Friday, April 3, 1931: Dow 169.89 -0.93 (0.5%)

Assorted historical stuff:

Ford Motor is in a much stronger financial position during this "protracted depression" than the last one in 1921, when it ran into a cash shortage. 1930 earnings were about $55M, on world production of 1.5M cars and trucks, vs. $81.8M on 1.95M in 1929; cash resources are over $300M. Henry Ford seems serene in face of distressing conditions, and has been content to lose some market share this year rather than engage in intensive sales campaigns. Expansion plans are going forward as usual; plants are being built at "Bombay, Calcutta, Madras, and Multan" to assemble and distribute cars throughout India; further progress has been made on rubber plantations in Brazil; additional iron ore land has been acquired in Michigan, as well as natural gas prospects in Pennsylvania. Ford is also working on project to "agriculturalize industry" by finding new uses for farm products; scientists at the Dearborn lab are working on substitutes for many materials now used in auto production, and Ford recently bought several thousand acres in Michigan for use as an experimental farm, at which workers freed up by inventory taking in the summertime can be employed. The 20 million'th Ford car will come off the assembly line about April 14.

Editorial: The Justice Dept.'s recent campaign against trade associations including the Bolt, Nut, and Rivet Mfrs., the Asphalt, Roofing, and Shingle Institute, and, most recently, the Sugar Institute, is likely to hurt business confidence by making members of over 2,000 other trade associations unsure of their legal position. This is particularly true of the sugar complaint, which uses charged phrases such as "increasing profits," "coercion," "blacklisting," and "spies." The facts hardly support charges of excessive profit; the largest sugar refiner is earning less than in 1918-19, when the industry was under government control. If govt. is really interested in protecting consumers from high prices it might look into the duty on raw sugar imposed by a few Western Senators, which almost doubles price of refined sugar.

Editorial by T. Woodlock: No fewer than nine electric utility bills have been introduced in the NY State Legislature by Democratic leaders; these bills, together with the remarkable recent law that prohibited utilities from contributing to relief funds, clearly demonstrate "intense dislike and hostility toward" private electric power. Source of the emotion is plainly the industry's relative prosperity over the past decade. While abuses have occurred, there has been nothing like the checkered history of early rail development; in fact, there has been steady development of service and lowering of rates. Rather than excessive rates, the industry's chief offense is that it's earning 7 1/2% on invested capital of $12B, "and that is more than some of us ... can endure to see. ... 'But,' many may say, 'it is the same thing! Reduce profits and you will reduce rates.' It may be so, but all human experience is against it."

Campaign against Mediterranean fruit fly ends as Federal inspection in Florida is discontinued after no evidence of infestation found; campaign started in April 1929, when discovery of the pest appeared to threaten Florida citrus crops.

Port of NY Authority signs contract to insure Holland Tunnel and new Hudson River bridge at 178 St against damages; tunnel insured for $30M, bridge for $25M.

Scientific research into the formerly obscure metal aluminum, largely sponsored by Aluminum Co. of America which has half the world's production, has created hundreds of new uses. Initially popular in kitchen appliances, it is now used in "airplanes, ink, furniture, cables, paint, nails, tableware, pipes, auto parts, fireworks, welding powder," and for many building uses. US now refines 200M pounds yearly; it's estimated that aluminum forms 1/12th of the earth's crust.

Sir William Mills, inventor of bombs used by the Allies during the World War, is now experimenting with bulbs in a garden on the French Riviera. Over 75M Mills bombs were used during the war.

Number of German mark millionaires has declined from 10,000 before the war, inflation, and reparations "melted the country's wealth away," to 4,000 now.

American Locomotive has enclosed along with its Q1 dividend check a circular describing its new 780,000 pound, 108-foot locomotive that reads like a car brochure: “triumph of dynamic symmetry combining immense power, high speed, ... and grace of lines.” It boasts a “starting effort” of 85,060 pounds, which will no doubt appeal to the car enthusiast fond of “leading the charge after traffic lights change.”

Market commentary:

Market wrap: Stocks showed considerable activity in spite of influence of Passover and Easter holidays. Market sluggish in first two hours, with bears successfully attacking isolated stocks including Allied Chemical, Worthington, and Vanadium; utilities also weak. Selling intensified and broadened to leaders at mid-day, with Steel hitting a 1931 low below 138. However, bears were unable to force heavy liquidation, and a brisk rally broke out in the final hour as many traders covered short positions before the holiday. Bonds mixed; US govts. little changed in spite of announcement of large new issue Apr. 7 or 8; foreign mixed with European strong but S. American irregular; corp. high-grade in demand but rail, speculative and convertible issues heavy. Commodities soft; grains mostly somewhat lower; cotton off moderately. Silver declined 1/2 cent to 27 5/8; silver brokers puzzled, since statistical situation continues favorable; selling reported from China and India.

Conservative observers believe technical rally is overdue, may come Saturday; advise clients to take advantage by reducing long positions; continue to favor stop-loss orders. Believe market will be more selective when it does stage a lasting advance; advise sticking to companies that have good earnings and outlook.

Brokers report public attitude toward the market in the past few days has been one of "watchful waiting."

A repeat of the heavy forced liquidation that took place in late 1930 is considered unlikely; "stocks are in stronger hands, and many security owners have greater confidence regarding the long-term outlook," so are unlikely to "throw over their shares" as they did last fall, when banks were failing in many areas.

Berlin stocks continued higher in past week, though volume was low; discount rate cut of 1/2% to 4 1/2% expected soon.

Kreuger & Toll has been relatively well supported during recent declines; buying may reflect European interests betting on political improvement; reports of pool operations not confirmed. US Industrial Alcohol rallied after it cut dividend to $2 annually from $6 instead of suspending it as expected, and end of alcohol price was announced. Responsible brokers are steering clients away from International Nickel, since it appears to be under pool control. IT&T is subject of rumored foreign buying; a small pool is also believed operating in the stock.

Jackson Bros., Boesel & Co. note this is season when chain store sales increase; see interesting possibilities in Woolworth, Grand Union, and J.C. Penney.

Broad Street Gossip: The Street reports a large percentage of recent short selling has come from “three big bears” who were very successful last year. GE is said to be target of heavy short selling by several large operators, though “history teaches us that no one ever made money selling GE short for a long pull.” Recent market has been difficult to trade, with declines seven days in a row; traders averaging in or buying on signals such as decline in volume are out of pocket. Preferred stocks are leading the lists of new highs, though common stocks of the same companies are near the year's lows.

Rep. J. Parker (R, NY) says consummation of 4-party Eastern rail consolidation plan will be decided aid to recovery; predicts adoption would be followed by over $500M of spending on improvements; believes plan will be filed with ICC within 2 weeks.

Editorial: Now that the Farm Board has decided to stop supporting wheat after the current season, why continue supporting it now? This only adds to the huge surplus to be sold at a loss. At a time of Treasury deficits, it doesn't make sense to keep buying more wheat on which the loss will be about 40 cents/bushel.

