicating course of many industries. While many annual reports will show considerably lower earnings, balance sheets are generally as strong as ever, with better cash and working capital positions. This contrasts with the depression in 1921, when many corporations had to borrow money at exorbitant rates.

J. Klein, prof. of taxation at City College NY, opposes rise in US taxes; says reduction of rates and simplification would increase revenue; calls for legalizing and taxing wine and beer to increase revenue.

H. Bancroft, Wall St. Journal pres., says US govt. support of wheat “indefensible folly,” repeats past fiascos in support of rubber, coffee, sugar, and copper.

L. Liggett, Drug Inc. pres., meets with Hoover, says confident bottom reached and tide coming in; hits playing of politics during hard times.

Harvard Economic Society expects economic decline to end in first half, probably in first quarter; Dec. showed "less uniform tendency to decline" than previous months, with some areas improved; this isn't proof that decline has ended, but may be significant considering decline has approached maximum seen in past 50 years.

J. Farrell, US Steel pres.: “Let us recognize that the turn of this depression is here ... The low peak of the depression passed 30 days ago ... We are facing in this country a bright future, and as our conditions improve, so will those of the rest of the world.” General business improvement over past 30 days due not only to “national resources and confidence, but to steady, coolheaded thinking by the business men of this country, and to constructive efforts to avert panic and to avoid discouragement.”

Economic news and individual company reports:

Comptroller of the Currency J. Pole appears as first witness before Glass committee; advocates Federal board empowered to remove bank officials found guilty of “bad practices”; big city banks sound but rural banks suffering due to movement of deposits to larger centers; security loans generally safe but loans by banks to investment affiliates should be limited; advocates national branch banking system.

Bank of US bankruptcy hearings delve into complex transactions of Marcus-Singer “syndicate” with various Bank of US affiliates; syndicate included Manhattan Borough pres. S. Levy and Governor's Banking Commission member H. Pollock.

Fed. Reserve 1930 review estimates total corp. profits down 30%-40% from exceptional level of 1929. Total manufacturing payrolls declined almost one-third since June 1929. Over half the decline in total manufacturing production accounted for by drop in steel, auto, shipbuilding, and related industries. Fed. Reserve maintained easy money policy throughout year. Public works and construction increased substantially.

Farm wage index Jan. 1 was 129, down 21 from Oct. 1 and down 29 from Jan. 1, 1930; supply of farm labor was 113.8% of normal vs. 105.9% and 96.7%.

Sales of household electric refrigerators in 1930 were 770,000 units valued at $223.3M; number of families now using electric refrigeration about 3M, of total 20.4M wired homes. Electric Refrigeration News predicts 1931 household sales of 1M units valued at $286M.

Commerce Dept. reports Japan is third-largest US trading partner, taking 4.9% of US exports and supplying 9.8% of US imports.

French Budget Min. Palmade estimates 1930 budget deficit at 1.5B francs due to flood of extraordinary expenditures. Assoc. of French rail investors estimates total 1930 deficit of seven systems at 1.7B francs, demands increase in rate or cut in transport tax. Premier Steeg avoids proposed rise in wheat tariff.

British Labor govt. to propose requiring sale of farm commodities through large monopolies distributing directly from farmers to consumers. Between 150,000-180,000 Lancashire cotton weavers idle in labor dispute.

Canadian govt. ordinary revenues in 9 mos. to Dec. 31 were $285.2M vs. $351.3M; expenditures $280.7M vs. $265.1M; net debt on Dec. 31 $2.194B vs. $2.159B on Dec. 31, 1929. Business failures in first 11 mos. of 1930 were 2,163 with liabilities of $43.9M vs. 1,943 with $35.2M in 1929. Canadian life insurance cos. generally report better years in 1930 vs. 1929.

British drain of gold to France increasing once again. German marks weak due to persistent withdrawal of foreign credits.

Houses heading largest total bond offerings in 1930: J.P. Morgan($649.7M), Harris Forbes ($455.1M), Halsey Stuart ($435.3M), Chase Securities ($361.4M).

Chadbourne world sugar pact signed by major exporting countries.

Philadelphia Auto Show reports increased retail sales over 1930; demand was greatest in the higher priced $1,000-$5,000 class.

GE Q4 earnings were $74.2M, down 32% from 1929; full year $341.8M, down 23%. Auburn Automobile net for year ended Nov. 30 was $5.43/share vs. $21.23 prev. year; quarter ended Nov. 30 showed $0.97 loss vs. $3.80 profit prev. year. Grand Union sales for five weeks ended Jan. 3 were $3.373M, down 2.4% from 1929; full year $36.9M, up 10.5%..

Companies reporting decent earnings: Lincoln Printing (largest financial printer), Hygrade Lamp.

Theater:

Anatol - A satisfying revival of Arthur Schnitzler's play about a Viennese playboy's affairs - a welcome surprise, since this kind of "sophisticated humor is not in the Broadway vein." Only false note is in the final episode, The Wedding Morning, which "descends to slapstick in an apparent effort of the producers to send the auditors out into the night with a typical Broadway finale ringing in their ears."

