Friday, March 20, 1931: Dow 186.56 +2.61 (1.4%)

Assorted historical stuff:

Despite "apparent urgent wish" of Gov. Roosevelt, legislature seen unlikely to revive Broderick proposals for banking reforms; most legislative leaders appear to oppose any radical changes in banking laws at present. Gov. Roosevelt is expected to send the legislature a message on his ideas for banking "remedial legislation."

Washington report: Deficit for this year will be financed, with no thought of raising taxes due to economic conditions. Future deficits are another matter; continuing to borrow money would increase interest charges; “such a process could not proceed very far.” Aside from tax increase, possible targets for large reductions in the deficit include the sinking fund, postal deficit, and Farm Board operations; other possible spending cuts would be relatively small. Progressives may need a substitute for the farm debenture idea; it's understood foreign govts. have made known their strong objections and threatened reprisals.

Editorial: J. Farrell, US Steel pres. recently said: "There are indications that the world-wide depression in business is subsiding and that the upturn is beginning." His statement is "welcome as the notes of the wood thrush announcing that ... the dawn is appearing." He also calls for "thorough examination of economic conditions" and cooperation on international trade. It's indeed time for those things, as a look at the low Feb. trade figures shows. However, while economic conditions account for a great deal of the decline, some may be due to political factors; "whatever may be the causes, they should be made known in order to seek proper remedies."

Editorial: Urgent calls for an unemployment insurance law in NY to address the current crisis are misguided, as seen by opposition of both the state Federation of Labor and the Nat'l Assoc. of Manufacturers. Insurance won't help the already unemployed; "there is no human possibility of making insurance retroactive." As Gov. Roosevelt has stated, "It is of the utmost importance that unemployment insurance, like the other forms, ... be based on sound actuarial tables. This is the fundamental which will prevent a mere dole or gift on the part of either private agencies or governments themselves."

Yet another editorial smackdown between T. Woodlock and letter-writer E. McCue concerning extremely complex situation in the beleaguered anthracite (hard coal) industry. One interesting point concerns Mr. McCue's criticism of the industry's attempts to market their "clean coal": "All the money spent in trying to impress the buyers with the clean coal idea is wasted. What the masses of people want to know is 'how much.'" [I think clean here refers to amount of dust from handling.]

A. Swayne, GM VP, says trucks and buses already pay a large and adequate share of expenses for highways; calls on rails to display more initiative in coordinating highway and rail service. Says motor industry favors Federal regulation of interstate bus traffic but is strongly opposed to Federal truck regulation.

Sec. of State Stimson reports visas issued in Feb. for immigrating to the US were 10% of the normal quota; Congress failed to pass a bill to cut the quota 90%, but the State Dept. has effected the reduction by administrative means.

US Red Cross attains goal of $10M for drought relief fund after 63 day campaign.

Dr. P Arcaya, Venezuelan Ambassador, cites advantages his country offers to US capital, outlining natural resources and denying any possibility of revolution.

Dr. G. Stromberg of the Carnegie Institute proposed to a gathering of eminent astronomers that while the heavens and earth were made in six days, these were not 24-hour days but "galactic" days, taking about 250M years each. Since then we have passed through six more galactic days, making 3B years since creation.

Col. Starrett predicts buildings will grow much larger, covering entire city blocks, but not excessively higher, due to cost and inconvenience.

French Academy of Medicine opposes use of baking powder and other chemicals in making bread; says impossible to determine if such chemicals are harmful.

New Mexico has placed in service five ingenious machines that travel over roads at about 10 mph equipped with powerful electromagnets to gather in nails, tacks, bolts, etc. A year's operation removed 66 tons of metal from the highways and saved drivers about $270,000 in tire repairs.

Market commentary:

Market wrap: Stocks opened higher on accumulated buy orders; shorts "showed less courage than in the past" and were urgently buying to cover in the morning; general list advanced under leadership of steel shares; brokers also reported increased public buying. Advance faltered later in the day as rails retreated; however, general market showed "good undertone" and setbacks in leading utilities and industrials were limited. Bonds moderately active; US govts. rally; foreign again active and strong; corp. generally higher. Commodities quiet; grains down slightly; cotton barely changed. Silver reacted again, down 5/8 cent to 29 3/4.

Conservative observers still favor sidelines, but admit continued advance would be bullish signal; most interests inclined to wait "three days or so."

Strong spots included US Steel, Bethlehem, GM, entertainment shares, Macy, Sears, Ward, Lambert. Advances in utilities were relatively moderate. Crucible Steel weak after unexpectedly omitting dividend.

Feb. business statistics give concrete evidence of slow improvement, particularly in employment, steel, and residential building. Financial community has been skeptical on indications of business revival due to unfortunate early 1930 experience. However, this attitude is giving way to greater confidence; steel improvement has persisted in the past weeks as opposed to 1930, when downturn began in late Feb. While first quarter earnings will undoubtedly be poor, it seems likely their market influence will be offset by improving business trends.

A number of professionals and floor traders are now active in automotive shares on the belief that, as they were the first to decline before the general market broke in 1929, they may be first to reflect a general uptrend. A few brokers are favoring food shares such as General Foods and Borden, since they can buy raw materials at lower prices and have well developed distribution organizations. Considerable interest in Sears-Roebuck prospects for this month; a good showing is anticipated due to Easter shopping and better Midwest crop prospects.

Strong buying in GM, said to be by interests identified with management, reflects improved outlook. Sales in Q1 will be about 20% below 1930, vs. 35% decline for the industry; March production is about 15% above Feb. vs. an 8% gain last year, while dealer inventories are low; further gains expected in Q2.

Brokers report considerable switching by the public from stocks with suspect dividends to those whose prospects have held up better, indicating public is carefully watching fundamentals; this has caused part of the selling in rails.

F.S. Smithers note two effects that aggravated slide in investment trusts [similar to mutual funds] after the 1929 break: leverage (caused by senior capital with first claim on fund assets), and switch from trading at premium of asset value to trading at discount. However, these could also increase gains on a market advance.

Frazier, Jelke report most popular stocks in portfolios of 100 managed and 50 fixed investment trusts were AT&T, Consolidated Gas, US Steel, Standard of NJ, GE, NY Central, and Union Carbide; believe these “portfolios invaluable as a guide to intelligent commitments.”