Economic news and individual company reports:

GM balance sheet strengthened in 1930; inventories were cut $52.2M to $136.3M; cash and marketable securities rose $52.2M to $179.0M; working capital rose $29.7M to $281.0M. GE is keeping tight control of inventories; as of Dec. 31, they were $60.1M, down 24% from a year earlier, and lowest in 10 years. Ratio of inventory to sales was 16% vs. 19.5% a year earlier.

Interior Sec. Wilbur says oil importing cos. have shown "fine volunteer spirit" [in agreeing to curtail imports]; sees hope of solving present oversupply crisis in oil industry if oil producing state authorities and operators show same attitude.

US business failures in March were 2,604, a record for that month but only up 1.5% from Feb.; liabilities were $60.4M vs. $59.6M in Feb. Total failures for Q1 were 8,438, also a record for the period and up 15% from 1930; liabilities of $214.6M were up 27% from 1930.

Fed. Reserve reports money in circulation Apr. 1 up $74M to $4.621B, total Reserve Bank credit outstanding up $85M to $943M. Member banks in NY City report brokers' loans down $33M to $1.875B; loans on securities to non-brokers down $38M to $1.792B. Money market was quiet over the month-end despite brief firming in call money; easier outlook seen for next 10 days. Deposits of 21 largest NY City banks and trusts as of Mar. 25 were $9.049B, down from $10.075B on Dec. 31 but up from $8.231B a year earlier.

All member banks of the Los Angeles Clearing House Assoc. will cut rates on savings deposits 1/2% to 3 1/2%; similar reductions have been made or are expected in other areas, including Boston, San Francisco, and NY City. This is expected to strengthen the market for bonds that savings banks can legally buy, particularly municipals. Dow average yield of 20 long-term city and state bonds is now 3.87%.

Gold imports to NY in Q1 were $84.911M; only $100,000 was exported, for net gain of $84.811M; net gain in Q1 1930 was $111.985M.

Dow average of 8 iron and steel products was unchanged at $44.23, low for 1931.

Bank of England reserve position weakened sharply in past week, but this is believed due to temporary end of quarter factors.

Registered British unemployed Mar. 23 were 2.580M vs. 2.640M Mar. 16 and 1.639M a year ago.

World sugar conference in Paris adjourns until after Easter to allow Dutch delegates to reconsider demands; important details remain unsettled.

Annual meeting of the world's largest corporation, AT&T, costs about $25,000, of which $23,000 is for postage to mail the meeting notice and proxies.

Pennsylvania RR plans to buy and recondition four ships to operate weekly service between Philadelphia and Europe.

Final figures on March Chevrolet production show 79,603 cars and trucks, 4,000 above preliminary report, 18% above April, and most since May 1930.

Pullman (passenger rail cars) in Feb. announced its first monthy loss from operations in years.

Companies reporting decent earnings: United Gas Improvement, Peninsular Telephone, Assoc. Portland Cement Mfgs. Ltd.

Movie:

The Finger Points - Second film to open in a week based on murder of Jake Lingle, Chicago reporter [shot dead June 9, 1930 in a crowded pedestrian tunnel under a Chicago train station - murder shocked the nation and Lingle was hailed as a martyr, until it was discovered he was on Al Capone's payroll]. Starring Richard Barthelmess and Fay Wray; once again, Clark Gable plays the gang lord who orders the killing. This time the writers come closer to telling the truth about events leading to the killing. However, though "the individual scenes are handled with resourcefulness and competently acted ... the trouble with the film is the incredibility of the plot and treatment of character."

Jokes:

Clergyman - Brothers and sisters, I will preach to you this morning on the present style of women's wearing apparel, taking my text from the Book of Revelations.

"The Smiths are on the balcony and can hear what a young couple are saying in the garden below. Mrs. Smith - 'I think he wants to propose. We ought not to listen. Whistle to warn him.' Mr. Smith - 'Why should I? Nobody whistled to warn me.'"

Thursday, April 2, 1931: Dow 170.82 -1.54 (0.9%)

Assorted historical stuff:

Transcontinental Air Transport plane crash in Kansas kills 8; Knute Rockne among the dead.

Washington report: Deficit for the 1932 fiscal year (starting June 30), based on current conditions, is estimated at $946M. If it was reduced to $500M, a tax increase could responsibly be avoided by skipping the $400M sinking fund payment and borrowing the small remaining amount. This could happen through a combination of business recovery and spending cuts. The latter will be harder since money for 1932 is already appropriated, but $100M or more could be saved if Farm Board stops operations. Sen. Capper (R, Kan.) defends Farm Board against Sen. Reed's proposal to abolish it; says Board hasn't been "given a chance yet to show what it can do."

Editorial: Sen. Borah has proposed a surtax on high-income taxpayers to close the deficit. This may sound good superficially, but not on a closer look. The surtax would apply to only 371,754 taxpayers. The people may like being coddled by politicians, but it's safe to say their "sense of fair play has not sunk so low ... [they] would be willing to let 1/3% of the people bear the burden of the coming Treasury deficit." In 1929, the top 1/3% of the population paid $974M in income tax on $12B income; the next 1 1/3% paid $13.6M on $12.4B; and the other 98%, with income of $70B, paid no income tax. [Note: A version of this editorial has appeared many times since in the Journal. It was much more convincing back then, before Social Security and Medicare taxes.] Meanwhile, Prohibition is depriving the Federal govt. of perhaps $800M in tax revenue, and much more in state taxes; the bootlegger's profits come not from the top 1/3% but from millions of voters.

Republican W. Austin wins special election for Senator from Vermont, defeating Democrat S. Driscoll, who had favored Prohibition modification.

After some trepidation, general opinion has turned in favor of German govt's recent adoption of rule by decree, since this will enable program for economic rehabilitation to be followed with minimum interruption.

Recent earthquake near Managua, Nicaragua may end proposed canal project, since it would have suffered enormous damage in the quake.

Editorial: Gov. Roosevelt looks likely to sign the St. Lawrence River power bill based on the more reasonable scheme favored by a majority of the commission he appointed, which doesn't open the door to State distribution of power. In doing so, he gives up his earlier position and chooses "commercially sound procedure and safeguarding of the State's finances in preference to a presumably useful political issue." Decade-long delay in development has at least had the benefit of preventing another possible "$200M mendicant like the Barge Canal."

Editorial by T. Woodlock: ICC's referral of the old rail price controversy to the Justice Dept. indicates it sees a possible violation of the antitrust law. This may be so, but will be difficult to prove. Antitrust law "can prevent ... corporations engaged in a given industry from agreeing not to compete; it cannot force them to compete if they, in fact, choose not to ..." While lack of competition strongly suggests an agreement, this can't be assumed but must be proven.

"Two decades ago at the beginning of the automobile era" roads and highways were rivers of mud except when frozen hard in winter or turned to dust in summer. Since advent of the car with its need for hard roads, billions have been spent on paving but only 700,000 miles of the 3.024M mile highway system has been surfaced. It's estimated $2.5B will be spent in 1931 on improvement of highways and streets, mostly in well coordinated work looking toward a national system.

British inventor develops strong, resilient asbestos sheet that can be molded into fireproof car bodies at half the cost and weight of steel; three largest British carmakers are experimenting with the invention.

