Friday, April 17, 1931: Dow 162.59 -2.07 (1.3%)

Omen of sorts?:

Starting today, the Journal consolidated its two market analysis/rumor/gossip columns, “Abreast of the Market” and “Broad Street Gossip,” into one. Possibly a telling indicator that people were getting so discouraged about the market there was no longer enough scuttlebutt to support two columns ...

Assorted historical stuff:

Millard Pryor returns from year-long trip around the world as special Journal correspondent. In Japan, observed "typical citizen lives in a fragile house of meager value ... and feels contented if he has enough food to keep alive his voluminous family." In China, hunger is accepted as "typical state of affairs"; in the tropics, "acquiring of wealth seems to occupy little of their thought and effort. Coming from a sphere ... where such a behavior would be ... next to criminal, at first I was shocked." However, upon observation concluded "these people were just as happy, on the whole, as my friends and fellow citizens ... the distinct impression prevails that human happiness is independent of economic well-being. ... It would be foolish to ask that business forget that it is essentially a profit producing enterprise, yet a shifting of emphasis, even though slight, might easily result in far-reaching effects."

New Spanish Finance Min. Prieto says will observe all govt. obligations but "Spain wants no tutelage." Believes stabilization of peseta not urgent; if country is well-administered, it should naturally return to "parity" value. Peseta fluctuated, closing lower. US will await definite information before deciding on recognition.

Editorial: Bank of England Gov. Norman, on returning from the US, is likely to report "American opinion is more open to the idea of world financial cooperation than at any previous time since the war." Opinion has changed significantly on war debts and use of gold holdings, although Col. Ayres might still come in for Congressional scorn for pointing out that Britain, after repaying a total amounting to a third of its original $4.6M war debt, now owes the US about twice as much measured in commodity value. While US attitude is unpredictable, a world conference on war debts with real US participation is starting to seem more possible.

Rep. Johnson (R, S. Dakota) proposes naming ex-Pres. Coolidge, or other prominent figure outside House, as Speaker in event of deadlock between parties.

Washington report: Oil industry is "at cross-purposes"; while there's an attempt to deal with problems of overproduction, other interests are suing the govt. to be allowed to prospect and drill on public land. Oversupply of oil must be dealt with at the source (drilling), either by economic forces or by law. If there is legislative action, consumers as well as producers must be protected, and this may lead to considerable govt. control of the industry. Many candidates are mentioned for the House Speaker's post. While legal, it's considered unlikely that the House will go outside its membership for a Speaker. Some have speculated that since the House is so closely divided, both parties would prefer not to organize it, preferring to let the other have "responsibility without authority." However, sounder Republicans have refused to listen to this talk, believing it would be "fatal for the party to attempt to dodge its clear duty."

Pres. Hoover may not take vacation this summer; he's currently making a review of the different departments of the govt., and won't be done for some time.

Britain announces will reduce interest paid by Australia on war debts $8M annually for 3 years and extend principal payments 2 years. British Liberal party attitude uncertain regarding Conservative vote of censure on Labor govt., but it's believed govt. will survive by small majority.

Radicals gain in Argentine elections; Gen. Uriburu's provisional cabinet resigns; peso down sharply as central bank suspends support. However, banking circles are pleased with Uriburu's record so far and informed observers believe he can form a coalition govt.

J. Schurman, former US Ambassador to Germany, says German govt. will be in safe hands for many years, and German Fascist party is already disintegrating.

W. Glover, Asst. Postmaster, invites bids for carrying mail on first transatlantic airline; route will be from Charlston, SC to London via Bermuda and the Azores.

Diesel-powered plane demonstrated at Detroit air show; engine has only 1,500 parts vs. 5,000-6,000 in gasoline engine.

Eastman Kodak announces new verichrome film with double silver coating, “greatest invention in snapshot film since 1903.”

After experimenting with an all-glass building, Chicago architects plan an all metal apartment house. Outer walls will be of "silver toned rustless Alleghany metal" backed with cork board and rock wool, and no more than 3.5 inches thick vs. 14 inches for brick walls. Floors will be of insulated ship deck construction. This method will provide 14% more rentable space and cost less to build. Heating will be electric, taking advantage of heat retention capacity of the walls.

Vote counting in the French Chamber of Deputies will henceforth be "mechanical and correct" due to a newly installed electric counting machine. There have been numerous inaccuracies in the past, some for important votes; it took 3 days in Feb. of 1930 to determine the final vote by which the Tardieu cabinet was defeated.

New radium deposits found near Edmonton, Alberta valued at $8,600/ton of ore.

Market commentary:

Market wrap: Pressure on leading shares continued, producing a new low since 1927 in US Steel and new 1931 lows in leaders including National Biscuit and Western Union and in many other shares; market ended generally lower. However, pace of decline slowed, and some resistance appeared, with general list showing some ability to break away from downtrend in the leaders. Bonds more active, irregular; US govts. quiet, steady; foreign mixed - European firm, Brazilian weak, Australian rallied sharply, Argentine rallied after early weakness; corp. highly irregular - high grade firm but several parts of the list reactionary. Commodities quiet; grains narrowly mixed; cotton barely changed. Copper buying quiet again; some metal sold at 9 3/4 cents while most producers held at 10. Silver up 1/2 cent to 28 7/8. Zinc at new low of 3.75 cents. Rio coffee futures on the NY Coffee & Sugar Exchange sold off to 4.35 cents/pound, lowest level since 1903; attributed to weakness in Brazilian currency.

Bear traders apparently took advantage of recent popularity of stop-loss orders, concentrating pressure to move stocks below resistance levels and trigger selling.

Insurance shares, after being relatively inactive for many weeks, sold off sharply along with the general list; banks and trusts were somewhat better supported. West Coast utilities said gaining from recent increase in electric output there.

GM remains one of the few stocks that's favorably mentioned; earnings are reportedly improving, and a bull pool is said to be operating in it, though its operations have been disrupted by declines in the general list. The usually resilient National Biscuit, which has continued to report record earnings, was weak on reports of a decline in current business. Western Union was weak after reporting Q1 earnings of $1.22/share, lowest in 15 years. Gillette was strong on reports of improving finances and earnings. National Steel Q1 earnings repeated Q4 performance as one of very few companies in the industry to cover dividends.

Brokers report recent market action has been discouraging to “outside” (public) who recently bought on recovery hopes; in many cases, they are taking losses and leaving the market. Short interest has again increased in past few days; some brokerage customers have gone short in spite of cautionary advice against it.

Divergence of the general list from leading stocks seen as hopeful sign many stocks have been "thoroughly liquidated," reverse of summer 1929 when the general list started declining even as leaders "were completing the bull swing." Analogy seen between present selloff in high-grade rail stocks, and ill-advised liquidation in AT&T stock during 1920-21 bear market on fears of wireless competition.

Editorial by T. Woodlock: Investigation on rail price-fixing by steel cos. could more effectively be carried out by the ICC than by the Justice Dept.; using subpoenas to gather facts, it could compel the rails to act together even if the steel cos. aren't in technical violation of antitrust law. Lesson, as in many other cases in rail industry, is need for “common action for the common good.”

M. Alexander, Nat'l Industrial Conf. Bd. Of NY chair., says economic readjustment necessary during depression can't be warded off by "building a Chinese wall around wages"; wage cuts proportional to decline in cost of living might allow increase in total wages.

Sir A. Geddes, chair.of Rio Tinto (lowest-cost copper producer), says immediate outlook not good; present economic distress likely to last at least through 1931.

R. Broomfield, Barnsdall VP, says oil industry in new phase; “days of large profits are gone”; industry now in category of low-margin manufacturer.

Grain special:

Editorial: Report that a Farm Board subsidiary has started buying grain elevators indicates it plans to start a large system of wheat marketing through cooperatives. Far from being "farmer-owned and farmer-controlled," this system would therefore be under Farm Board domination. It's the farmers right to market wheat however he chooses, but the govt. shouldn't engage in the business in competition with private marketers. While the public doesn't seem to realize it, the huge farm surpluses the govt. holds are only part of its agricultural operations, and it seems to be getting in deeper and deeper.

