Friday, May 22, 1931: Dow 139.54 +1.80 (1.3%)

Assorted historical stuff:

H. Bancroft, Dow Jones pres., says US not buying much but “we are individually saving and getting out of debt at a remarkable rate. That is one of the reasons why business is bad, but it is preparing a strong foundation” for recovery. Wholesale inflation is largely wiped out, but retail prices haven't adjusted yet, which largely explains current difficulties; people whose buying power depends on wheat, oil, copper, etc. can't pay retail prices for manufactured goods, creating imbalance. Recovery will take place when prices readjust; this will mean accepting inevitable wage cuts since wages and salaries make up most of margin between raw materials and finished goods. Idea that high wages make prosperity has it backward; it's prosperity that makes high wages possible. Cost of living has fallen 20% in past 2 years; a general 15% wage cut now would revive business, end unemployment, and general standard of living would be higher than in 1929.

Editorial responding to letter from Texas charging the Journal with bias because they advocate tariffs protecting "practically all American products" except oil. This is inaccurate; the Journal opposed the Hawley-Smoot tariff, and believes tariff preferences "for industries able to exert the required political pressure" have unquestionably gone beyond the Hamiltonian purpose of rearing "infant industries" which couldn't otherwise survive. The US oil industry has reached its advanced stage, producing 2/3 of the world's oil and exporting much more than it imports, without benefit of a tariff, which would now be counterproductive; what's needed is "state law with teeth ... to restrain reckless overproduction."

A. Thomas, Int'l Labor Office dir., estimates world unemployed at 20M currently, vs. 10M a year ago.

Editorial by T. Woodlock: Gov. Roosevelt, disappointingly but not surprisingly considering “his leanings toward the 'left'”, has gotten rid of the men who wrote the sensible report he commissioned on St. Lawrence River power development, and replaced them with a group with aggressive “liberal” leanings. As made clear by his recent telegram to the Progressive conference in Washington, Gov. Roosevelt has chosen to “throw in his lot with that of the 'liberals', so-called”; while the board he chose no doubt will act in good faith, they were chosen for their strong opinions and will be difficult for any private utility to deal with.

State Dept. reports immigration in 10 months ending April was down 90% from 1930; only 613 US visas issued in 21 top countries vs. total quota of 14,846.

War Dept. proposes abandoning 53 Army installations valued at $22M as part of Pres. Hoover's program of spending cuts.

O. Zubizaretta, Interior Sec., says attempts at revolution quelled last night in several cities; army has situation well in hand; declines to reveal casualties; says suspension of Constitutional guarantees may be necessary depending on opposition attitude, would be far more rigid than previous suspension. State Dept. says has no knowledge of disturbances in Cuba.

Chilean FM Planet proposes Pan-American customs union to remedy economic depression in American nations.

Nat'l Safety Council estimates accidents cost 99,000 lives in the US during 1930, up slightly over 1929; auto deaths rose 5%.

Many corporations can attribute their success to research; AT&T, GE. and Westinghouse are three of many that maintain their own laboratories and owe some of their position to the work done there. Another vital source is the Mellon Institute of Industrial Research at the University of Pittsburgh, which does research on a contract basis. Industrial fellowships are granted with “the broadest facilities for the accomplishment of a definite piece of research.”

The great mosque at Medina, described as the second holiest in all Islam, has recently replaced candles and oil lamps with electricity.

Esperanto, one of various invented international languages, is now taught in German public schools and is so popular they are short of teachers. A new entry in this category is "Romangle," invented by G. O'Harve, distinguished Belgian philologist, who claims anyone can master it quickly.

While the traveling salesman's lot can be difficult here in the US, it's even more complicated abroad thanks to languages, customs procedures, etc. M. Duchenois of France, addressing the Int'l Chamber of Commerce, recently advocated the salesman's cause, reporting several countries have recognized validity of the international identity cards for traveling salesmen, and efforts are being made to simplify customs.

E.T. Bedford died yesterday at 82; was one of the "Big Five" of the old Standard Oil of NJ, and built Corn Products Refining from near-bankruptcy to one of the largest US corporations; fortune estimated at over $75M.