GE has developed a vacuum tube able to detect heat radiated by faraway stars. The tube can detect 1/100,000,000,000,000,000 of an ampere, which compares to the power of a 50-watt lightbulb as two drops of water to a year's flow over Niagara Falls.

Hollywood now has an extensive botanical collection of flowers and shrubs to ensure authentic backgrounds for films, and also steadily employs about 20 professionals making flowers from paper or waxed cloth to duplicate more exotic varieties based on photos.

Market commentary:

Market wrap: Stocks declined most of the session, with majors including US Steel and GE drifting downward and bad breaks in some trading favorites; automotive shares including GM were relatively strong, while rails were a weak spot. Decline picked up steam late in the session, though there was a minor recovery near the close. Bond trading mixed; US govts. down slightly on talk of new financing; foreign govts. active and strong; domestic corp. mixed with rails and tractions higher, utilities steady, but convertible issues irregular. Commodities very weak; grains break badly, wheat down substantially, corn plunges to new season low and low since 1922, other grains down sharply; cotton down substantially. Copper remained at 9 3/4 - 10 cents. Silver declined 5/8 cent to 28 1/8.

Market observers remain cautious although a technical rally appears overdue; see no sign of imminent reversal.

Business news was mixed, with rail freight loadings in week ended Mar. 21 gaining more than seasonally to a new 1931 high, but first decline in steel production this year. Stock traders may have also been rattled by the sharp break in grains.

Broad Street Gossip: One broker received a buy order for 100 shares of US Steel to be executed when the “shorts are through liquidating stocks they borrowed from others.” Advice to buy on breaks and sell on rallies is again not working very well in the past few weeks, as there have few rallies to sell on. Recent decline attributed partly to tax selling by traders who made good profits early in the year. Stocks that have acted best during the recent decline include American Can, Woolworth, and McKeesport Tin Plate. Gillette 1930 report showing earnings of $3.25/share was better than expected, and showed lack of foundation for many rumors circulating when the stock was making new lows.

Potter & Co. recommend Cuba Railroad first mortgage 5% bonds, now selling at about 66 to yield 8 1/2%, on grounds “interest has always been paid, although the road has passed through three revolutions, two interventions, one moratorium and three major economic depressions.”

Recent bear drive on GM used clever tactic of selling through a broker associated with Raskob and du Pont interests, creating illusion of liquidation by interests close to the management. Reports were also "industriously circulated" that GM's dividend was in danger, though this appears to be false. Recent bear operations in automotive stocks were helped by reports of declining demand for automotive sheet steel. However, Iron Age says auto prospects remain good and suggests the decline may be a result of extreme caution by carmakers anxious to avoid mistakes of 1930; some factories are reportedly readjusting production every week based on retail sales reports.

Recent shipment of gold from France to Germany, though small, considered highly significant in banking circles; this was first shipment from France since last July. France has accumulated gold steadily since stabilization of the franc in 1928; holdings have grown from 28.9B francs to 56.1B, leading to charges gold standard had broken down and stability of other currencies was threatened. This shipment demonstrates franc can weaken against other currencies and lead to prompt shipment of gold. It also demonstrates return of German confidence that was so badly shattered by last fall's elections.

L. Rosenwald, Sears VP, says business somewhat slow but sees every indication of steady readjustment to normal conditions.

T. Watson, IBM pres.: "Based on information gathered by our representatives in all parts of the US and abroad, there are unmistakable indications of business improvement which should shortly be reflected in a better demand for merchandise of all kinds."

Economic news and individual company reports:

Six of twelve jurors chosen for Bank of US trial; the trial may begin early next week.

Steel production uptrend reversed; week ended Monday was 55% vs. 57% prev. week, 56 1/2% two weeks ago, 75% in 1930, and 95% in 1929; US Steel rose to 56 1/2% from 55 1/2%. Uncertain whether this decrease is just a “breathing spell or whether it marks a definite relapse from the upturn” since start of year; decrease is small, but this is the time of year when production usually peaks. Most encouraging news was higher demand for construction material; improving weather is expected to further stimulate construction activity. Price picture looks less encouraging; prices have stabilized, but at lower levels, with some recent attempted increases not holding. Decline in automotive orders seen due to extreme caution by carmakers since uptrend in production still appears strong. Machine tool business continues uneven with no marked improvement in March in spite of good inquiries.

March auto production by makers other than Ford was 187,848 cars and trucks, up 26% from Feb. but down 24% from 1930; Q1 was 465,884, down 27%.

With about 3/4 of Treasury debt maturing within the next 2 years and 7 months, Treasury is anticipated to shift to long-term for new issues.

Call money rate returns to 1 1/2%.

US electric output for week ended Mar. 28 was 1,681 GWHr, down 1.5% from 1930, vs. a 2.3% decline prev. week and 3.4% two weeks ago.

State gasoline tax collections in 1930 reached a new high of $522.1M vs. $448.2M in 1929; California collected highest amount, $40.0M.

Texas Railroad Commission agrees to raise allowed East Texas oil production to 125,000 barrels/day over next 90 days due to large new well discoveries.

Foreign currencies rose due to holiday influence and report of lower-than-expected British deficit.

French govt. strengthened as budget for 1931-32 finally passed by both chambers of parliament; small surplus predicted.

Followup international wheat conference on disposal of world surplus likely to be called in London May 18.

The London Stock Exchange is completing one of its dullest fiscal years in history; governing authority is besieged with proposals to attract the public into the market. Many brokers want the ban on advertising lifted; demands also made for more adequate information for investors. Drastic changes likely in coming year.

NYSE seat sold for $300,000, off $10,000 from previous sale.

NJ legislature is considering bill providing for state officials to take over municipal finances in event of default.

Middle West Utilities' year-end balance sheet and lower capital spending plans indicate relatively little new financing will be needed this year. Market decline in 1930 put a crimp in the financing program for that year; for example, over 500,000 warrants it issued for purchase of common stock at $40 went unexercised and the company had to look elsewhere for the $20M it had expected from this source.

Share of US soap market in 1930: Procter & Gamble 40%; Colgate-Palmolive-Peet 24%; Lever Bros. 14%; remaining 22% over 250 mostly local independents.

Continental Can reports improvement in paint, varnish, and "general line" cans; this type of business seems to be returning to normal for the first time in over a year.

Cadillac-La Salle March shipments were 2,332 units, up 43% from Feb. and up 26% from Mar. 1930; Q1 shipments 5,188, up 20% from 1930. Hudson-Essex March sales were up 38% from Feb.; April sales expected to show similar increase over March.

Stewart-Warner (automotive accessories) is diversifying into new products to restore earnings power. Upcoming products include small home movie camera to retail for $50, and a advertising sign for store windows that can be written on by the user, with writing appearing like neon tubing.

Companies reporting decent earnings: IBM, Hershey Chocolate, Duquesne Light, American Machine & Foundry (machinery for producing 5-cent cigars).