Investors who bought stocks late last year seen unlikely to sell on rallies; "considerable accumulation has taken place for interests who intend to hold the shares for the next sustained bull market"; rallies since haven't induced selling from these holders, which has reduced floating supply in many high-grade issues.

Broad Street Gossip: "Close students of economic conditions" will be very surprised if things don't improve over the next 6 months. The year starts with probably the largest number ever of big contracts, in hand and announced; rails, big industrials, and the Federal and local govts. have announced construction programs running into the billions. "Big interests who have accumulated millions because of their faith in the country and ability to see into the future have not been discouraged ... They intend to build and construct on a larger scale than ever before." What some call a nervous market may be jangling more nerves for the bears than the bulls; new highs for the year have often outnumbered new lows, a reversal from the late-1930 market. Manufacturers are concentrating mightily on reducing costs due to lower earnings and desire to maintain wages at current levels.

Economic news and individual company reports:

Trial of 5 Bank of US officers set for Mar. 30; indicted are: Bernard Marcus, Sol Singer, Isador Kresel, Henry Pollock, and Herbert Singer.

Eastern Regional Savings Conference opens. W. Bennett, Emigrant Industrial Savings pres., says savings banks potential stabilizers of business, calls for advertising campaign aimed at “man on the street.” W. Evans, Boston Five Cents Savings pres., cautions against depending on “legal” status of bonds to buy, notes that during 1930, municipals in Ariz., Colo., Fla., Mass., Mo., NJ, NY, N. Carolina, Tenn., and Texas defaulted.

Florida Citizens' finance committee recommends general sales tax as emergency measure, consideration of refinancing $650M of outstanding local bonds by a long-term state bond issue.

Republic Steel and Youngstown Sheet & Tube match Carnegie Steel price advance.

Fed. Reserve reports money in circulation Mar. 18 up $8M to $4.562B, total Reserve Bank credit outstanding down $35M to $907M. Member banks in NY City report brokers' loans up $94M to $1.913B; loans on securities to non-brokers unchanged at $1.846B.

Oklahoma Corp. Commission continues oil production curtailment indefinitely, pending oil conferences in Texas and Washington. East Texas production rose to 95,000 barrels/day in week of Mar. 19; potential production may reach 400,000 barrels/day by the time hearing on allowable production is held Mar. 24.

Agriculture Dept. reports US meat production and consumption was lowest since 1922. Farm Board reports prices of all classes of meat now below production costs; recommends "producers consider more carefully the regulation of production"; notes difference between wholesale and retail prices has widened substantially in recent years, suggests comprehensive study of ways to improve retail distribution.

Farm equipment shipments in Q1 will be only 20%-25% below the "phenomenally large" Q1 1930. However, the outlook is slow; large Soviet orders will be completed this month, and production not including those orders is down about 40% this year; dealer inventories are high and farm buying power lower; large manufacturers are trying to compensate by offering more liberal credit to farmers.

Former Farm Board chair. Legge becomes pres. of Internat'l Harvester.

Sugar prices have recently rallied on developments favorable to the Chadbourne stabilization plan, particularly recent law enacted by Dutch Indian govt. to restrict production in Java (second-largest exporter); raw sugar is up to 1.29 cents/pound.

M. Gandhi and Indian mill owners plan to form company to help dispose in other countries of foreign cloth held in India.

Bank of England able to increase gold holdings 1.097M pounds sterling in week, bringing total to 142.826M, due to recent rise in sterling vs. francs; foreign exchange circles optimistic the Bank can replenish holdings over the next several weeks. Bank had to reduce credit outstanding 2.110M to maintain bill rates.

Feb. silver production down sharply; US production 3.274M ounces vs. 3.480M in Jan. and 5.161M in Feb. 1930; attributed to low prices.

US Embassy in Buenos Aires reports trade with Argentina in Jan. down over 60% from 1930.

Smuggling of diamonds into the US has been greatly reduced since the new tariff law made polished diamonds duty-free.

Companies reporting decent earnings: Central Illinois Light, Amerada (oil), Arundel (sand and gravel), Blauner's (department store).

Movies with suggestive titles:

The Hot Heiress - first movie by musical comedy writing team of Fields, Rogers, and Hart. Workman meets beautiful heiress when a rivet he fails to catch while working on a skyscraper flies through her window and sets her apartment on fire; "bare and silly."

Lonely Wives - Attempt at film farce; vaudeville impersonator takes place of a husband one night so the husband can go out and relieve the loneliness of another woman who, amusingly enough, turns out to be the impersonator's wife; "unusually asinine."

Joke:

Testimony of trackwalker after head-on train collision: 'You say at 10 o'clock that night you were walking up toward Seven Mile crossing, and you saw No. 8 coming down the track at 60 miles an hour?' 'Yah.' 'And you looked behind you and saw No. 5 coming up the track at 60 miles an hour?' 'Yah.' 'Well, what did you do then?' 'I got off the track.' 'Well, but then what did you do?' 'Well, I said to myself, dat's one hell of a way to run a railroad.'

Thursday, March 19, 1931: Dow 183.95 +3.34 (1.8%)

Assorted historical stuff:

People have marvelled at Henry Ford's apparent freedom from detail, but he does have a system for keeping track of things; one old employee recently called him the "greatest sampler in the world." On one recent rainy day, Ford was with a visitor when 20 new cars right off the line came winding up the road and stopped in front of the house. Ford went right outside and closely examined the wheels on one, the engine on another, the underside of another, and so on, then waved the drivers away. Apparently the knowledge Ford may order such tests anywhere and anytime keeps the vast organization on its toes.

NY State legislature kills 40 banking reform bills proposed by Banking Superintendent Broderick, saying more study is required.

Washington report: Gov. Roosevelt's apparent favor among Progressives may hurt him with party leaders, who might be in position to block his nomination since a 2/3 majority of delegates is required. Likely beneficiary would be James L. Cox, former Ohio Gov. and 1920 Dem. Pres. candidate.

Editorial: Rep. Fish (R, NY) says the US has already lost the world wheat market and will lose $1B in exports in the next 4 years thanks to its aid in building up Russian Communism. While private capitalists are playing into Russian hands, we suggest to Rep. Fish that the US govt. also is, particularly in its disastrous farm policy. This policy, more than Russian production, is what has cost the US the world wheat market, since it fixed prices 50% above world levels.