Jokes:

"Assistant - The lady over there wants to know if this woolen jumper will shrink. What shall I tell her? Floorwalker - Does it fit her? Assistant - No, it's too large. Floorwalker - Then certainly tell her it'll shrink."

"Preacher - Johnny, don't you want to go to heaven? Johnny - Not yet."

Monday, January 19, 1931: Dow 162.89 -2.05 (1.2%)

A brief blather: I've seen some commentary that the stock market rally today may reflect the astonishing possibility that Mass. may elect a Republican Senator to Ted Kennedy's former seat - the idea being, this would prevent Congress from doing anything in the near future, which would be an improvement. I'm strongly reminded of the almost comical degree of concern shown in the 1930-31 WSJ about the eternally looming menace of an extra session of Congress ...

Assorted historical stuff:

Destruction of war material is still costing Germany large sums of money 12 years after the War. The 1930 budget contains increased spending for disposing of hidden ammunition dumps in recently evacuated occupied territories. Particular areas needing work include buried stores of deadly "blue cross" poison near Cologne, dumps of hand grenades and gas material near Coblenz, gas material and phosgen projectors near Kreuznach, and ammunition dumps in Westphalia.

Washington report: Sen. Robinson (D, Ark.) continues to introduce his food loan fund proposal with every appropriations bill; it was passed twice by the Senate, only to have House leaders block it without a vote. Robinson is apparently influenced by grim reports from his home state of farmers with failed crops, and merchants unable to extend further credit. The Administration feels direct relief by the Treasury would set a very bad precedent, but if Robinson continues his activities this may result in the dreaded extra session. Possible compromise would be a loan to the Red Cross. While House denied reports Treasury Sec. Mellon would retire March 4. Some Southern Democratic opposition seen emerging to party leader Raskob; with prospects for 1932 looking bright, a struggle for party control is seen likely. Fish Committee investigating Communist activities in US finds Russian govt. didn't sell wheat short to depress prices; committee recommendations seen unlikely to lead to any future legislation.

Editorial by T. Woodlock: Gov. Roosevelt is reportedly dissatisfied with the report of his St. Lawrence Power Commission recommending distributing power generated through existing utilities; other politicians have weighed in against this. The Commission decided this would be the most economic way to use the power generated; the state must now decide if it wants a development that makes economic sense, or one that subsidizes some communities at the taxpayers' expense and to the detriment of existing private utilities.

Editorial: A survey by the Amer. Agric. Chemical Co. concludes farmers will use 10%-30% less fertilizer this year. This would be a bad outcome; it would increase production costs and reduce farm income. Banks should encourage use of more, not less, fertilizer.

Editorial: Rails are complaining about unregulated and subsidized competition from waterways and trucks; they want these forms of transport to be regulated in the same way they are. It would make more sense to relax the regulations on rails to account for the new competition for their former monopoly. They should be allowed to lower rates to compete, abandon routes made uneconomic by competition, and operate their own trucks.

Traveler's Insurance reports motor vehicle accidents up 12% in 1930, deaths up 4%, and injuries up 13%.

Helena, Ark. has turned to Postal money orders and savings to transact business after last bank in town closed.

First airline between Russia and Scandinavia to start in summer; plans call for nonstop route from Stockholm to Leningrad, operated by Russian interests.

C. De Forest, Amer. Provident Society dir., urges all to spend as much as possible, but to distinguish between spending "as much as we can" and "as fast as we can."

Amer. Engineering Council advocates establishment of agency "to balance the forces of consumption, production and distribution in order that ultimately control may be imposed upon the nation's economic life."

Sir Thomas Beecham, British orchestra conductor and once one of England's richest men, now owes $700,000; much of fortune spent in 20-year struggle to establish permanent opera in England. Once large personal fortune of former French Pres. Poincare said to have "dwindled appreciably."

Market commentary:

Market wrap: Stocks were irregular through a very quiet weekend session; prices opened weak, recovered somewhat toward 11 o'clock, then sagged again in the last hour. Bonds generally strong, particularly high-grade. Commodities quiet; grains down slightly.

Week in review: Stocks generally moved lower, though encouraging resistance was seen on declines, with bears only able to force drastic breaks in isolated high-priced stocks. Higher grade bonds were generally up in spite of heavy new offerings, while there were weak spots in foreign and speculative issues. Credit markets continued very easy, with all rates in the money market working lower except call money, which held at 1.5% officially though 1% was available. Money ease accentuated by unseasonal liquidation of security loans, gold imports, and Fed. policy; encouraging signs seen ease is spreading to longer term bonds and loans. Gradual steel improvement continued. Grains fluctuated sharply, while cotton moved narrowly in spite of some bearish news. German marks down after budget deficit announcement; silver rallied but returned to record low at week-end, with Far Eastern currencies following.

Stock trading has recently become less active, reflecting reduced interest and mostly professional activity. Observers believe technical position has been strengthened due to increased short position.

Odd-lot (small) buying has reportedly been consistent on reactions; a considerable amount has been for cash, with the stocks taken out of the Street; believed to represent long-term investment.