Theatre:

Appearing at the Palace - Horace Heidt and His Californians - big band show, "even more lively than usual. While this organization's somewhat childish collegiate manner" might prove annoying on repeated viewings, "there is no gainsaying the spirited, almost breath-taking character of their offerings ... a rapid routine of orchestral numbers, songs and dances which are original and diverting." Songs include the popular "Peanut Vendor"; "dance numbers include interesting burlesque conceptions of the Russian, Scotch, Apache and Classic Greek styles." Bill also included Lobo II, a trained German police dog, comedienne Rosetta Duncan, a Smith & Dale skit about quarreling real estate partners and Jack McLallen dancing on roller skates.

Jokes:

'I took his temperature with that glass thing you gave me Doctor, and it's gone down.' 'Ah, that's right; that means he's getting better.' 'Oh, Doctor, are you sure? I was a bit worried when he swallowed it.'

Wednesday, April 1, 1931: Dow 172.36 -0.20 (0.1%)

Assorted historical stuff:

Pres. Hoover says tax increase can be avoided at next session of Congress, provided Congress doesn't impose spending increases on the Administration; calls on public to discourage accomodation of "demands of sectional and group interests." Statement was a surprise, and most important made by Pres. Hoover on taxes since last August, when he expressed strong hope the 1% tax cut could be extended; however, that cut was later abandoned. Statement is in line with positions of various Senators that with economizing by govt. and business recovery the 1932 deficit would become small enough to avoid a tax increase.

Rather bitter editorial by T.Woodlock concerning the Potomac Electric Power Co., previously cited by him as a model for more enlightened electric rate setting; company has a profit-sharing agreement with the District of Columbia giving it an incentive to lower costs. Now, however, in spite of a decline in household rates from 10 cents/kwh to 4.2 cents in the 6 years since the agreement went into effect, the Public Service Commission has decided the company is making excessive profits and is demanding renegotiation. Apparently "it is more important from the 'public interest' point of view that no one should make any 'profits' from serving the public than it is that the public should be well and cheaply served. ... One cannot help wondering why it is that human beings as individuals average so high a degree of intelligent fairness in their private relations ... while collectively they exhibit so little of that quality."

Washington report: Govt. officials are reportedly more optimistic on business, though still not sure whether current improvement is merely seasonal. One undoubtedly favorable item is Weather Bureau report that drought has been broken over most of the affected area. Negotiations next week bring hope of deal among oil-producing states to bring production under control while restricting imports. Fed. Reserve has been studying some of the same banking questions as the Glass committee; reports expected within the next few months. War Sec. Hurley says favors renomination of VP Curtis in 1932, refuting rumors Pres. Hoover might choose him as running mate. Sen. Watson visits White House, says agrees with Pres. Hoover that politics has adjourned and there would be no attempt to reorganize the Republican Nat'l Committee.

Editorial: Sharp decline in auto exports ($15.5M in Jan. vs. $16.4M in Dec. and $31.2M in Jan. 1930) is of grave concern given the importance of this industry. Well-informed people variously blame business depression, politics and foreign policy; whether agreeing with them or not, these opinions deserve consideration. Not only the automotive but also "the entire foreign trade situation demands unprejudiced investigation ..."

W. Mayo, chief Ford engineer predicts that by 1941 all major railroads will be operating airlines for passengers, leaving rails clear for freight trains.

IT&T demonstrates "micro wave" radio transmission between Dover, England and Calais, France. System uses transmitting and receiving antennas only one inch long, wave length as short as 18 cm, and only requires 1/2 watt of power. Ultra-short waves are less subject to fading; reception was up to best telephone standard.

Many of the 32,000 traffic deaths each year are due to flying glass. Some carmakers have already made safety glass standard on all models, while legislation requiring it is pending in many states. Willlys-Overland made safety glass optional equipment on Jan. 1; it was chosen by 82% of buyers in the high-priced line, 77% in the medium line, but only 35% of the low priced line.

Dr. H. Eckener, Graf Zeppelin commander, anticipates joint German-US operated transatlantic airship line in 1933; passenger fares will be $800-$1,000 and trip will take 2 to 2 1/2 days. Service will start with German ship now under construction, 812 feet long and filled with 7.1M cu ft of helium; capacity will be 50 passengers, crew of 35, and 10 - 18 tons of freight.

New Transcontinental & Western coast to coast air service Apr. 1 will reduce travel time to 33 hours from 36.

New electric flashbulb for photographers is a great improvement over dangerous flashlight powders previously used, providing a brilliant 1/100 sec. flash without noise, smell or smoke, and allowing photographs to be taken in new locations such as trains, planes, and underwater.

Highest drinking fountain in the world will be located in the Empire State building, over 1,100 feet above 5th Ave; Frigidaire is supplying the 1,600 water coolers needed to slake the thirsts of the building's 22,000 permanent workers and 10,000 transients.

NY State Legislature authorizes $10M for unemployment relief, acting under emergency messages from Gov. Roosevelt.

At a time when US legislators are actively discussing ending capital punishment, figures from Austria may give them pause. Death penalty was abolished immediately after the war. Vienna police report 111 premeditated murders in 1929, 97 in 1928, and 65 in 1927; this compares with 21 in the entire territory of the current Austrian Republic in 1913.

Market commentary:

Market wrap: Leading stocks staged moderate recovery early, shrugging off bad breaks in isolated issues including General Asphalt and US Industrial Alcohol; advance progressed into early afternoon, with sharp gains in trading favorites including Auburn and Alaska Juneau Gold Mining. Rally then ground to a halt, and bears resumed aggressive attacks around 2 o'clock; US Steel and GE broke below Monday's close and reaction spread through the list, intensifying in final hour. Bond trading more active; US govts. steady; foreign irregular with Australian again higher; corp. irregular but mostly higher in both investment and speculative sections. Commodities steady; grains firm, with corn up substantially; cotton off slightly. Copper sold by at least one small producer at 9 3/4 cents; large producers are holding at 10 cents; buying quiet. Silver at 28 3/4 cents; brokers see favorable outlook.

Market observers continue pessimistic; advise staying on sidelines until market indicates reversal, reducing long positions on rallies.

Market students disturbed by pattern last week of higher volume during reactions; many believe volume indicates the market's line of least resistance. Bears predict the current downtrend could produce a "selling climax" with sharp breaks on heavy volume as in 1930; however, many observers believe this unlikely due to much lower margin positions this time around.

Morning buying attributed both to traders expecting a technical rally and to longer-term investors who missed the opportunity to accumulate before the recent rally. However, many brokers who recommended buying for a rally advised taking profits quickly; G.M.P. Murphy said recent reversal has been so pronounced that a considerable period of better support is needed before taking longer-term positions.

Market talk will now shift to first-quarter earnings, which are expected to be poor. Some observers are already studying second-quarter prospects; they admit the past months's conditions and immediate outlook don't indicate any substantial increase in earnings.

Observers are speculating Chrysler's first-quarter earnings may prove a good surprise.

Chesebrough and Horn & Hardard failed to respond to good earnings reports.

A Wall Street man left New York a week ago for a two-year trip around the world. Before leaving, he bought $250,000 worth of 24 different stocks; he told a friend that by the time he returns to New York he expects to have more than doubled his money.