Yet another opinion piece on the Farm Board: Created to raise agriculture to parity with industry, it has violated the fundamental principles Pres. Hoover laid down at the April 1929 special session of Congress that led to its formation (no trading or price fixing in commodities, no activities resulting in increased surplus production, no duplication of working private systems, etc). Its current plan to replace the current private marketing system with cooperative marketing under govt. intervention will fail, leaving agriculture worse off and taxpayers to pay the bill.

Jules Fribourg, pres. of one of world's largest grain concerns, predicts world grain situation, though depressed by oversupply and complicated by Russian shipments, will correct itself through normal working of economic forces.

A large broker, catering to the grain trade, quotes from Proverbs 11:26 "He that withholdeth corn the people shall curse him, but blessings shall be on the head of him that selleth it." Or, in more modern parlance, "We advise selling July wheat."

Economic news and individual company reports:

Strike against Philadelphia & Reading Coal & Iron Co. spreads to 10 operations, involving 8,000 workers.

Brazilian situation appears to be “growing acute.” Bond investors have been selling off Brazilian federal and local issues, and coffee prices, upon which Brazil's foreign currency earnings largely depend, are very weak. Brazil appears unable to secure new foreign capital to service debt as it did prior to 1929. Total foreign investment in Brazil is about $3.3B, of which Britain accounts for about $1.5B and the US $500M.

Connecticut passes new laws requiring brokers and security salesman to register; Investment Bankers' Assoc. describes new law as "model measure"; seen putting "teeth" into the fraud law adopted two years ago.

Agriculture Dept. reports plowing for corn well advanced in much of Iowa, though the violent dust storm last week, worst in 40 years, did some damage to oat and barley seedings. Farm Board chair. Stone "expressed some interest in the dryness in the spring wheat belt"; believes production will be affected but it's too soon to tell if crop from that area will be short. Also recommends cotton farmers reduce 1931 acreage 25% below last year.

Commerce Dept. reports March exports $237M vs. $224.4M in Feb. and $369.6M in Mar. 1930; imports $211M vs. $175.1M and $300.5M.

BLS reports Mar. employment in 15 industrial groups almost unchanged from Feb., but payrolls up 0.7%. For manufacturing industries alone, employment rose 0.9% from Feb., and payrolls rose 2.2%.

Fed. Reserve reports money in circulation Apr. 15 up $15M to $4.629B, total Reserve Bank credit outstanding down $34M to $895M. Member banks in NY City report brokers' loans up $27M to $1.849B; loans on securities to non-brokers down $30M to $1.759B. Bank deposits in NY City were down over $1B in the year up to Mar. 25. While dramatic, this followed a usual seasonal pattern in which out-of-town banks withdraw deposits during the first quarter; banks outside the financial centers mostly reported higher deposits.

Dow average of 8 iron and steel products was unchanged at $44.23, low for 1931. Scrap prices dropped substantially at several important centers.

Several rails are experimenting with excursion fares as low as 1 cent/mile [vs. normal fares of about 2 cents/mile] to boost passenger traffic.

Bank of England lost 821,000 pounds in gold, reducing holdings to 146.2M; however, reduction is believed temporary due to Argentine situation.

Suez Canal Q1 revenues declined 6.8% to $15.1M, relatively better than the Panama Canal's 11.2% decline to $6.0M.

NY State tax officials expect drop of 20% in income tax returns from $40.2M total last year.

NY City borrows $41M short-term at 1 7/8%; their long-term bonds yield slightly under 4%.

Detroit reports applications for public relief in March were 4,085 vs. 9,043 in Feb. and 5,488 in Mar. 1930; applications so far in April are about 100/day.

Chevrolet reports March domestic sales of 73,628 cars and trucks, up 48% from Feb.; sales showed strong gains in each 10-day period, and dealer reports indicate continued gains in April.

Companies reporting decent earnings: Waldorf System (restaurants), Lambert (toiletries and medicinals).

Theatre:

Six Characters in Search of an Author - by Luigi Pirandello, translated from Italian, at the Bijou Theatre, starring Walter Connolly and Paul Guilfoyle. Abandoned by their author, a forlorn family of imaginary characters, father, mother and four children, wander unannounced into a theatre where a rehearsal is in progress. The question of the differences and similarities between acting and being, between characterization and character become bitter points of contention between the imaginary family and the 'real' director and his company. These questions, used to suggest more universal questions regarding reality and pretense outside the theatre, no longer seem as profound and disturbing as they once did but this makes the play more enjoyable and accessible. Treatment of the play is heavier than it should be but leading parts are acted well "and the more important passages .. are usually impressive."

Report from France:

Paris theatre has split into two camps on the question of censorship. Unlike in the US, where censorship is usually on moral grounds and is a reliable box office stimulant until litigation is complete, on the Continent it's often on political grounds, as in Austria and Germany's recent ban of the US-made All Quiet on the Western Front. Just days ago, French police ordered closing of a German play concerning the Dreyfus affair, a political scandal that bitterly divided French society at the turn of the century, saying the play provoked disorder. Few who were in Paris at the time can forget the “seething hatred” caused by the affair, in which a young Jewish officer in the French army, Captain Dreyfus, was convicted of selling military secrets to Germany. Street riots were frequent, and the mere mention of the name drew scowls and violent words. (An article by Emile Zola later inspired a controversial reopening of the case, and Dreyfus was exonerated). Proponents of the play now demand the same freedom accorded the press, while opponents contend "the theatre because of its more intimate and personal appeal,” is a more powerful medium with a greater responsibility and "that its potentialities as a propagandist for causes far exceeds the fleeting message of the press."

Thursday, April 16, 1931: Dow 164.66 -3.77 (2.2%)

Assorted historical stuff:

Spring wheat areas in the Dakotas, Minnesota, and part of Iowa report a shortage of rain “so serious as to cause widespread dust storms”; both topsoil and subsoil in bad condition. This is “a comparatively late turn in events. Up to a couple of weeks ago, it appeared as though the drought had almost been broken.” Canada's Western prairie provinces also report drastic lack of rain, poor seeding situation, and major dust storms.

Head of Spanish provisional govt. N. Zamora pledged Spain will be given Constitutional govt. respecting religious and property rights of all. Peseta (currency) rallied vigorously in spite of continued rumors and skepticism on new govt.'s chances of success, with bankers expecting inflation.

Sen. Couzens (R, Mich.), former Ford VP and GM, warns that unless business leaders quickly make concerted effort to solve unemployment and stabilize industry, Congress will step in and provide for old age and unemployment insurance. Editorial: Sen. Couzens, using some sarcasm, stated that he hopes the US Chamber of Commerce meeting will "instruct Congress what we are not to do concerning the care of our citizens who are in distress." If the Chamber's pres. wanted to answer in kind, "he might have referred the Senator to ... the last session of Congress for some examples of what not to do"; instead, he took the high road with a "polite and evidently sincere" invitation to Sen. Couzens to "give the Chamber the benefit of any constructive ideas that may be teeming in his brain." This is a fine idea. The Senator also asks the Chamber "if it approves of 'the present trend of accumulation of property into the hands of the few.' Who is better qualified than the Senator to enlighten the Chamber on that process?" [I assume this was a shot at Couzens' wealth - he sold his interest in Ford for $35M in 1919.]

Recent surveys indicate little hope of smaller deficit in 1932 fiscal year (starting July 1), since economic recovery will be too gradual. It remains to be decided if govt. will cover deficit by borrowing or by raising taxes. If a tax hike is chosen, the politically expedient form would be a “soak the rich” surtax, though this would of course be harmful economically. A more desirable course would be to broaden the tax base, though this seems unlikely to attract support.

Editorial: In Canada a royal commision headed by Sir Josiah Stamp will investigate the very old question of whether speculation in farm products leads to lower prices. While US and Canadian farmers believe it definitely does, they might be surprised to find British consumers are positive it raises them! In fact, it does neither but is simply "a factor in registering prices, and those prices represent an equation of supply and demand ... The sooner farmers in Canada and the United States learn that speculation does not make prices high or low, and that it perfoms a most useful function in marketing farm products, the better it will be for them."

Editorial by T. Woodlock refuting Gov. Pinchot's accusation that electric utilities overcharge home customers by about $500M/year based on the rates they pay compared to industry. In 1929, utilities made $835M of profit on an investment of $11B, a return of 7.59%; lowering rates to home users by $500M would reduce return to a measly 3% (rates to industry are set competitively and so can't be raised much). Detailed analysis by Col. W. Kelly, VP of Buffalo, Niagara & Eastern Power, shows costs of service to home customers are in fact much higher, accounting for the difference in rates. Pennsylvania Senate committee investigating the state utility board criticizes Pinchot for attacks on the board and utilities in general, saying it found no evidence of corruption.