Deposed Soviet premier Alexei Rykoff restored to Central Committee along with Nickolai Bucharin; action seen as move to reconcile Right and Left wings [both found guilty of treason and executed in 1938].

J. Leary, ex-NY World writer, to study systems of unemployment relief for Pres. Hoover; will visit England, Germany, and Switzerland, but not Russia.

British Premier MacDonald reprimands followers for lack of teamwork; suggests coalition govt., with Liberal leader David Lloyd George entering Labor cabinet to attack unemployment problem.

Editorial: Rep. Borah's recent attack on capitalists at the Progressive's convention was an "amazing compilation of mistaken assertions." For example, the Senator said: "IT&T stock was put to the public at 149. It shrank to 26 ... GE went to the investors at 101. It shrank to 45"; he then calculated a loss to investors in the billions, supposedly stripped from the public by a "coterie of capitalists." However, these weren't the prices at which the stocks were offered, but simply the 1929 peak and subsequent low; the high prices the Senator indignantly quotes were made through speculation by the general public.

Editorial by T. Woodlock: Dr. Charles Beard claims Progressive opinion is against wholesale nationalization of electric utilities, but it demands the govt. crack down on “stock juggling inflation” and clear up confusion about what constitutes a “fair return.” Evidence for this claim of moderation is nowhere to be found in Sen. LaFollette's statements or in the Progressive “organs of opinion.” Can Progressives clarify if they believe govt. utility operation is a good thing in itself, or only a possible lesser evil?

AFL Pres. Green says war profits reprehensible, but knows of no practical way to prevent them; only way for govt. to exercise control is through recapture tax.

Navigation on Lake Erie officially opened this week, about 3 weeks earlier than usual, due to unusually mild winter.

NY State Senate likely to pass bill removing restriction from prescribing of medicinal liquor.

G. Dawnay, Anglo-Norwegian Holdings pres., predicts another profitable year for whaling industry, though industry will face overproduction in 1932.

US air mail in 1930 was 8.004M pounds, up 12.7% from 1929; revenues were up 6.2%. Provisions of the Watres air mail law are expected to lead to eventual replacement of current planes that fly at 125 - 135 mph with new, faster planes with top speeds about 150 mph.

Spending on airplanes by army and navy to July 1, 1932 will be about $39M for 978 planes; orders for $24M will be placed in next few months to help industry.

New independent car company De Vaux-Hall, to start production about Apr. 1; car prices will be $595 - $795.

A can of corn packed 43 years ago was eaten at the Calif. Packers Assoc. convention at Del Monte, Calif. O. Huffman, Continental Can pres. and one of the eaters, stated the contents were just as palatable as if newly packed.

Horace J. Morse dead at 93; was senior member of A.M. Kidder & Co. and adjutant general of Connecticut during the Civil War.

Market commentary:

Market wrap: Stocks opened with rails still under pressure; however, industrials and utilities were well supported . Shortly after noon, a much firmer tone developed; then, unexpected steel price rise was announced and carried the whole list up sharply; even rails abruptly changed direction, though the rail average closed with a small loss. Bond market active, mixed; US govts. mostly steady; foreign unusually active and strong; corp. high-grade mostly firm, some weakness in rails and particular issues. Commodities strong; grains up moderately, corn strong; cotton up substantially.

Conservative observers warn against reaching for stocks on the rallies in spite of improved sentiment; advise reducing long positions on further rallies.

Strong spots included US Steel, GM, and Johns-Manville.

Bull pools recently seem to be withdrawing support from their stocks when bear pressure develops.

Market students are discussing stocks likely to benefit from improvement in silver; most often mentioned is Kreuger & Toll and the associated Internat'l Match.

Market observers are paying close attention to the Dow rail average, since it has indicated the general market trend on numerous occasions. The recent rail average has recently lost slightly more than 50% of the previous recovery, which is thought to be an important technical level for indicating a change in trend; many therefore contend that rail action in the next week or two "may give a definite cue to the trend of the market."

Rail freight loadings figure was somewhat encouraging; decline of 17.1% vs. 1930 was better than the 19.2% average decline of the previous two weeks.

Hornblower & Weeks note mixed bond picture, with high-grade strong but lower grade reacting more to stock market than money market conditions due to uncertain outlook for business earnings.

Broad Street Gossip: News of the past few days indicates things are "a little better all around," including better trade reports, improvement in textiles, better statements from the big Fifth Ave. stores, slight reduction in unemployment, evidence commodity prices have hit bottom, and more active buying. Many market writers believe the market will trend up for the rest of the year, but "advise caution in making commitments." Recent developments indicate people still have money in spite of depression: NY savings bank deposits increased in $40M in Feb.; bond sales have been near record levels; brokers report continued odd-lot (small) buying of higher-grade stocks.

Middle West Utilities reports business conditions in its territory spotty, with industrial activity generally at low rate but with a few indications of improvement; New England did best, while South remained unfavorable.

Dr. J. Klein, Asst. Commerce Sec., sees positive business signs. Confidence has improved; “shrewdest students are virtually unanimous in thinking that the bottom of the depression has been reached.” Corporations like Penn. RR taking advantage of low money; strengthening in residential building, steel, autos, cotton; employment improved somewhat in Feb.; internat'l developments positive.

Economic news and individual company reports:

US Steel reports two major positive surprises. Carnegie Steel subsidiary announced an unexpected price rise of $1/ton starting Apr. 1, shortly after reaffirming the old price last week; this was seen as indicating they had become much more optimistic on business. US Steel announced it had received an order for 125,000 tons of structural steel for construction of "Radio City," one of the largest single contracts ever. Some other steel prices are also reportedly firmer, including wire products. However, price concessions have been reported in some districts, and there hasn't yet been enough buying to test any of the recent price changes.

Steel production continued moderate uptrend; week ended Monday was 56 1/2% vs. 54% prev. week, 53% two weeks ago, 74% in 1930, and 94 1/2% in 1929; US Steel rose to 55% from 54%. Automotive steel continued gains; structural steel looks strong thanks to some large projects, and important upcoming highway building. Machine tool demand continues to drift, but some lines of industry that are normally good buyers have become more active.

Continental Shares (investment trust co.) postpones annual meeting to give officials time to respond to lawsuit; another stockholder files suit charging Continental paid Cyrus Eaton $2.4M over market value for certain stocks. Three suits filed against Transamerica (another inv. trust co.) alleging reported company profits for 1929 were inflated by $29M. Another Bank of US director testified he relied entirely on bank officers for information on bank activities, and signed reports as a matter of form.