Broad Street Gossip: When the decline will end is a subject of much guesswork. Bulls can point to a crowded short position, margin loans “down to bedrock,” and big banks reporting that banking liquidation was completed last year. Bears can cite expected poor earnings and lower dividends. In the end, “your guess may be just as accurate as any.” Experienced traders say public buying is the best kind, but heavy public buying doesn't always put a stock up; US steel has been declining since the third quarter of 1929 although shareholders increased from 110,166 to 149,122 in that period. Estimated April interest and dividend payments of over $1B make the recent market decline seem “made to order” for those who invest these payments in securities.

Editorial: The public perception that rails want to destroy other forms of transportation and maintain a monopoly is misguided; they simply want to be freed to use all forms of service on the same terms as other interests. The tradition that rails are a natural monopoly and must be repressively regulated is outdated; rules prohibiting rails from making use of waterways and other forms of transport have become absurd and are contributing to wasteful competition and duplication.

Utilities in the Insull system report better business and agricultural conditions in some sections; expect some improvement in Q1 earnings vs. Q4 of 1930.

H. Clarke, Fox Film pres., says film industry has ceased to be volatile; points out revenue in past 18 months has held up better than almost any other business.

Sir H. McGowan, Imperial Chemical chair., says recent months have indicated fall in commodity prices has slowed; uptrend may appear within short time.

Economic news and individual company reports:

Jury selection begins for Bank of US trial; first juror chosen is Arthur Swann of 40 W 67 St., dealer in rare books. Motion for postponement of trail due to illness of bank counsel Kresel denied. Receiver sues Nat'l Bank of Kentucky directors for over $14M, charging "improvident, wasteful and illegal acts of management."

Fed. Reserve “easy money policy ... has apparently been successful in stopping the process of bank credit contraction.” Total loans and investments at member banks expanded more than seasonally from $22.776B on Jan. 7 to $23.046B on Mar. 25. Expansion was in investments, which rose $833M, of which $668M was govt. securities; benefits of this to business “have been indirect, and in all probability the stimulation has not yet been thoroughly felt.” However, easy money hasn't been able to stop loan liquidation; “all other” (commercial) loans declined $290M, vs. a $477M decline in 1930 and average $84M increase in 1927-29.

Rail freight loadings for week ended Mar. 21 were 741,942, up 7,680 from prev. week, down 15.2% from 1930 week, and down 22.9% from 1929.

Feb. net operating income for all class 1 rails about $27.3M, 54% below Feb. 1930 and lowest since 1921; revenue $337M, down 21.2% and lowest since 1918.

Standard Oil of Calif. and the Texas Co. match oil purchasing price cuts just posted by Union Oil. Feb. domestic demand for gasoline 26.133M barrels vs. 26.461M in 1930; exports 3.6M vs. 4.9M. Oil industry appears before FTC to protest decision that 18 of 21 rules in the industry marketing code illegally restrained trade. Soviet oil production shows rapid growth; 1930 exports from Black Sea ports were 28.6M barrels vs. 25.3M in 1929 and 10.9M in 1926.

Bank statements for past week showed continued uptrend in non-govt. security holdings, up $29M in the week.

Call money rate rose 1/2% to close at 2%.

Financing was heavy in March, with new securities estimated at $675M-$700M, highest since last July and up sharply from $201.1M in Feb. While some new issues are being negotiated, the April total is expected to decline substantially.

NYSE stock trading in the first quarter was 172.3M shares vs. 227.6M in 1930 and 294.2M in 1929. March volume was 65.7M, lowest March since 1927.

US Steel dividend is now subject of bear rumors that started when NY Central cut its dividend, since both companies have the same banking sponsorship. However, Steel is in a much better position to maintain dividends due to strong balance sheet and good earnings in recent years.

British deficit for just-ended fiscal year now estimated at $125M, about half that predicted by Chancellor Snowden a few weeks ago. PM MacDonald says will submit next budget April 27; work on the budget, on which survival of Labor govt. may depend, has been slowed by illness of Snowden.

Small French shipment of gold took place to Germany, seen as “one of the most significant developments in some time in the foreign exchange market.”

Miami Mayor C. Reeder reports city operating expenses have been reduced from a peak of $6.749M in 1926 to $2.654M for year ending June 30.

$290M plan for unifying Chicago traction [mass transit] cos. declared operative.

Chevrolet production schedule increased to 85,088 units from previously planned 81,088, and vs. Mar. production of 75,266; sales gaining in many territories.

AT&T first-quarter earnings are running at greater rate than the overall 1930 result.

Pennsylvania RR 1930 net $5.28/share vs. $8.82. Phelps-Dodge (mining) 1930 net $0.18/share vs. $4.80.

Wm. Wrigley plans to use all money it receives for chewing gum in 12 Southern states to buy cotton at 12 cents/pound or less through newly formed Wrigley's Cotton Investment Fund. Plan anticipates buying about 100M pounds of cotton by Dec. 1.

Companies reporting decent earnings: Lefcourt Realty, Morris Motor (British car maker).

Movie:

Bad Sister - Adapted from Booth Tarkington's novel "The Flirt." Pampered daughter of small-town family forges her father's name for the sake of a handsome swindler from the city, but repents later, returns, and marries least attractive of her former suitors; her plainer sister marries the man she would have had she not turned "bad." Story can hardly compete with tales of "gangsters and wealthy city-dwellers" more popular today, but well produced and will interest those who still prefer Tarkington's characters to those of Ernest Hemingway or Ben Hecht. Sidney Fox shows star potential in the lead role; in the supporting cast, Humphrey Bogart is excellent as the city swindler and Bette Davis is convincing as the plain sister.

Joke:

Admiral conducting an examination for the Navy - Who, in your opinion, are the three greatest sailors in British history? Student - I'm sorry, sir, I didn't catch your name when I entered the room, but the other two are Nelson and Drake.

Tuesday, March 31, 1931: Dow 172.56 -1.50 (0.9%)

Assorted historical stuff:

Editorial by T. Woodlock: Summarizes “notable address” by Hans Luther, Reichsbank pres.: German people have handled unemployment involving a quarter of workers with only slight increase in national debt. Solution of current problems must not involve another inflation, which would destroy all that has been accomplished since the mark was stabilized. Germany is a “crowded people ... economically intertwined with the other nations”; solution must be a world one, and involve free-market system, which history shows best able to create progress. Reparations payments force money to flow “contrary to its economic course” and become immobilized by “political or psychological conditions.” Logical solution would be increasing exports, but precisely because everyone can see that, other nations, in violation of the Young plan, are trying to exclude German exports, and are politically interfering with international lending. Comment by Woodlock: What Dr. Luther naturally doesn't say, but is clear, is that we've made it “quite certain that we can only collect reparations from Germany at the price of handing her the commercial hegemony of the world. Perhaps it might after all have been good strategy for Dr. Luther to have said that!”

Editorial: Australian bonds are recovering as investors become aware move to repudiate New South Wales bonds “does not originate in any desire of the people,” but in a radical minority that “opposes capitalism in all forms. Unfortunately the premier of New South Wales heads that minority.” A similar recovery took place in German bonds as investors saw “solid Germany rallying to repudiate Hitlerism.” Premier Lang has aroused a storm of protest, extending even to his own party, that is likely to sweep him from the stage.