The Rotolactor, a machine that bathes, dries and milks 50 cows in 12 1/2 minutes, is now employed at the Walker-Gordon farm in Plainsboro, NJ. A turntable 60 ft in diameter is used; cows enter and exit without direct human assistance; vacuum pumps milk each cow, placing its milk in a separate jar. All this ensures the milk is kept absolutely clean. The machine runs 21 hours a day performing more than 5,000 separate milkings; each cow gets three turns on the ride.

The NY Telephone Co. has developed into an amazingly efficient organization; for example, service on a new phone begins immediately after the wires are attached. The serviceman, after completing installation, makes the first call to his coordinating office to report installation is complete and working, after which service on the new phone is no different from the other hundreds of thousands in NY City.

A huge factory, occupying 5 acres and costing $1.5M but without a single window, was recently built in Fitchburg, Massachusetts for Simmonds Saw & Steel Co. Daylight is replaced by uniform illumination from hundreds of 1,000 watt lamps. Other "scientific innovations" include an electric ventilation system and noise reducing appliances. The color scheme is also notable - machinery is orange, walls and ceilings blue, green and white, to rest the eyes.

NY City to immediately spend $2M of $10M appropriated by Legislature to give jobs to unemployed; will put 15,000 to work.

Archbishop of Canterbury and J.P. Morgan, cruising the Mediterranean on the Corsair, visit Jerusalem; King David Hotel flies US flag in Morgan's honor.

Market commentary:

Market wrap: Stocks broke badly. Bears applied pressure early, attacking US Steel through the morning and finally establishing a new bear market low under the 134 3/8 mark reached last Dec. Attention swung to Vanadium about noon; it plunged after suspending dividends. Selling spread to leading rails at mid-day; NY Central particularly weak on poor loadings report. Pressure on rails lifted briefly after Penn. RR declared normal dividend, but another selling wave broke over the general market about 2 o'clock; leaders lost further ground and US Steel and the rails closed at new bear market lows. Bond trading quiet; US govts. strong; European steady but S. American unsettled after another break in Brazilian issues; highest-grade utilities firm but rest of corp. list generally down; oil and rail issues particularly weak. Commodities mixed; wheat up substantially, other grains firm; cotton down substantially. Copper buying quiet; price remained at 10 cents/pound. Zinc declined to new low of 3.80 cents.

Conservative observers discouraged by inability of market to resist selling; continue recommending the sidelines.

Liquidation by the public and brokerage traders was higher than in recent sessions.

Observers encouraged by recent moderate improvement in copper conditions; believe latest price firming may be on a sounder basis than the sharp advance attempted earlier. Tobacco shares have held up relatively well recently; some of the buying may be due to persistence of rumors of wholesale price hike. Some quiet buying reported recently in rail bonds based on expense cuts and moderate business improvement in March.

NY Central may have felt effects of the industrial slump more than any other system; most of its volume is supplied by important industrial states including NY, Pennsylvania, Ohio, Michigan, Illinois, and Indiana. US Steel annual meeting will be held Monday, directors' meeting on dividends and earning report on the 28'th; report "may make poor reading."

Leading brokers report public has been waiting for a definite business upturn before buying, but report some "shrewd buying" by longer-term interests. Bankers queried on their outlook generally feel the market "may be about dragging bottom," but admit the "banking fraternity" doesn't contemplate "important action ... to stimulate interest on the buying side until it has been established definitely that general liquidation is out of the way for some time."

Broad Street Gossip: Rails are viewed more pessimistically than in years by the general public and market writers, although many high grade issues are selling at half or less of their 1929 peak, and "it is a foregone conclusion that when general business begins to pick up, the business of the railroads will increase with it." Stock "accumulation" continues, "but that counts for little in the absence of organized support." Stocks of some companies with gains of 25%-50% in shareholders over the past 18 months are down 50% or more in that time. One group recently bought over 100,000 shares of a certain stock over two weeks; the stock gained 3 points, but then lost all of the gain on total sales of less than 30,000 shares. Short interest is very large, "but it is evident that the shorts are confident of their position and have refused to be stampeded."

F. Awalt, deputy Comptroller of the Currency, says banking affiliates should be supervised, but without unreasonable restrictions that would tear down the national banking system.

Former Bank of France Gov. Moreau says there's a tendency to exaggerate role of central banks in world economic problems, since they are incapable of fixing prices. Sees need for developing foreign loans.

Hotel Pierre pres. Charles Pierre reports NY City's large hotel business, long considered an accurate barometer of general business trends, is clearly picking up.

J. Auchincloss, NY Better Business Bureau pres., says experience shows depressions "provide the richest soil for crooks' predatory activities." People who have lost the most "are the readiest to seize upon deperate expedients to recoup their losses"; urges coordination of fraud fighting agencies.

J. Pelley, New Haven RR pres., says business remains at low level, but sees some encouraging signs, and "more definite feeling of optimism in the air."

Martin Insull, Middle West Utilities pres., says utility holding companies have made US electric industry preeminent in the world over past 20 years; best interests of public served by “regulation of the operating company, with freedom of the holding investment company.”

While current depression isn't an exact parallel to that of 1921, history does show that when recovery begins corporate profits can recover with amazing speed; following the 1921 depression, corporate profits in 1922 rose an astounding 800% on a revenue increase of only 8% (though they were still below the 1920 total). Steel industry decline was more drastic in 1921 depression; production bottomed at 22% vs. 39% in 1930, while prices declined 50% vs. 12%.

Economic news and individual company reports:

Conference of West Palm Beach bondholders and city officials fails to reach definite conclusion. City has been in default of payment of interest since May 1929 and principal since Oct. 1929. Stockholders of defunct City Trust Co. to be allowed to sue officers and directors of the bank for "alleged wrecking of institution." NY Banking Superintendent Broderick testifies he didn't know of complex transaction by which Bank of US made it appear two affiliates had repaid $8M loan.

Steel production downtrend continued; week ended Monday was 50.5% vs. 52% prev. week, 55% two weeks ago, 75% in 1930, and 96% in 1929. Weekly steel reviews more pessimistic; hopes for recovery to March level waning; rail and farm demand down; automotive hard to predict; some hope for construction increase. Some price weakness in finished products; severe weakness in scrap “seen as ominous by many observers.” Machine tool demand weaker.

Labor Sec. Doak reports employment in manufacturing industries increased 2.3% from Jan. to Mar.; payrolls increased 10%.

New life insurance written in March was $1.028B, down 15.9% from 1930; total for Q1 was down 12.2%.

Long analysis of national income and tax data for 1929. In spite of the crash late in 1929 that wiped out $25B in stock value, total net income of $24.5B was almost unchanged from 1928, and much of that income came from capital gains, particularly for the highest income brackets (total net gains $3.9B).

Bell System grew at slower pace in 1930; revenues were $1.103B vs. $1.071B; net $283.5M vs. $291.1M; phones in system 20.098M, up 1.054M.

Rubber industry operations have recovered seasonally from low of last fall, but production for Jan.-Feb. remained 15% below 1930 and 30% below the 4-year average; outlook uncertain pending summer buying season; tire prices believed firmer; crude rubber situation remains unfavorable,

World sugar agreement to be signed June 5 at The Hague, where the permanent commission will be located. World lead producers agree to curtail output 15%.

Lloyd's reports world shipbuilding activity declined over 325,000 gross tons since start of year, to lowest in four years; British plunged from 908,902 to 693,814, US was relatively stable, and French increased substantially.

Canadian budget for fiscal year starting Apr. 1 was $386.4M, down $37.3M from prev. year.

French decree raises allowed percentage of foreign wheat in flour from 5% to 15%. Price of wheat is at postwar record high of 180 francs/100 kilos.

German state and central govts. guarantee 70% of credits to Russia to support German exports there.

Argentine exports in Q1 were 3.976M tons, valued at $162.0M, up 37.7% in volume but down 15% in value vs. 1930.

14 textile mills in Carolinas to merge into Textiles, Inc.; to be largest yarn spinner in US, controlling 300,000 spindles.