BLS reports employment in 15 industrial groups up 0.1% in Feb., payrolls up 4.7% (based on survey of 42,383 establishments employing 4.575M). Employment in manufacturing industries was up 1.4%, and payrolls up 7.5%.

Treasury Sec. Mellon reports US must furnish about $500M by Apr. 11 to pay for veterans' bonus loans applied for up to Mar. 14; Gen. Hines estimates another $390M will be needed in following four weeks; new $200M short-term issue expected shortly.

US electric output for week ended Mar. 14 was 1,664 GWHr, down 3.4% from 1930, vs. 4.8% decline the previous two weeks.

Observers encouraged by Bank of England's ability to buy substantial amount gold in open market. Registered British unemployed Mar. 9 were 2.692M vs. 2.635M Mar. 2 and 1.564M a year ago. 5,000 coal miners in South Wales strike to protest wage cuts of 14 cents/day.

Chile able to show small govt. surplus in 1930 in spite of depression.

Australian Federal Treasurer Theodore defends fiduciary currency bill providing for printing of $90M in new currency notes against charges it is unsound; “Australia is faced with a breakdown of its monetary and economic systems and the country is practically paralyzed.”

New Zealand faces govt. deficit of $6.250M vs. $3.750M estimate; next year's deficit also likely to exceed $22.5M estimate.

German trade surplus rose to $41M in Feb. from $34M in Jan.

NJ Gov. Larson proposes bill authorizing state to appoint commission to take over finances of cities in financial difficulty. Texas repeals law allowing bondholders to put cities into receivership when payments weren't made.

F. Robinson, Union Pacific RR VP, estimates consumption of natural gas in 1929 replaced about 59M tons of coal, or 1.2M carloads, about 2% of all rail traffic.

Combined net of 95 utilities (excluding telephone and telegraph) in 1930 was $1.025B vs. $1.007B; gross was $2.382B vs. $2.230B.

RCA's sharp improvement in the final quarter last year has reportedly been continued since. Correction to earlier article - projection for potential home “little theatres” showing sound films was 20M, not 20,000.

Movie:

Body and Soul - ineffective spy melodrama; "In a minor role, in the opening sequence of the film, Humphrey Bogart gives a better account of himself than do the principals."

Theatre:

Miracle at Verdun - New adaptation of the German play about resurrection of 13M war dead. Staging is a failure; vaunted talking film sequences are "suggestive of the old nickelodeon films"; "guttural noises" and "groveling tendencies" of the resurrected soldiers are grotesque rather than solemn. Author's original conception, while striking, is inconclusive. The soldiers find "their places have been taken by others as if they had never lived and died." Their wives have remarried, their sons are becoming soldiers, and factories are making even more destructive weapons of war. Going to the great peace conference, they find they are not welcome; the US Ambassador informs them they are undesirable surplus population.

Poem by F. Caverly:

"I know a man with income huge, Who says he can't - crass subterfuge -
Afford to buy or spend his cash, Because of that darn market crash. ...
When men are out of jobs, you know, It helps if those who have the dough
Would spend a LOT. Be not abashed; Forget the day the market crashed.
I urge you, get your savings out; Your funds from hiding places rout;
Most things are cheap and they're not trash; Make history of that market crash. ..."

Stock market joke:

Trader 1 in Broadway house - That man in the end chair seems to be very bearish. Trader 2 - Bearish? I should say he is. He just sold short on the Einstein announcement that the world would explode in 100,000,000,000 years.

Wednesday, March 18, 1931: Dow 180.61 -3.00 (1.6%)

Assorted historical stuff:

Since Prohibition was adopted in the US, tourism has become one of Canada's largest industries. In 1930, 5.4M cars carrying about 21.5M tourists crossed into Canada, vs. 4.5M cars in 1929. The Ontario govt. made a net profit of $7.5M on sales in its 120 liquor stores, which it hopes to increase to $10M this year.

Editorial: As noted yesterday, "a decade of tax rate reduction and rapid retirement of the national debt has definitely ended." Higher taxes will likely be required for several years; deflation makes things worse by reducing tax revenue for the same volume of business. Congress faces the hard job of readjusting spending to the new price level so it can aid recovery by cutting taxes instead of raising them. One crumb of comfort is that debt was reduced from $25.5B to $16B in the good years.

Editorial by T. Woodlock: Hits price-support schemes, which have perhaps never been so widely deplored yet so much in use. “Capital must have the discipline of pressure. Ease the pressure in the slightest and capital rushes in like a storm into an area of low barometer.” Price fixing systems merely prolong the agony of inefficient producers, with no advantage to anyone; relief, if necessary, should be given by means other than price fixing, even by the dole if we must, rather than “valorization” or “stabilization.” The US has some trouble accepting these ideas, possibly due to generally soft living conditions compared to the Old World. In fact, the US harbors a set of ideas that “together make a most incongruous mess.” We want abundant and cheap credit for all, especially the “little fellow,” but safety and high interest for our bank deposits; everyone is entitled to go into any line of business and succeed, and if he doesn't, it's the fault of a “big fellow”; and so forth. “We could do with a little more hardness of head in our economic thinking.”

Washington report: Issues involved in the electric utility dispute are becoming clearer. Pres. Hoover is looking to extend regulation of power companies to fill in gaps where states can't act, particularly interstate business. On the other hand, Progressives say regulation has failed, since power companies "regulate the regulators." Power companies have a solid legal basis for rates, which would be hard to lower by law; therefore, Progressives are attacking indirectly, hoping that govt. run competition will force utilities to lower rates. There's little basis for the speculation on whether Progressive support for Roosevelt would help him in 1932; in the past, support of Progressive Senators hasn't even enabled Presidential candidates to carry the Senator's own state. Sen. Borah (R, Idaho) says believes any agreement to restrict oil imports or curtail production would be illegal restraint of trade.

Four special deputy sheriffs and several strikers injured in battle with 100 striking metal workers; deputies were to escort outside workers to Phillips Petroleum.

In the war-torn section of France, all but 3,900 of the 640,000 buildings destroyed during the war have been rebuilt. Of 4M acres of farmland ruined, all but 100,000 have been restored to cultivation. About $3B has been paid in cash damages in the areas destroyed, with about $240M remaining to pay.