Editorial: British Conservative leader Baldwin has now adopted tariff protection for agriculture; thus, tariffs have made headway even in the old home of free trade, and, if the Labor govt. falls, will become a decisive issue in the next election. Apparently Conservatives have decided “that hair from the dog that bit you is the right cure for dog-bite.”

Weather Bureau reports recent beneficial rains have broken last year's drought (restored normal amount of moisture in both top- and sub-soil) everywhere except areas of Iowa, Minnesota, the Dakotas, and Atlantic states south through Virginia. Conditions were helped materially even in sections still short of moisture.

White House indicates Pres. Hoover will keep hands off the wheat situation, leaving it entirely to the Farm Board.

“In striking contrast with the modern industries which are housed in plants which are literally glass houses,” a steel processing firm is completing a windowless plant near Fitchburg, Mass. with filtered air and completely controlled temperature, humidity and lighting, allowing a new degree of exactness in the product.

Regular Bell telephone service to island of Java to start Apr. 1, using land lines, transatlantic telephone, submarine cable, and short-wave radio. There are 30,000 phones on the island. Number of telephones now in South Africa is "approximately 100,000, or one for every 18 whites."

French Air Ministry negotiating for "Romeiser" Russo-German lightweight airplane engine said simpler and more economical to operate than best current engines.

Boat in which Gar Wood set world speed record of 102.256 mph was equipped with two 1,100 hp Packard engines that survived two previous wrecks unharmed.

NY City transit unification bill currently blocked by Republican State Sen. Knight, who insists on giving some agency other than the mayor and transit companies a voice in the proposed Board of Transit Control; this is unacceptable to the city administration.

A famous globetrotter says many of the world's great cities can be recognized instantly by their smells, for example: London - fog and gasoline; Paris - tobacco and charcoal; Berlin - ink; Vienna - sawdust; Marseille - flowers and fish; Madrid - cigars and vegetables; San Francisco - "a tonic atmosphere charged with the scent of fog"; New York - "assails one with a peculiarly exhilarating atmosphere, which has no particular odor."

Market commentary:

Market wrap: Stocks opened under heavy sell orders accumulated over the weekend, with bear pressure also continuing; leading shares declined; however, fairly good support came in "on a scale down" and limited setbacks; market steadied around noon and made weak attempt at rally, but decline resumed in the last hour, with day's lows near the close. Bonds generally under pressure; US govts rose slightly; foreign irregular though Australian continued rally; corp. highest grade utility steady but rest of the list heavy, with rail, speculative and convertible issues particularly weak. Commodities mixed; grains fluctuated sharply; wheat plunged early to new season low but rallied to close higher; corn followed wheat movements but closed mixed; other grains fell sharply; cotton down substantially.

Market sentiment continues pessimistic, though conservative observers believe a technical rally is overdue after the sharp recent setback.

Discouraging factors for bulls included sharp early break in grains (though they rallied to close higher), poor rail earnings, and decline in US Steel, accompanied by rumors of lower automotive steel demand.

Dow Theory special: students note rails again gave accurate market signal. On March 17, rails dropped to level representing loss of over 50% of the rally from Dec. 16, indicating more-than-technical decline; rails then fell 10 sessions out of 12 while industrials declined from 183.61 to 172.56. Dow theory students will now carefully watch support for rails between current 97.54 and the 1930 low of 91.65, reached Dec. 16. If main rails hold above 1930 lows, this would strongly indicate bear market had bottomed; if they break through 1930 lows, together with industrials, this would indicate the whole market was headed lower.

Major industrials have received support above this year's lows, probably due to a sounder technical position for the market rally since early Dec. than for the superficially similar rally from Dec. 1929 to early 1930. That rally involved a sharp rise in speculative buying on margin, with brokers' loans rising $946M; on the other hand, during the current rally brokers' loans have actually declined, from $2.008B to $1.908B.

Positions of several bull pools reportedly weakened by recent sharp bear drives; pools have been discouraged by inability to attract public following into their stocks, quite a few of which have broken down through resistance levels; some groups have stopped operations and withdrawn support orders.

While general business reports continue to indicate slight improvement, the Street is concerned with conditions in basic industries, where news has been less encouraging. "Keen competition and price cutting" is reported in steel; copper is suffering from limited demand and rumors of price shading; oil also looks cloudy.

Steel sheets (used in auto production) are weakest part of the steel market, with demand weak and price "shading" again rampant; "It is reported in responsible quarters that, when attractive inquiries come into the market, sheets have been selling generally at whatever price the consumer is willing to pay." Bethlehem Steel's annual report revealed sharp decrease in cash and securities on the balance sheet, raising concern about continuation of dividends. Alaska Juneau Gold Mining bucked the market, rising on rumors of new ore bodies.

Broad Street Gossip: As result of the recent sharp decline, “many are advising caution, and the lower stocks go,the more emphatic that advice will become. When the market turns upward, 'notes of caution' become few. It always has been thus and always will be ...” Paine,Webber pick the six stocks “most typically representative of industrial America”: American Can, AT&T, GE, GM, Union Carbide, and US Steel. Recent news on earnings and dividends has been bad, “but the feeling that business will be materially better before the end of the year continues.” One broker refers to a “creeping trade improvement.”

Fed. Reserve report showing credit outstanding of $858M, lowest since 1924, “gives an impression of liquidation which is wholly misleading.” In fact, “effective credit base” consisting of gold plus Fed. Reserve credit has shown no more than normal seasonal contraction this year; as of Mar. 25, it was $5.547B, vs. $5.445B a year ago and $5.591B two years ago. “These figures indicate how unfair are the accusations frequently made that the Fed. Reserve banks have allowed credit contraction to take place ... The Fed. Reserve has maintained a large portfolio of govt. securities to prevent undue credit contraction.” Reports of national banks and several state banking system shows usual seasonal pattern of declines in deposits in big cities and increases in more rural areas, although decline in NY City is more pronounced than usual due to business recession.

Guaranty Trust says this month's developments “present the most encouraging signs in some time”; see “strong indication that the business curve is at least scraping bottom,” though recovery “will be a slow and uneven process.”

Economic news and individual company reports:

Agriculture Dept. estimates wheat crop of 825M bushels this year, leaving exportable surplus of 125M over domestic needs, plus 250M carryover in Farm Board hands. National Grange (farmers' assoc.) demands enactment of export debenture or similar plan to replace stabilization policy abandoned by Farm Board. Bureau of Agric. Economics reports index of farm prices Mar. 15 was 91 vs. 90 a month earlier, first rise since Sept. but down 35 from a year earlier.

Current rail earnings predict more dividend cuts to come. Of 20 representative dividend-paying rails, only 11 earned their dividends in the year ended Feb. 28 even after 7 recent dividend cuts; 7 of the 20 are selling for less than 10 times earnings. First 65 rails reported Feb. net operating income down 51.1% from 1930.

GM sales in Q1 will be about 295,000 cars and trucks, down 20% from 1930; Q1 earnings estimated at $0.59/share; co. has made strong competitive gains vs. rest of the industry; trends are favorable, and the co. may cover its dividend in the first half ($1.50).