Fertilizer sales in 10 Southern states in 8 months ending in March were down 33% from prev. year.

American Tobacco makes 8 brands of cigarettes, 2 of little cigars, 2 of cigarette paper, 3 of "twist tobacco," and 17 of plug, chewing, and smoking tobaccos. American Machine & Foundry, whose machines make 95% of US cigarette output, is developing a machine that can produce up to 2,000 cigarettes a minute, vs. current machine's capacity of 600/minute.

GM sales to dealers worldwide in March were 119,195 cars and trucks, up 24% from March and only down 10% from 1930, best comparison this year; Q1 sales were 304,547, down 17%.

International Great Northern Rwy. was only one of the first 23 class 1 rails reporting Q1 traffic figures to show an increase over last year; car loadings gained 17.8%, benefiting from large movement of oil from new East Texas fields.

Companies reporting decent earnings: W.T. Grant (chain stores), Niagara Hudson Power, American District Telegraph, Rand Mines Ltd., Zonite (antiseptic and household drugs), Wil-Low Cafeterias.

Theatre:

Top-notch vaudeville at The Palace. Four actors share role of MC, including Phil Baker and Bert Lahr. Features Don Azpiazu's Havana Casino Orchestra playing The Voodoo, Azpiazu's "stirring composition ... particularly effective in dance form presented by the West Indian [Caribbean] girl who appears with the orchestra." Of course, the band also plays Azpiazu's smash hit The Peanut Vendor, with English lyrics by Marion Sunshine. Other acts include Lahr and Ben Bard in "the examination scene from Flying High, which nearly everyone found shocking but hilarious," and Baker and "Italian dialect comedian Harry Burns ... in some more or less spontaneous nonsense."

Movie:

Strangers May Kiss - MGM, starring Norma Shearer and Robert Montgomery, at the Capitol. "Cheap trash", "lavish production and competent acting of the principals are powerless to make the movie saisfying," although it does feature Shearer saying "I'm in an orgy, wallowing, and I love it."

Poem by Justa Naverage (with apologies to Kipling):

"Wheat, wheat, wheat, wheat, Wheat and the chronic sight of it!
Cheap, cheap, cheap, cheap, But millions can't get a bite of it!
Pools and probes and probes and pools, Government guarantees, politics, fools
Farmers, grainmen - these are the tools That have chiseled the present plight of it. ..."

Report from France:

Old Paris, with its "narrow crooked streets," "sinister quarters," and "unsavory tenants," is being demolished to make way for more pleasant neighborhoods, including modern cinemas. The most notorious slum in old Paris, the former Cour des Miracles, is now home to the Theatres des Miracles, showing a film with Douglas Fairbanks, Jr. This neighborhood, once home to "the most depraved criminals of Paris" and immortalized by Victor Hugo in Notre Dame de Paris, took its ironic name from a public court at which beggars "miraculously" washed off their painted wounds to turn into "banditti" by night, while old women returned from begging on church steps and shed their years and rags "for that other role which they played by night in the streets of Paris."

Wednesday, April 15, 1931: Dow 168.43 -2.64 (1.5%)

Assorted historical stuff:

Spanish govt. overthrown. After a strong Republican showing in local elections, King Alfonso gave in to their demands and abdicated so a new govt. could be set up. This ended 981 years of monarchical govt. Demonstrations throughout Spain but fair order maintained; martial law declared. Provisional Republican govt. named. King granted safe conduct; gave in to avoid civil war and bloodshed. Editorial: At the moment, Spain is in total confusion. "Yet, assuming reasonable ability on the part of the Republicans," change should be wholly positive. Public sentiment had been moving toward more democracy for some time. It's a "great gain that this was a bloodless revolution, fought with ballots instead of bayonets." While outcome is unpredictable, it's reasonable to expect transition to constitutional govt. respecting "private rights of person and property." Finances shouldn't cause concern; Spain has ample gold reserves and "no inflationary problems"; currency decline has been due to "timidity or incompetency." Investors shouldn't fear repudiation of debts, since by international law, revolution doesn't extinguish debts.

Interesting Woodlock editorial answering reader's question about what would happen to the gold-standard economies if technological development provided an unlimited supply of cheap gold [I actually predict this will happen in the next 30 years]. Woodlock answers the consequences would be similar to the German hyperinflation: owners of real state, buildings, and “things” would be as rich as before, debtors would be freed of debt (since the money they owe, being based on gold, would be worthless), and creditors would be wiped out. Since, in the US economy, the middle and wage-earning classes are the creditor classes, unlimited gold would wipe out most of their property. (Of course, consequences would also include “indescribable confusion for a time” until new money system emerged).

Editorial: Economist Sir George Parish recently joined ranks of many other non-radicals who nevertheless believe evolution of Russia "toward sanity and a genuine freedom of the spirit" is inevitable, and would be helped by extending long-term loans; this should also have the practical benefit of ending Soviet "dumping" of foodstuffs. However, in view of the clear Soviet stance that private property is "the vilest of social evils," could he really recommend those loans to the investing public or a bank? "If Russia is to float a loan, in Canada or elsewhere, let the prospectus recommending it to investors be drawn up by Sir George Parish."

Pres. Hoover praises black economic and cultural progress in speech marking 50'th anniversary of Booker T. Washington's school at Tuskegee. Pres. Hoover, in Pan American day speech, praises progress toward settlement of major disputes among American republics by conciliation and arbitration.

Japanese cabinet headed by Y. Hamaguchi resigned Monday; Emperor Hirohito directed former premier R. Wakatsuki to form new cabinet.

Sir H. Robson, British delegate to recent grain conference, attributes current "disastrous" situation to govt. intervention, in exporting countries by accumulation of huge surpluses, and in importers by regulations and import duties.

Supreme Court decision on oil cracking patent seen as important, validating cross-licensing and sharing of patent royalties as possibly promoting rather than restraining competition.

The car industry has been a large factor in the country's progress over the past 20 years; some estimate it directly and indirectly employs 10M people. It has been a large contributor to growth in steel, oil, copper, electric, lumber, and other industries; it's even one of the largest customers of the rails, in spite of their complaints about cars usurping their business. It's estimated owners in 1931 will pay a record high of $1B in taxes on their cars. The 20 million'th Ford car was assembled at the Rouge plant in the presence of Henry and Edsel Ford.

Holland Tunnel sets new record for traffic volume April 12, when 58,702 cars passed through.

New Jersey trout fishing season begins today; over half a million trout have recently been distributed in rivers and brooks, or 500 per mile.

The Dead Letter Office in Washington received 22.686M letters in the 1930 fiscal year. After every attempt at delivery failed, the letters were opened, and 70% of the $105,000 in currency and 98% of the $5.3M in checks were returned to the senders.

Bond Club to revive its annual Bawl Street Journal publication "filled with Wall Street witticisms and satirical thrusts aimed at the outstanding personalities and events of the financial district." Previous copies have become collector's items.

F. Pasley of the Chicago Tribune has written a bio of Al Capone, "appropriately sub-titled 'The Biography of a Self-Made Man.'" The ad promises "everything is here, from the first handshake murder to Capone's party on his Florida estate, where the guests amused themselves by shooting at floating pop bottles with machine guns."

Market commentary:

Market wrap: Stocks opened with continued strength, lifting majors in early trading and prompting "urgent short covering." However, uptrend was checked about noon as selling broke out in groups including electrical equipment and amusement shares. Main body of stocks showed good support at first, but gave way in the afternoon following renewed assault on electrical shares. Bond trading dull; US govts. continued strong; Brazilian issues again weak, but other foreign bonds quiet, with no apparent effect from Spanish news; corp. highest-grade firm but second-grade and speculative mostly lower; some rallying in rails. Commodities weak; grains mostly lower; cotton down sharply.

Electrical shares were a weak spot following estimate GE wouldn't cover dividend in Q1 and previous Westinghouse report of loss. Amusements also weak on anticipated seasonal earnings decline. GM remained strong on expected favorable sales report. March rail earnings expected to increase from Feb. based on gain of 104,100 in car loadings; this compares favorably to an 8,800 gain in Mar. 1930 and a 40,600 gain in Mar. 1929. Both the oil trade and Wall Street believe a cut in midcontinent crude prices may be coming soon.