Ex-Kaiser Wilhelm II remains richest German despite revolution, inflation, depression, and political disturbances; fortune is estimated at 150M-250M marks vs. 140M before the war, when he was only fifth richest in Germany. Fortune is largely German industrial shares and various castles and estates.

Dr. A Stetbacher invents new explosive more powerful than any on market, and less sensitive to shock than other explosives; combination of penthrit [PETN, later used as ingredient in Semtex plastic explosive and by recent attempted shoe and underwear bombers] and nitroglycerine.

Pacific Air Transport division of Boeing will start 7-hour service between Seattle and San Francisco.

Trans-Lux opens first movie theater with “daylight” screen lighted from rear, allowing theater to be adequately lit.

Pennsylvania RR grade crossing accidents in 1930 were 564 vs. 830 in 1929 and 933 in 1928.

Bank of America celebrates 100th anniversary of purchase of present site at William and Wall St. for $70,000; land alone now valued at $6M.

The Chrysler Building in New York is piped for gas to cook, heat, etc., from the subbasement to the roof 1,046 feet above the sidewalk. A 6 inch gas main runs up to the 70th floor, with outlets on each floor. The highest gas customer is the all-male Cloud Club occupying the top 3 floors.

Market commentary:

Market wrap: Stocks advanced across the list early, but encountered resistance and then a reaction in the afternoon; selling started in rails after M.K.T passed their dividend, but spread to industrials; decline picked up momentum late and trend was sharply down at the close. Bond trading more active; US govts. higher; foreign generally strong; corp. highest grade firm, lower-grade and speculative irregular. Commodities weak; grains mixed, corn and some wheat months down sharply; cotton down sharply. Silver fell back 1 cent to 30 3/8 after sharp rally; setback believed technical.

Conservative observers pointed to market action as justifying advice to stay on sidelines.

Otis & Co. note that at the Feb. highs, rails and industrials had regained about 50% of the Sept.-Dec. decline, and at last week's low had lost half of this recovery. "This is a fairly typical performance for the first three or four months following the absolute lows of important bear markets"; similar patterns occurred in 1904 and 1908. However, important break through last week's lows would indicate relatively weaker market.

Douglas Aircraft rallied on announcement govt. will spend $18M on aircraft of various types. Reynolds Tobacco advanced on success of $1M weeklong ad campaign for new cellophane wrapped Camels. American Smelting weak on silver decline.

Brokers report more small bruins in their midst than ever before. In past bear markets, few of the public knew the mechanics of short selling, but "expansion in financial learning" over the past 10 years has widened knowledge of this tool.

Broad Street Gossip: Market has shown more resistance to selling, even in those stocks "hammered persistently" by bears. While many of last years bears remain in that camp, many have switched to the bull side. Recent buying has shown "greater assurance" than in most of 1930. In 1929, people bought then investigated; now they investigate then buy. Short interest has built up over the past few weeks; borrowing demand by short-sellers was at its highest this year. One piece of recent good news is levelling off in commodity prices since start of Feb.; this may indicate bottom has been reached.

Editorial: The trade figures for Feb. at first look very pessimistic, with trade continuing its decline since the depression's start. However, a closer look reveals some reason for hope. Much of the decline is due to price deflation; volume decline is more moderate for most goods. Also, when the depression began there was a mountain of surplus to work through; considerable progress has been made in doing this. Inquiries for goods indicate conditions are improving; longer-range planning is needed by business to prepare their selling organizations for revival.

G.M.P. Murphy: “modern banking has performed a service which has raised immeasurably the standard of living of the entire civilized world and, by the same token, has made itself indispensable for the continued maintenance of the even flow of goods and capital.”

Economists have compiled well-researched charts of money rates over the past 50 years, and have found the course of rates invariably forecasts business upturn by several months. According to that pattern, the downward course of rates that started in late 1929 should soon be followed by business recovery; the slow improvement starting last Dec. could therefore be the start of a fairly good upswing.

Sir Ashley Sparks, Cunard Steamship dir., says current serious slump in British shipping aggravated by political as well as economic factors, but worst of slump seems about over and indications point to marked improvement in spring and summer travel; construction of new 1,038 foot liner proceeding as scheduled.

Economic news and individual company reports:

Missouri-Kansas-Texas Lines [rail] passed its dividend; while this is a relatively small rail, other rails and stocks with suspect dividends declined, including B.& O., NY Central, and Westinghouse. Rail freight loadings for week ended Mar. 7 were 723,534, up 41,534 from prev. holiday week, down 17.1% from 1930 week, and down 23.6% from 1929.

$1.5M judgement granted against former pres. of failed Bancokentucky; first judgement from numerous suits regarding bank failures of several months ago. Receiver has indicated he will go after Bancokentucky stockholders if assets aren't enough to meet liabilities. Continental Shares, an investment trust business, sued by stockholder claiming mismanagement caused $38M shrinkage in assets; losses incurred by buying securities during period of industrial depression, when "ordinarily prudent business men would not have made such investments."

Income tax receipts Mar. 1-14 were $45.0M vs. $49.4M; for fiscal year to Mar. 14, $1.216B vs. $1.302B. Customs receipts Mar. 1-14 were $14.6M vs. $19.1M; for fiscal year to Mar. 14, $272.9M vs. $398.6M.

Washington hopeful on agreement to restrict oil imports in line with curtailed domestic production; all importing cos. but Standard of Indiana have agreed to reduce imports and negotiations with Stanolind are ongoing. Administration is also willing to meet with committee of oil men early in April to help work out plans for industry stabilization. Oklahoma is waiting for action on East Texas fields before extending curtailment in their state, which is scheduled to expire March 31; Texas Gov. Sterling has introduced a bill to take curtailment away from the Railroad Commission and put it under a new state oil and gas commission. Refineries ran at 64.8% in week ended Mar. 14; stocks of gasoline increased 32,000 barrels to 45.821M. Crude oil production in week ended Mar. 7 was 2.191M barrels/day, up 33,850 from prev. week but down 392,650 from a year ago.

Agriculture Dept. reports Feb. 15 farm product price index 90 (vs. 100 prewar level), down 4 from Jan. 15, down 41 from a year ago, and lowest in 20 years.