Union Oil of Calif. cuts crude purchasing price 30 - 35 cents/barrel; third cut in past three weeks.

Standard Oil of Indiana agrees to curtail its Venezuela production and imports by 23% for 60 days, joining all other major importers in agreeing to curtail.

Motion Picture Producers' and Distributors' Assoc. reports weekly US box office about $30M, attendance 115M; 17,097 theaters, 13,515 wired for sound.

Dept. of Justice asks dissolution of Sugar Institute (assoc. of cane sugar refiners producing 85% of US sugar) on grounds of price fixing.

Australian PM Scullin says govt. will pay interest on British war debt that state of New South Wales is defaulting on, after receiving legal opinion federal govt. is liable for state debts. New South Wales premier Lang introduces bill limiting interest rates on deposits to 1 1/2% - 3% and on govt. debts to 3%; says confronted with “repudiation of their debts, the Australian governments must realize the duty of formulating a proposal to avoid national bankruptcy.” Federal govt. Treasurer Theodore introduces similar bill to reduce interest rates, defends proposal to exit gold standard; says banknote issue will be limited to $300M, backed by securities.

Canadian employment index Mar. 1 was 100.2 vs. 100.7 prev. month and 110.2 on Mar. 1, 1930; Feb. showed improvement in manufacturing.

General coal strike averted in France as coal miners and owners agree on 6% wage cut. German labor strife threatens after coal and iron mines seek larger cut than the 6% set by government arbiter in Jan.

German capital has been returning in recent weeks, lowering money rates and bringing talk of a possible cut in the 5% Reichsbank rate. German circles feel worst of the crisis past; adjournment of Reichstag until Oct. and rule by decree now considered favorable, though decree was surprising and at first slightly disturbing.

AP Moscow reports Russian plan to mine coal with machinery has resulted in output 46% below plan.

Argentine farmers move to burn much of corn crop as fuel in factories and electric plants due to low prices for grain. Argentine Feb. exports were $111.5M, down 18% from 1930; imports were $105.5M, down 22.6%.

US Steel reports common stockholders as of the Mar. dividend date were 149,122, up 7,215 in the prev. quarter and up 25,053 in the prev. year. General Foods reports stockholders now 42,773, up 10,708 in the past year.

Goodyear cuts annual dividend rate from $5 to $3. Gillette 1930 net $3.25/share vs. $4.65. R.H. Macy 1930 net $4.81/share vs. $6.70.

Both Mead Johnson and Cuneo Press declined sharply in spite of strong earnings; both had recently run up to new yearly highs. Cuneo closed at 34, after recently reporting 1930 net of $6.96/share; Mead Johnson at 101 1/2 after reporting $9.51/share, its 10th consecutive earnings increase; earnings so far in 1931 are reportedly running at $13/share annual rate.

Companies reporting decent earnings: F. & R. Lazarus (department stores), Chesebrough Mfg. (Vaseline), Horn & Hardart (self service restaurants).

Theatre:

After a trying season involving ventures with experimental fare such as Miracle at Verdun, the Theatre Guild now turns back to “that old stand-by, George Bernard Shaw.” That sharp-tongued dramatist, who “had to fight his way into the London theatre, and whom Irving would have kept out forever, becomes in 1931 the old ... restful friend. ... Mr. Shaw now stands on the safe middle ground, somewhere between Shakespeare ... and S.M. Tretyakov,” whose Roar China involved a battleship set “so huge that the Guild could not float it around its subscription circuit.”

Joke:

"'Sorry, but you're too late for the job. I've already had 25,000 applications.' 'Well, what about employing me to classify the applications?'"

'Make a sentence using the word diadem.' 'People who hurry across railroad crossings diadem sight quicker than people who stop and look.'

Monday, March 30, 1931: Dow 174.06 -3.24 (1.8%)

Assorted historical stuff:

Pres. Hoover reportedly directed a group of Republican Senators to reorganize the Republican Nat'l Committee before departing on Carribean trip. Report is circulating that Pres. Hoover may pick Theodore Roosevelt, Jr., now gov. of Puerto Rico, as running mate in 1932.

Editorial: Although it's apparent that real estate is paying an unfair proportion of local taxes, practically no legislation for relief has been enacted. Possible sources of new revenue, including a state-licensed liquor traffic and adjustment of income taxes, are apparently too politically risky, while demand for "liberal" government expenditures only increases in hard times. "The payer of rent lacks 'tax consciousness,' but he wants every benefit that comes from government distribution of tax receipts. ... The fact seems to be that real estate will continue to be the goat."

Editorial by T. Woodlock: In the past 30 years, US Steel has accumulated a large surplus of undistributed profits. "This surplus belongs in the fullest sense of the word to the common stockholders." In times of depression, corporations should reasonably draw on surpluses to continue dividends; only if this is done are corporations justified in withholding earnings to accumulate a surplus in prosperous times. "Granted that stockholders will probably spend their dividends as they receive them, it may also be suggested that large sums of idle cash are a great temptation to managements."

Aviation trend toward integrated manufacturing and airline companies continues; this allows development of new designs to be coordinated closely with airline requirements. Most prominent example is United Aircraft & Transport, with its Boeing and National Air Transport subsidiaries; others are Aviation Corp.of Delaware, Curtiss-Wright, and the recent grouping of General Aviation with Western Air Express.

D. Replogle of the Jenkins Television Co. predicts television broadcasting will be underway in all large US cities by fall.

A British visitor to the Ford River Rouge plant's huge rustproofing (Bonderizing) area: "If I had all the rustproofing business of the British Empire I wouldn't have but a fraction of what I am now looking at."

Julian Huxley [brother of Aldous, later a major figure in the development of the "modern synthesis" version of evolution] notes Europe now has 18M more women then men, believes this will lead to a superior feminine sex since many women will remain single, and so direct their abilities toward betterment of their sex and the human race as a whole, instead of taking care of husbands and babies. Notes women in England "realize they are doing outstanding things now ... and they let men know they feel on an equal footing with them." Astonished at the "way the average American girl expects and gets presents from men. The fact that a woman is willing to receive gifts all the time, indicates she feels she is inferior."

NY Appellate Division unanimously reverses $35,000 verdict for damages sustained from tripping over NY City sidewalk doormat: "To require a license for everything whatsoever upon the sidewalk or street would work a decided change in the customs and habits of those dwelling in the City of New York ..."

Market commentary:

Market wrap: Stock selloff resumed at the open and continued for rest of the session with only minor pauses; heavy selling in leading shares including US Steel and GM; declines throughout the list; ticker ran one or two minutes behind most of the session; extensive public liquidation seen, while demand aside from short-covering was negligible; decline picked up steam in last hour. Bonds irregular; US govts. somewhat lower; Australian issues rallied again but foreign generally heavy; corp. highest-grade and utility issues steady, but rails heavy; speculative and convertible weak with sharp breaks in some issues. Commodities weak; grains very weak, unsupported wheat months down sharply, corn down to lowest levels since 1922; cotton down moderately on quiet trading.