Bulls encouraged by pattern "on several occasions recently" of lower volume when market was under pressure and more active trading during rallies; this is believed "one of the most encouraging signs in the past few weeks," reflecting lack of liquidation on declines and entry of new buyers on rallies. Market observers believe short interest may "provide a cushion for the market during reactions"; bear policy in past few weeks has been to cover during reactions. Market appears more selective than in past several years, as investors seem to be carefully weighing merits of individual stocks; this has caused some stocks to hold quite well even under heavy bear pressure, while others in the same group give way.

Market interests who incline to the long side say constructive business news now would materially help stocks; however, many feel business news is unlikely to improve much until after first-half earnings reports; substantial industrial improvement is seen likely to come in the late fall and extend into 1932.

Jackson, Boesel say market should "fluctuate meaninglessly" in a trading range for about 60 days; "short interest is ... too large to permit of a major decline in the near future," while a "major advance is also out of the question" due to pending bad news including removal of govt. support for wheat and poor Q1 earnings. After this period, "technical position will be unusually favorable for a sustained advance," based on business improvement that should by then be apparent.

Broad Street Gossip: One broker who keeps tabs on incoming "tips" reports he received 38 last week, of which 33 were bearish. The market declined steadily from Mar. 24 - Apr. 14; the Dow industrial average closed lower on 15 of 18 trading days, ending with a total loss of 17.57. A number of bull pools were formed early in the year; most "still are intact and will become active as soon as conditions warrant." Brokers report a "preponderance" of accounts now are using no margin, even with call money at 1 1/2%; in 1929, with call money at 8%-10%, margin accounts predominated.

A. Reeves, Nat'l Auto. Chamber of Commerce GM, reports car buying demand encouraging; believes buying will extend far beyond usual spring season into summer due to carmakers' recent decision not to announce new models in the summertime.

Florida Gov. Carlton says defaults of local Florida govt. debts have frozen public and private enterprise. However, says direct aid in form of absorbing debts with state bonds out of the question; calls for "uniform but liberal" procedure for refinancing.

Lawrence Stern & Co. note sharply improved bond market in March; only 20% of dealers surveyed reported normal business in Feb., but 40% did in March, while over 90% foresee fairly good bond business in coming months.

Col. Ayres of Cleveland Trust points out price-earnings multiples of high-grade stocks remain relatively high due to earnings declines; at end of 1930, leading stocks sold for 20 times earnings vs. 19 at the bull market peak. However, the price-dividend multiple has declined from 32 at the peak to about 17 now; corporations largely maintained dividends as earnings declined, and as a result were paying out 114% of earnings at the end of 1931.

Judge M. Gossett, Federal Land Bank of Houston pres., defends firm loan collection policy, points out dangers of leniency.

R. Stephenson, Amer. Bankers Assoc. pres., says wage adjustments should be made if required by economic conditions; however, calls on the banker predicting that wage cuts are inevitable to make clear he “is merely interpreting impersonal events and is not expressing personal desires of himself or his supposed class.”

Banking situation doesn't show any real business revival yet. Loans at Fed. member banks alone are down $852M since start of the year, while investments held by banks continue to grow; “there seems to be almost no demand for credit, at least of a type that banks are willing to extend, and so long as this condition continues money will rule extremely easy and banks will be forced to seek employment for their funds in the investment market.”

Economic news and individual company reports:

Nat'l Industrial Conf. Bd. notes bonded debt of state and local govts. has been rising steadily in recent years, contrary to trend in Federal debt. State and local net bonded debt in 1928 was $12.6B, up 7.6% from 1927; previous two years showed increased of 9.5% and 9.2%.

GE Q1 earnings fell slightly below dividend requirements of 40 cents/share, for the first time in many years; Q1 1930 earnings were 50 cents; new business bookings in Q1 were 33% below 1930.

Bell System showed a net decline of 38,500 or 1/4% in telephones in Q1; first quarterly decline in memory, though March showed increase.

Bethlehem Steel expects slight profit in Q1. About 500 stockholders present at annual meeting. Chair. Schwab gave impassioned defense of controversial executive bonus system, but stockholders were restrained from announcing results of the vote pending notice from the court. Company held proxies for about 72% of shares, enabling them to pass any motions favored by management.

Net profits of 722 industrial and mercantile companies in 1930 were 42% below 1929, 32% below 1928, 16% below 1927, and lowest since 1924. Earnings of telephone cos. and other public utilities in 1930 were only slightly changed from 1929, and remained well above previous years.

Veterans' bonus payments as of Apr. 11 reached $473.5M to 1.257M veterans; thus far, very little seems to be making its way back to banks as deposits.

Prosecutor Steuer in Bank of US trial charges $8M loan to affiliate was made on highly overvalued assets.

Rail freight loadings for holiday week ended Apr. 4 were 728,511, down 11,568 from prev. week, down 19.7% from 1930 week, and down 23.9% from 1929.

Refineries ran at 66.4% in week ended Apr. 11; stocks of gasoline increased 681,000 barrels to 46.757M. Crude oil production in week was 2.308M barrels/day, up 56,150 from prev. week but down 252,900 from a year ago. Almost all of week's increase due to Texas production. Texas Att'y Gen. rules restraining order against East Texas curtailment only applies to small tract; Railroad Commission will move to enforce curtailment.

Portland cement production in March was 8.227M barrels, down 26.7% from prev. year; shipments were 7.172M, down 18.7%.

Newsprint production in US and Canada in March was 287,595 tons vs. 253,340 in Feb. and 320,813 in March 1930.

Hog and steer prices continued decline. Opening prices for 1931 Hawaiian pineapples down 16% from last year.

US steamship interests will seek legislation to curb activities of foreign ship lines in travel lanes that "belong to the American lines," particularly "trips to nowhere." Claim earnings of foreign lines not taxable, and therefore unfair to US lines.

Foreign exchange market featured sharp break in Spanish pesetas; sentiment was disturbed by failure of Bank of Spain to defend currency in spite of obtaining recent $60M stabilization credit; “rumors of all kinds” circulated due to strict censorship in Spain.

L. Ponton, Mexican Finance Min. chief clerk, says govt. faces 30M peso deficit this year as Q1 revenue was 10% below estimates. Mexican Agricultural Chamber favors suspension of debt payments "for this year at least" to finance Mexican agriculture.

Poland to cut salaries of govt. and army officials 15% for monthly savings of $1.2M

Suez Canal receipts from Jan. 1 - Apr. 10 were $15.121M, down over $1M from last year; cut in rates considered to stimulate traffic.

Kellogg Co. of Battle Creek adopts 6-hour day to relieve unemployment.

Q1 earnings/share: AT&T $2.51 vs. $2.96; Western Union $1.22 vs. $1.76; Scott Paper $1.63 vs. $1.57; Otis Elevator $0.68 vs. $0.83.

Companies reporting decent earnings: Scott Paper, Commonwealth Edison, National Public Service, Chesebrough Mfg. (Vaseline), Unilever.

At the galleries:

Knoedler Galleries hosts exhibit of “Pictures of People” to benefit Hope Farm; perhaps the finest canvas is Whistler's “White Girl,” painted in 1863 and widely exhibited since, although Whistler's reputation as a painter “has begun delicately to decline.” Also shown are two Renoir masterpieces, two Cezannes, “without whose work no group exhibition of the past 50 years can be considered complete,” the masterful “The Soap Bubble” by Manet, and “L'Arlesienne” by Van Gogh, as well as portraits by Sargent, Bellows, Matisse, Beal, Picasso, and Specher. Kennedy & Co. are showing an interesting set of drawings of old NY by Nicolina Calyo, depicting “sidewalk types of a vanished era” including “the chimney sweep, the cane seller, the rubbish man, the pineapple seller, the soap fat man, the root beer seller, etc.”

Movie:

A Connecticut Yankee - starring Will Rogers; at the Roxy. Mark Twain's amusing tale has been modernized and slightly modified for its star; "a host of Austin cars" are used to transport Arthur's knights, and "a typical Rogers episode shows the Connecticut Yankee participating in a tournament ... dressed in cowboy costume and finally throwing his opponent with a toss of the lasso. ... The Will Rogers drawl tends to slow up" the picture, but this is compensated for by the dialogue, "much of which is spontaneous Rogers humor, including references to current political problems. ... Industrialization of the kingdom ... is amusingly depicted ... bathtubs are introduced and the technique of warfare is advanced by the production of machine guns, bombs and airplanes."