Fed. Reserve member bank statements of the past week revealed encouraging $29M purchase of non-govt. bonds, while selling $9M of govts. large scale buying of non-govts. by banks would help general bond market. Liquidation of bank loans continues, with total loans now at $15.377B, down $1.636B since Oct. 1.

New state and municipal bond issues continued to draw strong bidding.

Average yield of foreign bonds offered in the US in 1930 was 5.49% vs. 5.81% in 1929, lowest yield since 1919.

Commerce Dept. receives optimistic reports on Germany, Netherlands, and India, though gains are mostly psychological.

French $150M loan to Italy now seen unlikely; negotiations have been suspended, and Italy is now reportedly more optimistic on issuing new bonds.

NYSE seat sold for $310,000, up $10,000 from previous sale.

1930 earnings reports: GE $1.90/share vs. $2.24; Warren Bros. (pavement) $6.08 vs. $6.05; Calumet & Arizona Mining $1.46 vs. $9.17.

At the galleries:

Major exhibition of 100 paintings from NY art dealers, for benefit of Women's Fund for unemployment. Includes pieces by such prominent artists as Neri de Bicci, Rubens, Pontormo, Goya, Monet, Hoppner, Renoir, Cezanne, Segonzac, Degas, Matisse, and many others. Boston Museum of Fine Arts has unusual exhibition devoted to a woman silversmith, Hester Bateman; little is known of her life other than the record of her work from 1774-90. Arden Galleries is showing a collection of contemporary furniture and art objects inspired by early peoples of the American continent, including Mayan, Inca, Indian, and Spanish Colonial design.

Entertainment:

Tragic death of Lillian Leitzel, who fell while doing her trademark "back hand flange" high in the air, calls attention to decline of the aerialists who once dominated music halls and circuses. Ranks of the "be-tighted gentry" are dwindling; distractions of modern life have narrowed the circus field, while movies have offered an easier medium for young talent. In the US, the Ringling Brothers have absorbed most of the other major circuses; in England, the circus is now seasonal; in France and Germany, it plays mostly in the provinces. In the 1850's and 60's, aerialist "families" were well paid and in demand. Over time, demand for thrills increased until "death defying stunts" became "death inviting stunts", including loop-the-loops with bicycles and then cars, and the turn-of-the-century Desperado, who dove from the top of the tent into a runway. Competition from movies brought even more dangerous performances, including the "human fly" who fell to his death a few years ago in NY and the "human cannonball" who died before 5,000 spectators in Atlantic City last summer after being fired from a gun in an airplane.

Joke:

"'Perhaps you can tell me. What does it cost to divorce one husband and marry another?' 'I'm sorry - I don't know the present rate of exchange.'"

Tuesday, March 17, 1931: Dow 183.61 +2.85 (1.6%)

Assorted historical stuff:

"Indian Potentate Premier Plutocrat" - World's richest man is the Nizam of Hyderabad, 45-year old monarch of 13M Indian Muslims. Fortune is estimated at over $2B; during the war he contributed over $50M to the British govt. He is said to have over $500M in gold in his treasury. On a visit to New Delhi two years ago, he traveled in a special train of 22 Pullman cars; his luggage was sent ahead in four special trains, one devoted to carrying part of his collection of 400 cars.

Editorial by T. Woodlock: Stockholders agitating against Bethlehem Steel's executive bonus system are giving every reason but the real one, even if they don't consciously recognize it: “a strong feeling on the part of most of us ordinary folk that a million dollars is too much for anyone.” The executives involved have clearly done a good job; Bethlehem's expenses are proportionally lower than US Steel's, bonuses included. Perhaps when they realize their true motivation is envy of others' riches, the Bethlehem stockholders who are to vote on the bonuses may be released from this “neurosis” and cast a fair vote. This problem is also apparent in the agitation for public control of electric utilities, which is motivated less by desire for low rates than by anger over the other fellow's profits.

Washington report: In the past few days many realized that their 1930 taxes would be substantially higher even though incomes were lower, due to the expiration of the 1929 1% tax cut; this hit the lowest 1 1/2% bracket hardest. The US, however, faces even higher taxes and a rise in debt; the current year will show a $500M deficit, and even with a business recovery it's hard to see revenues rising enough to avoid tax increases, since much of 1928-29 revenues came from capital gains and corporate taxes. In addition, spending may rise for the Farm Board, veterans, and unemployment relief measures. Public reaction to a tax hike is uncertain; this would be the first peacetime increase in income taxes. Political parties have been exchanging mimeographs, which are “the only known combination of words” containing a “higher percentage of pure buncombe than Senate oratory. ... But the really ridiculous aspect is that newspapers print these things and offer them to their readers as news.” The statements, though sponsored by Congressmen, are mostly written by “publicity men in party headquarters,” as the newspapers well know. Another ridiculous spectacle is that of Republican and Democratic Senators trading charges on who is responsible for record peacetime spending; “It so happens that both of them are right.”

Assoc. Against the Prohibition Amendment estimates repeal would raise $882M this year from taxes on liquor sales.

Henry Ford, in AP interview, sees prosperity in present low-price era rather than false prosperity that speculation begets; wages not cut in Ford plants; predicts reelection of Pres. Hoover, advises against govt. ownership of utilities.

Russia outlines plans for reorganizing collective farms along capitalist lines; equality of wages will be ended and farmers paid according to production.

Editorial: Railroads and shippers are locked in a battle over whether truck transport should be regulated as rails are. This involves some complex questions of whether trucks are paying their full costs and whether competition is in this case ineffective to determine reasonable charges. However, it's worth noting that shippers were just as fervent for rail regulation 20-30 years ago as they are against truck regulation now - could they be trying to have it both ways?

G. H. Hall, Civil Lord of the Admiralty, predicts new life for Britain's coal industry since fuel oil can now be produced cheaply and practically from coal.

Union Carbide has developed plastic Vinylite, which can be used for furniture, window frames, and many industrial purposes. "Experts believe the development of plastics will be among the most important factors in the next few years."

War Dept. to order 388 airplanes at cost of $18M; will bring total plane strength to 1,800. US Navy to order 12 high-speed (300mph) bombers for $525,000.

NY City taxicabs travel about 900M miles/year vs. 1.347B miles by mass transit vehicles; drivers declared about $26M annually in tips received.

In first 9 weeks of the year, 213 people were killed by cars in NY City, increase of 13% over 1930.