Time money is at lowest rates in 37 years; this should make high-grade stocks attractive on yields, though immediate outlook is obscured by economic troubles.

Bank of France rate cut to 2% on Jan. 2 unlikely to cause desired outflow of capital from France until return of confidence in world political and industrial outlook.

Stock market has recently rallied intermittently, but overall trend has been down, and volume on rallies has been lower than on weak days.

Observers encouraged by greater stability in steel prices, and recent small rise in Dow steel average; the more conservative advise waiting to see if gradual uptrend develops in coming months.

Broad Street Gossip: "'It's a trader's market,' commented a trader ... 'As long as I have been down there, I haven't known it to be anything else,' replied another trader." Rumors have returned to the Street along with the recent decline; bears are growing increasingly bold, as seen in their attacks on the highest grade stocks including Amer. Can, US Steel, GE, Allied Chemical, Nat'l Biscuit, etc.

Procter & Gamble appears to be in "depression-proof" class; seen benefitting from drop in raw material prices while finished product prices have been stable. Vanadium probably under heaviest bear pressure of any stock recently; important bears have maintained positions in spite of announcement $3 dividend will be maintained. US Steel attractive to "world's canniest investors": Scottish shareholders increased position from 2,809 shares to 2,814 in the last quarter.

M. Taylor, US Steel finance committee chair., waxes philosophical on causes of the current depression. Modern innovations have expanded material goods and entertainment available; “so great has become the variety ... that if one were to enjoy the use of all of them it would call for a further quickening of the pace and of all the sensibilities ... and a certain wear and tear upon the individual ... Consequently, life has necessarily become one of high speed.” We've reached a point where productive capacity exceeds consumption demands. The measures to correct this aren't yet clear, but “like evolution in all other cosmic facts, ... these conditions in due time will be clearly appraised and new courses will be laid.”

Economic news and individual company reports:

Ford seems to be approaching 1931 conservatively; production schedule for first quarter is 40%-50% below 1930 level, which was unusually high starting up production of new model A. 1931 price cuts are only $5-$10 on standard models, vs. $20-$40 cuts by Chevrolet. Edsel Ford, pres., says worldwide reports from branches and dealers indicate steady improvement. New assembly plants set up in India at Bombay, Calcutta, and Madras, with parts to be shipped from Canada.

Fisher's wholesale commodity index declines for 6th week in a row, to 77.9 for week of Jan. 16, vs. 80.7 for week of Dec. 5.

US Dec. exports about $273M vs. $426.6M in 1929; imports $209M vs. $310.6M. Imports for the year fell about 30% in value but only 15% in volume.

New NYSE-listed securities (stocks and bonds) in Dec. were $212.0M vs. $141.7M in Nov. and $1.193B in Dec. 1929; full year was $7.813B vs. $15.668B in 1929, $7.762B in 1928, and $5.548B in 1927.

Butler Bros. survey of 2,000 US merchants finds them in strong position; inventories lowest in many years, finances liquid.

Youngstown district steel operations to rise 4% this week to 48%, fourth consecutive increase since late Dec. low.

Oil development reportedly being curtailed in Oklahoma and Texas; present fields seen able to supply market demand for months. Natural gas in wide oversupply in California, selling at relatively low rates.

F. Brownell, Amer. Smelting & Refining chair. (world's largest silver refiner), presents plan for stabilizing silver price through “gentleman's agreement” between governments on when to sell and buy.

German govt. acts to hasten price reductions by cancelling all price-fixing agreements on trademarked items that haven't been cut 10% since July 1.

French Chamber of Deputies unanimously approves first installment of $200M national development program to combat unemployment. Min. V. Boret says intends to fix price of wheat at about $7 per 180 pounds to protect French farmers.

Wall Street firms have been cracking down on employees' personal use of stationery, stamps, telephone calls, and telegrams; one firm reports saving $3,000/month.

Charles V. Bob, bankrupt runaway former stock promoter, enjoined from future stock sales after surrendering.

Companies reporting decent earnings: Peoples Gas, Light & Coke.

Theater:

Broadway is faring about as well as "might be expected, the theatre being able to carry the art of make-believe only so far." More theaters than usual are empty; many playwrights will now confess that bulge in their pocket is a rejected script. League of NY Theatres has apparently given up on controlling "ticketeers" (ticket speculators). Max Gordon announces Tilly Losch, along with Fred and Adele Astaire, have been signed for his spring revue. A couple of interesting imports opening soon: Private Lives, starring Noel Coward and Gertrude Lawrence, and Pirandello's As You Desire Me.

Joke:

"Bus Driver - Madam, that child will have to pay full fare. He is five years of age. Madam - But he can't be. I have only been married four years. Bus Driver - Never mind the true confessions; let's have the money."

"'Is the world round?' a school ma'am asked. 'No, ma'am.' 'It isn't, eh? Is it flat, then?' 'No, ma'am.' 'Are you crazy, child? If the world isn't round and it isn't flat, what is it?' 'Pop says it's crooked.'"