Joke:

"Husband - I've got to get rid of my chauffeur; he's nearly killed me four times. Wife - Oh, give him another chance."

"Son - Ma, what's the idea of making me sleep up here every night? Mother - Hush, Bobby, you only have to sleep on the mantelpiece two more weeks, and then your picture will be in a Believe-It-Or-Not cartoon."

Tuesday, April 14, 1931: Dow 171.07 +3.04 (1.8%)

Assorted historical stuff:

Weather conditions in grain states, at least for the time being, are overshadowing the huge surplus in storage. "For some days messages from the American and Canadian Northwest have been telling of severe dust storms." This is indicates lack of surface moisture, and recent official reports have also told of a lack of subsoil reserve. While rains have been sufficient to give winter wheat crop a good start, "persistent rains will be necessary to prevent deterioration."

Editorial by Guy Walker citing astonishing total of US national income as evidence of the "folly of fear for the future and the restraint upon spending that is being shown by the American people." Puts total gross US income for 1929 at $213B, including corporate, individual, and farm revenues; also cites $210M increase in savings deposits in NY alone during Dec.-Feb., "at a time of unparalleled unemployment and depression. ... The chief problem is to use intelligently the capital which we have been gathering in such large amounts in developing the rest of the world and bringing it up to a standard of living comparable with our own. If the people of China could be benefited by the use of American capital" national income there could rise to $80B; this would flow into foreign trade and benefit the whole world.

Editorial by T. Woodlock: Human progress now depends on replacing society's current “drift” with “mastery” under direction of a talented minority. This will be difficult because the instincts of all work against it. The majority will find it difficult “to realize that in the politico-economic order it is not the fount of all wisdom and the seat of omnipotence,” since it is often assured by politicians that it is both. On the other side, “it is not natural for the minority of mankind (which constitutes the upper tier of brackets) to regard itself as trustee for the welfare of mankind.” To achieve this, “some unifying principle must be found which both minority and majority recognize, believe, and resolutely attempt to put into practice.”

Editorial on idea that workers' buying power can be preserved by avoiding wage cuts or by a universal 5-day workweek. Situation is more complex; workers can be divided into those making full pre-depression wages, and those whose pay is lower or who have no work. The first category can command greater amounts of the labor of the others; this must be temporary, since the others will respond by curtailing most their consumption of what the first category produces.

Sen. Borah says oil industry should be declared a public utility to give Congress control of prices; says curtailment plan arrived at in recent conference of oil producing states fails to protect consumer from exorbitant oil and gasoline prices. Interior Sec. Wilbur replies this is a matter for states to decide, though he assumes whatever plan is agreed upon will include consumer protections.

Herald Tribune reports Pres. Hoover plans renewed effort to stimulate public interest in home building.

Editorial: Legislature has finally acted on bill to relieve savings banks from discriminatory tax. Under current system, savings banks, originally supposed to receive preferential tax treatment to promote thrift, were paying as much as 12% of net income vs. 4 1/2% for commercial banks. Final version of the bill offers full relief, reducing rate to 4 1/2%; Gov. Roosevelt is expected to sign it even though it reduces tax revenue a few million dollars from the existing "unjust and unfair law."

For the first time since organization of the Honolulu government over 20 years ago, a man without Hawaiian ancestry is mayor: G. Fred Wright, born in Honolulu of "Anglo-Saxon parents." Board of Supervisors also has record-low Hawaiian ancestry, featuring "but one member of part Hawaiian blood. Other members include one Chinese, one Portuguese, and four Anglo-Saxons."

About 18,000 attended National Aircraft Show at Detroit City Airport on Sunday. Show expected to unveil decided improvements over last year's models. New "flivver" planes priced in $1,000-$2,000 range should revive moribund demand in commercial field. Airline officials encouraged that recent disaster in Kansas [in which Knute Rockne and 7 others died] hasn't diminished passenger traffic; another record is expected this year.

Rail innovations: B.&O. is installing electric air-conditioning units on its special "Columbian" NY- Washington train that can change the air in the car in two minutes while excluding all soot, cinders, and other foreign bodies. Southern Rwy. is printing menus for its "Crescent Limited" on cotton cloth to promote use of the textile.

Market commentary:

Market wrap: Stock trading was light, and movements narrow but mostly upward through the session; trading turned "virtually lifeless" on declines. A convincing rally broke out near the close "which forced the shorts into urgent retreat"; uptrend spread across the list and stocks generally closed at the day's highs. Bond trading quiet, prices irregular; US govts. firm; foreign mixed with European in demand but renewed weakness in Brazilian issues affecting S. American list; corp. irregular with utility and traction issues strong, but continued weakness in some rails; some speculative issues were in demand. Commodities strong; grains and cotton up substantially. Copper up to 10 cents, domestic demand is moderate but foreign sales brisk.

Conservative observers see possibility of further technical gains but remain cautious; advise using further advances to reduce long positions. Recent weakness of rails seen as warning sign, considering rail movements have predicted general market well in the past year.

Market appears to be resisting bear pressure more firmly in recent sessions, in spite of many very poor Q1 earnings statements. While the averages declined steadily in the 3 weeks ended Saturday, many groups have held their own including chain stores, tobaccos, and coppers; in the meantime, volume has been shrinking and main offerings seem to be coming from short-sellers. This indicates technical strength and makes a "selling climax" less likely.

Market conditions seem ripe for technical rally; some traders have quietly been picking up leading stocks in anticipation, though they're protecting positions with stop-loss orders. Some brokers report recent heavy short selling by the public, despite their advice to the contrary; these new recruits have been putting out stocks while some of the old-time bears have been covering. A number of brokers report recent liquidation of rail shares by long-term investors disturbed at inability to resist bear pressure; some switching to bonds reported.

Public utilities were a strong spot, including AT&T and Consolidated Gas. Coppers also strong on improved price situation. Vanadium was down sharply on dividend rumors, but other trading favorites were strong, with Auburn soaring 14 points to 292 1/2. Only three weeks after announcing a dividend cut, Westinghouse is again subject of dividend rumors based on poor first-quarter business. Company has been one of the "outstanding targets for ... the most powerful bear group operating in the Street." Procter & Gamble, going against the trend, is rumored to be a candidate for a dividend increase. Mexican Seaboard (oil) said to be subject of bull pool operations.

Recent survey finds a representative group of 34 managed investment trusts [similar to mutual funds] had average depreciation of 31.6% in assets in 1930.

Broad Street Gossip: Although business has been declining since the summer of 1929, well-managed corporations are as strong as ever in cash assets; shrinkage has been confined to earnings and market capitalization. This contrasts sharply with previous depressions, in which many cash-poor corporations were forced to borrow at 6% or more. Lending and "heavy investing in securities by corporations is something never witnessed in previous depressions." Despite the long economic downturn, public buying power is still large. NY State savings bank deposits continue to increase, now totaling $4.958B with 5.436M depositors. Floating supply of the stock of many corporations is at a record low, indicating public still has money to buy stocks. Public has also been absorbing $500M or more per month of new securities. Recent $275M issue of treasury certificates drew almost $1B of bids.

US study for Internat'l. Chamber of Commerce finds automation of industry in recent past hasn't caused appreciable reduction in employment opportunities for industrial workers; displacement of workers by technology seen as problem of "vocational readjustment." H. Houston, US committee member, to present proposal for economic study of war debt question in light of current business conditions; suggests canceling payments based on arms cuts.

G. Pierce, Nat'l Shawmut Bank VP and head of foreign dept., says US and France should greatly increase foreign financing to bring about business recovery.

T. Chadbourne on closing of his world sugar agreement: plan is unique in receiving support from govts. of all countries involved; without this agreement, enormous oversupply would have persisted for several years, but with it there's every reason market should become orderly again; price could rise to 2 1/2 cents or higher.

A. Erskine, Studebaker pres., predicts auto industry will produce 3.1M cars in 1931 and 4M in 1932.

Economic news and individual company reports:

Spanish pesetas broke sharply after election that precipitated “grave political crisis” putting govt. in danger of overthrow. Bank of Spain apparently failed to defend the currency, bearing out recent criticism that “political stability and the willingness to make the necessary sacrifices” were needed for stabilization.