Week in review: Stocks declined following mixed business news; dividend cuts by majors including Westinghouse, B.&O., and Anaconda apparently disturbed the market; however, “the action of the general list gave reason to believe that it was bumping along bottom rather than entering another period of general liquidation.” German stocks rose on “Reichstag's quick and successful work.” Money market quiet; call money was at 1 1/2% aside from brief flurry to 2% Thursday. Fed. Reserve reports indicated credit liquidation continues; reserve credit outstanding declined $40M to $858M, lowest since 1924. Bond market mixed; US govts. active in narrow range, slightly below previous week; foreign issues heavy, sharp break in Australian; corp. highest grade steady to firm, particularly utility, but rest of list irregular. Foreign currencies irregular; marks strong; loan to Spain announced to support return to gold standard. Commodities fluctuated; wheat slumped following Farm Board decision to stop stabilization; July wheat hit 58 1/2 cents, lowest since 1895, but rallied following announcement of 82 1/2 cent minimum price for selling surplus, ending week at 61 cents. Cotton absorbed heavy liquidation impressively, ending the week only moderately lower.

Conservative observers note generally more pessimistic sentiment, but advise watching developments closely this week, pointing out that if the decline meets resistance, astute traders might be able to profit by buying during periods of "outstanding weakness."

Bulls discouraged by 3% decline in Youngstown district steel rate, seen as indicating output may have peaked for the first half; steel shares heavily liquidated; decline in auto sheet demand was taken to indicate slowdown in car production. Poor action of rails on Thurs. and Fri. was also disturbing, since Dow rail average approached the year's low; rail earnings reports for Feb. have been poor and more dividend cuts are feared. Little attention was drawn by more favorable news items including weekly trade reviews and optimistic statements by GM pres. A. Sloan.

Reactions last week triggered large numbers of stop orders; these now seem to be more popular, with many longs using them to protect accounts and raising limits during rallies; this resulted in considerable selling on the first sizable reaction. Rumors of weakness in steel and iron scrap affected the stock market at times last week, since many students believe scrap price trends predict those in finished steel prices. Many transactions in the scrap market are done privately, and a large supply is believed hanging over the market.

Many big operators who were active bears much of last year are back on the job; one has a short line of over 100,000 shares. Majors including US Steel, GM, B.&O., Eastman, and Westinghouse are among the most heavily shorted. Short-term traders have also switched extensively to the bear side, influenced by return of the big bears and by bearish signal given by rail decline. However, the big bear interests were just as outspoken at the market bottom last Dec., when the current recovery began. While business conditions haven't justified continuation of the rally, there is “undeniable” evidence that business has hit bottom and is slowly turning around; strong hands are therefore likely to support stocks at about the yields offered at the 1930 lows. Meanwhile, short interest is again growing large and, due to increasing business confidence, it's unlikely bears can again get a period of “convulsive liquidation” in which to cover as in late 1930.

Broad Street Gossip: One banker believes that while it will take time for business to improve much, stocks will rise based on future expectations. “A few months from now will mark two years of business decline, and history teaches that business declines of the past have not lasted more than two years. This has been the longest period of market depression we have ever had.” If money was tight, we might expect recovery to be delayed, but corporations have more cash than ever, while people are increasing savings and absorbing over $500M a month in new securities. While the Dow industrial avg. is 12.61 above the year's low, many stocks are close to or at their lows for the year.

Editorial against two new prescriptions for farm relief that the "senatorial apothecaries, wrapping their togas about them," have come up with: the equalization fee (a sales tax on farm products, used to create fund to remove surplus production) and the debenture (export bounty). The latter, which is more likely to come before the next Congress, would be costly and might lead to foreign reprisals.

A. Sloan, GM pres., predicts gradual business recovery and good years in 1932 and 1933; says depression has demonstrated beyond doubt soundness of installment buying; GM hasn't cut wages and doesn't plan to at present, but continued low commodity prices would eventually require wages to be adjusted.

Economic news and individual company reports:

Youngstown district steel output will decline 3% to 48% this week, due to unexpectedly sharp decline in sheet manufacturing, slump in automotive bookings.

NY Central operating income, considered a good barometer for the rail industry, has dropped sharply so far this year. For first 2 months, net was $3.428M, vs. $9.722M in 1930, and loadings in March so far have been poor. Barring a turn in business soon it's unlikely that Central will be able to earn its dividend this year, even after the recent cut from $8 to $6.

Amer. Petrol. Inst. reports Jan. gasoline consumption in 46 states was 824.8M gallons, up 11.5% from 1930; a “ray of light in the present oil situation.”

Bethlehem Steel defends executive bonus system in court filings; says suing shareholders only represent 0.08% of stock; denies charges against system; notes approval of bonuses since 1917 will be put to shareholder vote at annual meeting Apr. 14. Lorillard stockholders place half-page ad against revision of employee stock plan lowering purchase price from $20-$30/share to $10; acknowledge co. is doing very well and favor “liberal provision” for officers and employees, but believe plan is unfair; ask for proxies to fight it.

Fisher's wholesale commodity index resumed decline to 75.6, after holding at 76.0 for three consecutive weeks.

Feb. meat sales by representative US packers were down 7% from Jan. and 28.5% from a year ago; decline was due to price declines for almost all meats and lower consumption during Lent.

Texas Railroad Commission continues hearings on oil curtailment with testimony that East Texas area is having disastrous effect on entire US market structure.

Crude oil purchasing prices in Calif. fields for better types are about 50% below a year ago; for example, 25-gravity is down from $1.20/barrel to $0.57-$0.67.

Australian bonds now subject of debate, with some in the bond community arguing the announced plan to default payments in London is merely a ploy to force adjustment of rates on Australia's war debt to Britain, now at about 5% vs. 3% for British war debts to the US.

Spanish loan for currency stabilization and return to gold standard was reportedly boycotted by British bankers who argued Spain could use its large gold holdings for that purpose.

NY City's emergency employment committee, now employing 21,500 with privately raised funds, won't be able to continue most employment after Apr. 8; Board of Estimate approves bill to be presented to Legislature immediately authorizing city to spend $10M to provide work.

Canadian Pacific Railway, despite sharp decline in 1930 earnings, continued policy of substantial spending on capital improvements; stock offering likely in 1931.

Douglas Aircraft (military planes) expects record sales in 1931.

Companies reporting decent earnings: Long Island RR, Cuneo Press (commercial printing), Centrifugal Pipe, National Distillers Products (medicinal whiskey), Mississippi Valley Utilities Investment (controlled by Middle West Utilities).

Movie:

The Conquering Horde - Starring Fay Wray and Richard Arlen. Tale of corrupt politicians in post-Civil War Texas. "Plot steps ... are artificially motivated" and "acting of the principles is seldom any more convincing"; few of the "you-alls" are enunciated with "appropriate Southern understanding." However, stage show that accompanied the movie "more than compensated," featuring Bill [Bojangles] Robinson, Cab Calloway and his Cotton Club Orchestra, a large chorus, and two excellent comedians; the "stirring presentation" more than justified its name "Hot From Harlem."

Joke:

Letter to a lawyer: "My husband got struck by an automobile, No. 6B4872. If the owner is rich, sue him at once. He wasn't bruised any, but on your notifying me that you have brought suit, I will hit him in two or three places with a hammer."