NY State Industrial Commissioner F. Perkins reports deaths in industrial accidents in Feb. were 122, down 43 from Jan. and down 24 from the 5-year Feb. average. Causes included 31 vehicle accidents (24 cars, 5 trains, and 2 horse drawn), 24 falls from elevators, 13 falling objects, and 6 “strains.”

J.P. Morgan to build NY City's only bronze subway entrance, on corner of Wall and Broad Streets.

Market commentary:

Market wrap: Stocks opened under bear pressure, but resistance soon developed; rallying began, with utilities particularly strong and leading industrials pushing ahead; advances were extended in the afternoon. Bond trading dull; US govts slightly lower; foreign mostly firm; corp. irregular, rails in good demand.

Commodities strong; grains firm, corn up sharply; cotton up very sharply on short covering. Copper remains at 10 - 10 1/4 cents, with buying small. Silver continued sharp rally, up to new 1931 high of 31 3/8 cents vs. Feb 16 record low of 25 3/4.

Conservative observers still favor sidelines; ability of stocks to move ahead for several days would be good indication.

Bulls encouraged by trade reports of continued gradual improvement, rally in silver, and on the technical side by recent effective support for leading stocks in face of discouraging developments, and large short position as reflected in heavy borrowing demand in the loan market.

Recent stock market irregularity seen accurately reflecting a very mixed business picture, with moderate improvement in some lines including autos, steel, and textiles, but disappointing progress in others including rail loadings, copper, oil, and retail trade. Inconclusive bear-bull contest and technical market seen likely to continue while conditions are so indefinite. A number of nimble operators in leading houses have made profits recently by looking for stocks in which a heavy short position has developed, and going long; this has touched off many minor rallies in individual stocks over the past week.

Kreuger & Toll US certificates and Internat'l Match preferred hit new 1931 highs; strength attributed to rally in silver. Woolworth in demand on reports of better March business. Gillette has broken out to the upside after a bear-bull contest last week. Internat'l Cement weak on rumors of price cut; Feb. production and shipments are down sharply from 1930. Oil shares slightly firmer in spite of another crude oil price cut by Union Oil of Calif.

A substantial part of recent high grade bond demand is reportedly coming from investment trusts [similar to mutual funds].

J. Oliphant & Co. see a market advantage for car stocks in that they've already been deflated for about 2 years vs. 1 1/2 years for rest of the market; major carmakers stocks peaked early in 1929.

Berlin stocks and currency continued firm; financial circles optimistic on apparent return of funds sent out of country last fall, turn for the better in employment.

Broad Street Gossip: Notes willingness of “master minds of business” including Pennsylvania RR, NY Central, Rockefeller, and AT&T, to spend large sums on expansion; they have earned vast sums “through their ability to see into the future. In the long run, they always add to their wealth, as well as ... their shareholders, and usually profit from depression.” Ability of market to absorb $2.5B in recent financing without a ripple indicates we're truly “in an age of big business”; veteran traders can remember when bear drives were launched based on $200M in new financing.

Editorial: World cotton consumption figures are grim, indicating world depression in cotton manufacturing and increased consumption of Indian cotton. Remedy could start with scrapping of Farm Board, with "its dangerous theory of 'orderly marketing,' stabilization, and throwing of monkey wrenches into the market machinery" and return to business principles of reducing costs of production, avoiding heavy surpluses, and letting markets function.

S. McKelvie, Farm Board member, denies the Board's sales of wheat abroad constitute “dumping.”

Col. A. Woods of the President's employment committee says employment situation throughout US is somewhat better than a week ago, based on encouraging reports from regional agents.

J. Campbell, Youngstown Sheet & Tube chair., says depression one of the severest ever experienced, but sees indications bottom has been reached, “outlook is encouraging for a gradual increase in volume through the year.”

Economic news and individual company reports:

Texas Railroad Commission hit back after Gov. Sterling accused them of failing to enforce oil curtailment: “It seems Pres. Hoover would like to shift the responsibility upon the Railroad Commission of Texas for his own dereliction in failing ... to stop importation of foreign oil ...”

NY State Banking Dept. takes possession of business and property of some Bank of US affiliates to continue liquidation process. Motion granted for trial of five Bank of US officers. H. Satterlee to confer with Gov. Roosevelt on Rosoff plan for reorganization.

Banks are now in position to buy about $2B in non-govt. bonds, while remaining quite liquid compared to the past; this would substantially help business recovery. Since Oct. 1930, banks have shown no inclination to buy non-govt. bonds, possibly due to bank failures and concern over the economy. However, this may change due to current very high liquidity and pressure of low earnings.

US Feb. exports $226M vs. $349M in 1930 and lowest since 1914; imports $175M vs. $282M and lowest since 1916. While Feb. is a seasonally slower month, observers had expected a better showing due to drastic decline in the previous few months.

NY State Railroad Trainmen's union seeks to cooperate with NY rails in promoting placing of all transportation, including buses, trucks, water carriers, pipelines, and air transport, under the same regulatory restrictions governing rails.

Since organization of US Steel in 1901, receipts have totalled over $30B; dividends paid on common totalled $891M or 160%, while $1.453B was reinvested.

US automotive exports in Jan. were $15.5M vs. $16.4M in Dec. and $31.2M in Jan. 1930; Denmark became leading buyer of US passenger cars with 121% unit gain, followed by Canada and India.

Light weekend rain or snow fell in some US areas, but still no general relief for areas suffering from winter drought.

British rail workers refuse to accept wage cuts decreed by Nat'l. Wages Board; union leaders had urged acceptance of the cuts.

Canadian report: In 11 months ended Feb., govt. revenue was $322.7M vs. $402.1M; expenditures were $331.2M vs. $310.1M. Govt. net debt on Feb. 28 was $2.208B vs. $2.156B a year earlier. Rail car loadings for the year up to Mar. 7 were 460,501 vs. 563,139.

Industrial Rayon announces it will guarantee prices to customers against declines for 60 days.

International Nickel 1930 net was $0.67/share vs. $1.47; world consumption of nickel 88M pounds vs. 130M and 117M; sales declined rapidly in second half. Vanadium 1930 net $3.04/share vs. $5.26. Caterpillar sales kept at "encouraging pace" so far this year by govt. road machinery and tractor orders; sizeable business expected from Hoover Dam project.