GM strengthened balance sheet in 1930 in spite of lower earnings; working capital rose $29.7M to $281.0M; current ratio rose 4.35 from 3.13, highest since 1924. Auburn shipments for Jan. 1 - Apr. 11 were 13,888 cars, exceeding shipments for the entire 1930 year. Nash Motors maintained per-unit profit margin close to previous 5-year average in spite of sharp decline in sales and earnings, thanks to tight control of expenses. Sales are up sharply in Mar. and Apr.

Cotton textiles report continued progress in March; production was 271.6M yards, up 2.4% over Feb.; shipments 317.2M, or 116.8% of production; sales 295.3M, or 108.7% of production; inventories 273.8M, down 14.3% in March and lowest since Jan. 1928; unfilled orders 374.0M, down 5.5%.

Oil production figures for past week will be up sharply due to rise in East Texas and temporary increase in Oklahoma. Texas oil operators say decision temporarily suspending curtailment in East Texas may upset quotas in other Texas districts. Supreme Court decides against govt. in antitrust suit charging Standard Oil cos. of Indiana and NJ, Texas Co., and others regarding gasoline cracking patents.

Agriculture Dept. reports drought relief loans to Apr. 10 totaled $32.7M to 234,786 borrowers. Cattle and hog prices sharply lower after heavy runs to market. Farm Board chair. Stone confers with Chinese Minister Chauochu Wu on possibility of distributing Farm Board wheat in China.

Bank for Int'l Settlements reports progress in new role of international clearinghouse for currency and gold transfers, which may help work toward “European monetary solidarity” by reducing risks of shocks among the 25 European gold-based foreign currencies. Has also been investigating ways of facilitating medium-term credit to countries in need of capital.

Canadian report: Highest-grade bonds have shown uptrend in spite of relatively heavy new issues this year; tax-free govt. bonds yield 3 1/2%, taxable 4 1/2%, and highest-grade utilities slightly more. However, the need to refinance $1B in govt. debt over next few years is causing some concern. Local govts. are taking advantage of the favorable market to finance public works; new bond sales were $190.4M in Q1 vs. $162.6M in 1930 and $125.2M in 1929. Savings deposits continued uptrend in Feb., while current loans continued decline. An early spring is increasing retail trade in some lines, though retail prices have only declined 9% from the Jan. 1930 peak while wholesale prices are down 24% from the Sept. 1929 peak. Weekly rail freight loadings showed some improvement in March. Major distilleries agreed to end price cutting; export trade has suffered since govt. closed off liquor exports to US.

Australian govt. to claim $3.5M from state of New South Wales to compensate for payments made to holders of state bonds when the state defaulted Apr. 1.

Argentine govt. replaces high tariff on imported foreign movies with 20% tax on profits of distributors.

3,500 workers of the Philadelphia & Reading Coal & Iron Co. out on strike.

R. Whitney renominated as head of NYSE.

Companies reporting decent earnings: Beatrice Creamery, Internat'l Hydro-Electric System, Jamaica Public Service Ltd, Warren Foundry & Pipe.

Theatre:

Peter Ibbetson - Lee Shubert's "painstaking revival" of the wistful romance, based on George Du Maurier's popular novel. [Childhood sweethearts are separated, the man unjustly imprisoned, but they can reunite eternally in each other's dreams].

Joke:

"Mrs. Youngbride (in bookstore) - What are the blank pages in the back of the cook book for? Clerk - My wife uses them for the addresses of the delicatessen shops."

Monday, April 13, 1931: Dow 168.03 -0.69 (0.4%)

Interview with the publisher:

H. Bancroft, Dow Jones pres. [WSJ publishers], comments on the economy in interview with Chicago Daily News. “In regard to business, it is very clear that we are close to the bottom of the U.” In major depressions, stocks go down in “a jagged V,” but business takes “a slower curve. ... The current depression is the worst in depth and extent ... in my lifetime.” Nothing compares except depressions of the late 1870's and mid 1890's; it's much more severe than 1921 and 1907. While we may not have hit absolute bottom, “a further drastic decline is highly unreasonable.” However, start of recovery will be slow; most that can be hoped for is “an improvement from terrible to plain poor.” Modest improvement likely throughout 1931. Depression has been prolonged by artificial efforts to “fight the inevitable”; in particular, theory that high wages produce prosperity has things backward. Favors high wages when possible, but believes wages must be adjusted in industries that are unprofitable; this will increase jobs. Also criticizes “outrageous and extravagant spending of the public money”; would favor govt. spending to provide work during depression, if it could stop spending during prosperity; “as it is, they take all they can both ways”; “remedy” likely to cause new problems.

Assorted historical stuff:

AFL pres. W. Green pledges resources of the AFL for old-age relief. Favors enacting laws in each state "with a commission to care for those to be aided, with benefits of not less than $300 yearly for those in need at age of 65."

Editorial: Oil industry is in desperate straits. Oil is selling at 20 cents/barrel in the newest East Texas fields, and oil men are predicting that may shortly drop to 10. Nevertheless, Texas land owners are bitterly resisting curtailment efforts, apparently determined to sell their own underground wealth for a fraction of its worth, and destroy values in other areas in the process. This is ample reason to support the purpose behind the 10-state oil curtailment plan, as complex and uncertain as than plan is. However, one weakness that should be addressed is its restriction of producing wells while leaving drilling unrestrained; "if the flow from existing wells can be subjected to legal restrictions, why not the sinking of new wells?"

Editorial: Upcoming International Chamber of Commerce meeting in Washington offers a real opportunity for useful dialogue instead of the "usual pious platitudes." In the past year, "business men of all races have had their preconceptions roughly shaken"; they're now more open than in many years to "new points of view, to unfamiliar ideas" that may offer hope of improvement. Two years ago, the meeting was prevented from discussing the Hawley-Smoot tariff then pending in our Congress; the US should not again ask for special consideration when this subject arises. Other sensitive topics are likely to come up, including "the Russian problem, which almost daily shows new facets," international debts and reparations, and economic changes in Europe, including the desirability of strengthening Germany's economy as "a bulwark between Russia and the rest of the world."

Woodlock editorial smackdown: a correspondent writes in disputing implication that Bethlehem Steel dissidents are motivated by "antipathy to the other fellow making a million or more dollars per year." Bonus system enabled small group of executives to take $31.9M during same period stockholders were only paid $40.9M in dividends. "Can anyone assert that Bethlehem Steel, with its extremely liberal bonus system for executives, has any more efficient management than that of AT&T, Pennsylvania RR, ... US Steel, or 50 other important corporations which you or I could name without difficulty and where CEOs are receiving $50,000 to $100,000 per annum?" Woodlock responds to point about dividends; comparison to other corporations not addressed.

Ford "junking" system for worn-out cars has proved itself, and system will be expanded to capacity of 5,000 cars/day from current 300-400. Unlike other carmakers who turn junked cars over to commercial dealers after incapacitating them, Ford has a "disassembly" line on which, in about 30 minutes, all parts having value for salvage are systematically reclaimed, including glass, pipes, tires, and cloth, and the remaining hulk is compacted and melted for steel. While Ford is probably taking a loss on the junking process, it's felt the benefit of getting antiquated cars out of dealers' hands outweighs it.

Passenger airline operations are now becoming regular enough to offer some of the same features as railroads, including published schedules. Passenger volume has increased to the point where airlines are now including in their schedules a page of "general information" for passengers to take account of before travel; Eastern Air Transport's specifies that babes in arms travel without charge but all others must pay full fare, and that animals are barred.

Transcont. & Western Air to start new 24-hour coast-to-coast service Apr. 20; service may only carry mail until dark parts of airway route are lighted.

Lawsuits against Colonial Western Airways for St. Patrick's Day crash in 1929 that killed 14 result in jury award of $89,000 in damages.

The old saying "Nothing is sure but death and taxes" takes on new meaning in Denmark. "A recently compiled list of the various taxes made on Danes includes state, county, capital, income, house, ground, church, water, dog, business, radio, beer, alcohol, automobile, document, benzine, snow, inheritance, road, chimney, calendar, movie and legitimate theatres, dancing, amusement and bachelors."

Theft of freight and other goods on rails was $990,000 in 1930 vs. $750,000 in 1929; increase attributed to unemployment.

Week in review:

Stock market action was "diametrically opposite" to culmination of bull market in summer of 1929, when stocks rose steadily in face of unmistakable signs of business slowdown. In spite of "cumulative signs ... general trade was recovering from the lowest levels of depression", stocks declined, led by renewed pressure on rails. Rail earnings for first 2 months were very poor, but should now improve seasonally. Steel outlook uncertain; production declined, but opinion was split on whether production has peaked for first half. Bond trading active, irregular. US govts. firmed after announcement of $275M issue; NY State long-term bond offering sold at near-record low 3.464%. European govts. mostly firm, while S. American fluctuated under influence of unexplained plunge followed by rally in Brazilian issues. Corp. highest grade firm, particularly utilities, but most of the list trended down, particularly rails. Foreign exchange featured steadiness in sterling, weakness in franc, with speculation gold may move from Paris to London; marks declined on anticipated Reichsbank discount rate cut. Grains fluctuated narrowly most of the week, while cotton declined gradually. Call money returned to 1 1/2% after brief spurt to 2 1/2%. Fed. Reserve continued easy money policy by lowering buying rate for 46-90 day bills. Gold holdings hit new record of $4.706B. NY bank loans continued sharp decline.

Market commentary:

Market wrap: Stock trading highly professional in weekend session; volume light and fluctuations small; market firmer early and receded later, but showed no distinct trend or evidence of concerted bear action; Dow industrial average ended down but rail and utility averages closed higher. Bonds active in short session; US govts. firm; foreign steady to firm; corp. irregular with "readjustment" in many parts of the list while some rail issues rallied. Commodities strong; grains generally firm in spite of bearish Canadian report of record wheat supplies; cotton up substantially. Copper no longer available below 10 cents, though no sales have yet been made at 10.

Conservative observers increasingly anticipate a technical rally, but still advise clients against trying to catch it; instead, advise reducing long positions on advances, since they can probably be replaced at lower prices after poor Q1 earnings reports.

Traders who have been most active in recent weeks continue pessimistic, have been selling short on all rallies. Largely professional character of recent market is confirmed by concentration of trading in a few issues; in a number of recent sessions, as much as 50% of trading was in about 20 stocks, and 15% in two or three. Recent action of rails has been discouraging to the public, many of whom consider them high-grade investment issues. However, if industrials can counter rail trend over next few sessions this would be considered encouraging by those observers still anticipating a technical rally.

Overnight news was light, but Friday's included some positive items such as the sugar agreement, US Steel tonnage report, and improved markets abroad. A report was heard on the floor that "the short interest would be run in this week"; this might be accomplished quite easily with current low volume.

Copper issues strong; production and inventories have been declining, sales in the first quarter were ahead of 1930, and price outlook seems firmer. Motor shares were strong with Auburn hitting a new high of 278 1/2, up over 200 points in a few months. Other strong spots included steels, tobaccos, and tractions. Fertilizer shares have been weak on lower sales and greater need to extend credit.

Kreuger & Toll's recent report confirmed predictions by some of a favorable showing; quiet accumulation reportedly in progress for a European account. Johns-Manville down sharply after poor Q1 earnings. Radio Corp. steadied about 20 after heavy selling early in the week on report of lower-than-expected business.

Broad Street Gossip: Many traders are looking to the US Steel annual meeting in Hoboken on the 20th for official statement on dividend policy. With $240M in cash reserves, Street feels a dividend cut now is unlikely. "Floating supply" (stock in brokers' names) of US Steel common stock is down to 15.69% of shares, a record low; this indicates recent decline has been due to liquidation by traders rather than "strong box liquidation." Short interest in rails is reportedly largest in years Atchison, B. & O., Pennsylvania, and NY Central are popular targets. Stock trading volume Saturday of 615,740 shares was lowest since August.

J. Pelley, New Haven RR pres., in speech at MIT, predicts "era of great coordinated transport companies, embracing air, water and land ..."

Allegheny Region public utilities committee notes sharp decrease in industrial electric demand in their territory, although higher home consumption is compensating to some extent; because of "rigorous economies" net earnings for electric utilities should mostly be as high or higher than last year.

M. Cahill, M-K-T Rwy. pres., returns from extended tour of company lines; says it would be exaggeration to say sentiment was enthusiastic, but “it is a fact that everywhere in the Southwest there is a decidedly healthier tone to business and the impression is general that the depression has spent its force and that we may confidently look for better times.” Company freight loadings show uptrend.

Economic news and individual company reports:

First 17 states report 46% increase in Mar. car sales over Feb., though still 31% below Mar. 1930. Car makers are increasing production schedules due to low inventories, against usual trend of slackening in production starting in mid-April. J. Scoville, Chrysler chief statistician, says auto industry “steadily climbing toward normalcy”; retail sales were 47% of normal last Nov., but increased steadily month-by-month to 75% in Feb.

Treasury issue of $275M in 1 7/8% 8-month certificates oversubscribed almost 4 to 1.

Decline in “all other,” or commercial loans of $299M this year mostly restricted to NY and Chicago districts; 81% of the decline occurred there, though combined loans in those districts are only 36% of the total; decline in other districts was only 1%. Part of NY decline may be due to sales of bankers' acceptances.

Youngstown district steel output to decline 1% to 44% this week.

Fisher's wholesale commodity index declined slightly again to 75.2.

While mounting East Texas oil production is agitating oil interests, it at least has the benefit of displacing foreign crude, which can't match the 20 cent/barrel price.

Refined copper inventories in N. and S. America at end of March were 354,205 tons vs. 363,629 in Feb. and 256,020 in Mar. 1930; production of refined copper was 102,058 vs. 99,853 and 127,064; shipments 111,482 vs. 100,051 and 104,167.

Earnings of 103 telephone cos. in Jan. were $23.109M vs. $22.944M in 1930 and $24.897M in 1929.

Agriculture Dept. estimated world cotton crop for 1930-31 season at 25.5M bales vs. 26.3M prev. year.

Butter and egg futures for April hit record lows.

Soviet purchases of US products by Amtorg Trading was $33.3M in 6 months ended March 31, down 44.8% from a year earlier. P. Bogdanov, Amtorg chair., attributed decline to worsening trade relations.

World sugar conference ended; Permanent International Council on Sugar headquarters to be located in The Hague.

Bank of Netherlands discontinues delivery of gold coins for domestic purposes, but will stay on gold standard.

Commerce Dept. reports exports of radio receiving sets in first two months were $2.010M vs. $1.260M in 1930.

Feb. aircraft production by 46 major mfrs. was 172 aircraft valued at $1.864M; sales 163 aircraft valued at $1.923M; both figures gained from Jan.

Wright Aeronautical 1930 net loss was $2.198M vs $900,837 profit in 1929.

Companies reporting decent earnings: Pacific Lighting, Lehigh Valley Coal, Corno Mills.

Movie:

Cracked Nuts - RKO picture at the Globe. Famed comedy team of Wheeler & Woolsey is joined by Edna May Oliver in "a round of obsolete wisecracks and familiar comedy situations which are still apparently entertaining to a number of people." Woolsey wins crown of mythical kingdom, El Dorania, in "a crap game." Wheeler buys a revolution from an insurgent general but forgets to do anything with it. Miss Oliver owns large plantations and endeavours to keep Wheeler away from her niece. "Gives the impression of having been slapped together from the readiest ideas at hand." [Note: I'd say this was a cheap ripoff of Duck Soup, if Duck Soup hadn't come out two years later].

Jokes:

Defense attorney - What time was it when you were robbed? Witness - Ask your client. He took my watch.

"'Do you act toward your wife as you did before you married her?' 'Exactly. I remember how I used to act when I first fell in love with her; I used to lean over the fence in front of her house and gaze at her shadow in the curtain, afraid to go in. And I act just the same way now when I get home late.'"

"'At an examination of a class in first aid, a member was asked: "What would you do if you found a man in a fainting condition?' 'I'd give him some brandy,' was the answer. 'And if there were no brandy?' 'I'd promise him some.'"

Recently, a package was lost in transit between NY City and an importer in Buenos Aires. After a complaint, the Argentine Post Office looked into the matter and reported the package had been placed in the lost parcel area because the addressee was unknown, and unfortunately had been destroyed by rats. The NY Post Office replied "the lost package contained 15 revolvers, which it is difficult to believe have been eaten by rats in so short a time."