Movie:

River's End - The Canadian Mounties, "favorite subject of silent films," finally have their day in the talkies. Plot "presents the familiar movie theme of the supposed criminal who looks exactly like the officer of the law."

Jokes:

Two middle-aged businessmen sat in the smoking room of a club criticizing the young men of today. Said one: "Look how reluctant the young men are to marry and settle down." "That's so," said the other. "They seem to fear marriage. Why, before I was married I didn't know the meaning of fear."

Theological lecturer - Some admire Moses, who brought the old law; some Paul, who spread the new. But after all, which character in the Bible has had the largest following? Voice From the Back - Ananias. [Lied to Peter concerning financial matter, was struck dead on the spot - Acts 5.]

Monday, March 16, 1931: Real Estate Special Report

Historical stuff:

Wall Street, probably the world's most valuable thoroughfare in proportion to length, is now possessed by about 30 owners. While there's always a market for Wall St. property, no one wants to sell; “Unlike land almost anywhere else on Manhattan, it is not subject to varying business conditions. Property values there never depreciate. A change of ownership generally is at greatly increased prices.”

Buildings about ready for occupancy: the new Waldorf-Astoria at 49-50 St. and Park-Lexington Ave.(2,253 rooms, all equipped with radio and “wired for television”; over 500 de luxe rooms with high ceilings, open fireplaces, and boudoir baths; private rail siding under hotel for guests owning private railroad cars); new 50-story Irving Trust headquarters at One Wall St. (grand reception hall 3 stories high and 100 feet wide along Wall St.); Empire State Building (2.2M sq. ft., to have 25,000 tenants, $65M cost; seen drawing tenants from financial district and many other areas; reject nasty gossip in some quarters about proximity to garment district); new 60-story City Bank Farmers Trust building at Exchange Place and William St.

Buildings under development: Met. Life new office building at 24-25 St. and Fourth-Madison Ave.; 67-story office building at Pine, Pearl, and Cedar St.; 36-story Maritime Exchange building at 80 Broad St.; 35-story Commerce building at 155 E 44 St.; revolutionary “all-glass” 3-story building for Phila. Fund Society Bank.

Development of far East Side between 23-63 St. and 2nd Ave - East River proceeding apace, looking to reclaim residential glories of 100 years ago. Many large plots have been assembled along 2nd Ave. in anticipation of the new subway. Growing residential areas include Jackson Heights, Mamaroneck, New Rochelle, Yonkers, Bronxville, Mt. Vernon, White Plains, Maplewood, West Orange, Stamford, Norwalk, Darien, and Greenwich.

H. Mandel notes that while Manhattan has been losing population year by year to commuting, there recently seems to be an increasing return to living in Manhattan, with residents drawn by more “dignified and handsome” apartment buildings, convenience, and other advantages of city living.

Jan. report of Nat'l. Assoc. of Building Owners and Managers covering 1,935 buildings in 41 cities with total space of 165.6M sq ft. shows office vacancy rate of 14.7%, vacancies enough to take care of normal business expansion for at least 3 years. About 7.9M sq ft of new space will come on market this year.

Thompson-Starrett, since its organization in NY in 1899, has executed 1,246 contracts involving expenditures well over $1B; recent NY buildings include the Waldorf-Astoria and Downtown Athletic Club. Almost all work has been done under “limit of cost” contracts in which it guarantees limits on building costs and time, while taking only a fixed fee; any cost overruns are borne by the company, while cost savings pass on to the owner.

Comment and analysis:

F. Goode of Brown, Wheelock compares real estate market to convalescent from a “long-deferred but necessary operation”; patient is weak, but ordeal is mostly behind him. Real estate slump was due to overproduction brought on by excessive optimism, loose credit, and entry into construction field by “millionaire ex-merchants with a limited background” but limitless confidence and access to funds. In 1927-29, the more experienced and conservative were overruled and their warnings ignored; boom continued as long as general business held up; when stocks collapsed in 1929, rental business gradually softened, while some buildings started during the boom continued to come on the market; fortunately, incidents of “real distress” and default are isolated. Lessons for future: more careful investigation by lenders and bond buyers; elimination of “compaisant” appraisers willing to inflate valuations; return control of construction to experienced hands; temporary pause of 1 to 3 years in building until vacant space can be absorbed.

G. Mortimer, NY Title & Mortgage pres., notes distinct uptrend in NY real estate, though situation remains far from normal. Rents are increasing on Park. Ave.; many important homes recently bought; mortgages now readily marketable, all large mortgage institutions now actively seeking acceptable applications as means for meeting eager demand for their securities. Uptrend even more encouraging in boroughs and outlying areas.

W. Greve, NY Investors Inc. pres. says better quality real estate resisting forces of deflation as it has in similar periods in the past.

C. Noyes notes major real estate deals have come to standstill since Oct. 1, but in the past it has been “right at that moment light is coming out of darkness and better times are dawning ...”

Douglas Elliman reports real estate bore up well through early part of depression but has suffered some setbacks since; however, rental situation reasonably sound with 9.4% vacancies in East Side rentals vs. norm of 10%; rents may be reduced slightly but “no panic in rents”; lull in building should be beneficial. Good income-producing real estate now undergoing “emotional liquidation”; this is a buying opportunity.

Fred Ley notes increasing confidence that real estate industry is slowly but surely recovering from 1930 slump. Remembers past periods of depression and sees same signs that marked recovery then, including abundant and cheap money, more optimistic mood, and low cost of construction. Time for indiscriminate building is past, but “wise builder, who has both courage and discretion” has an opportunity. “It still is true that one cannot rightly be 'bearish' on the United States.”

C. Babbage, US Realty & Improvement Corp. pres.: “impossible to prophesy accurately” when prosperity will return, especially with regard to real estate. However, situation would be easier if there were no new laws for a while. Inflation in real estate was caused by ease of borrowing money; many involved hadn't been through a depression and didn't sense they might have to pay back loans when conditions were less favorable.

P. Grimm, Real Estate Board of NY pres: “We have reason for satisfaction over the manner in which real estate has withstood the shock of a worldwide economic reasjustment. It has suffered by no means so widely and deeply as many other commodities.”

T. Mersereau of the NY Real Estate Securities Exchange says the Exchange, formed 15 months ago, has filled the need for a place the real estate operator can go to the public to raise capital for large projects. Considering basic soundness of real estate, believes there has never been a better time for “public to invest wisely in attractively priced real estate securities.”