Market commentary:

Market wrap: Encouraged by rampant pessimism, bears attempted to continue the market reaction for the first four hours, "roaming restlessly from stock to stock"; targets included Anaconda, Western Union, Allied Chemical, and leaders such as GM, Can, and GE; some trading favorites broke badly. Meanwhile, however, rail shares were working slowly higher after closing Wednesday with the second consecutive daily gain. The rails eventually developed "definite rallying tendencies"; news from London of the fortnightly bank settlement passing without incident gave impetus to the recovery, and an active rally spread across the list, with sharp rebounds from the day's lows in leading industrials and utilities; rails were further stimulated by news of Eastern rails' vote to ask for rate increase; market closed strongly. Bonds generally lower on moderately active trading; US govts. down slightly on profit-taking and talk of heavy new issues; sharp break in Chilean bonds to record low unsettled S. American list, while Europeans were narrowly mixed; highest-grade corp. relatively steady but "reactionary tendencies prevailed in most other groups." Commodities soft; grains down substantially, with season lows in some corn months; cotton barely changed. Copper sold at record low of 8 3/4 cents late Wed.; larger producers held at 9 cents. Cocoa hit new record lows.

Many observers anticipate a week-end rally on technical grounds, but conservatives advise using it to reduce long positions. Some are buying rails in belief they will lead on a recovery. New record lows in copper seen forcing some companies to shut down completely; even low-cost producers will have trouble showing a profit. Aluminum shares declined on fears of increased competition from copper. Auto parts and accessory co. earnings should improve in Q2 vs. Q1 based on auto output gains of 30%-40%, though they are likely to remain below Q2 1930.

Investors have reportedly been selling more stocks "out of strong boxes" recently than in a long time; market trend has apparently disturbed them enough to realize cash for their holdings, in some cases of stocks held for years. Selling has not been particularly heavy in the recent decline, but buying demand has been missing; the public has been "disinclined to buy" due to general pessimism even though brokers report many customers are carrying credit balances; demand is largely coming from the shorts, but they've refused to bid stocks up.

Woolworth met some selling after the Indiana anti-chain tax was upheld in spite of apparently miniscule effect on company (about $750/year); this attests to "readiness of traders to put out short lines on any news at all which appears unfavorable." Continental Can has been pressured on reports of poor earnings so far in 1931 and predictions that demand will be lower than expected this year because of large carryover of many canned products. American Chicle (chewing gum) foreign business, which fell 15%-20% last year, has reportedly revived back close to 1929 levels. Alaska Juneau Gold has bucked the market for months, moving to new highs while the market headed down. Some bears have reportedly bought it as a hedge.

Organization of new short-term fixed trusts [similar to ETF's] has been halted by persistent market decline; birth rate was high in Q1 when many believed bottom had been passed. NYSE plans to issue bulletin to all members listing fixed trusts that members can be associated with.

A. Brown, Brown's Letters pres., urges Pres. Hoover to restrict short-selling on the NYSE.

Editorial: Two items of recent news are encouraging indications rails may finally be realizing "the advantages of solidarity" in defending against loss of traffic and earnings, and are not pinning their hopes solely on the ICC granting an emergency rate increase. Southwestern rails have decided to start pickup and delivery service using motor trucks, a long-awaited necessity to meet highway transport competition. Also, several rails have acknowledged failure of cut-rate passenger fares to simulate traffic; this may compel them to curtail unprofitable service and moderate competition with each other.

Treasury Dept. says reentry by US to international lending field would materially improve worldwide economic conditions, but investors have not been attracted due to unsettled conditions and previous losses in foreign bonds; these unsettled conditions also account for continued influx of gold to US in spite of low money rates. Notes some direct investment being made abroad.

T. Macauley, Sun Life of Canada pres., responding to rumors, says co. has “not sold a single share of any stock for months,” remains bullish as ever on future of US and Canadian stocks.

N. McClave, Nat'l Assoc. of Furniture Mfrs. pres., advocates campaign in US and Canada for 5-day week and maintaining current wage scale.

B. Anderson, Chase Nat'l economist, says depression caused not by general overproduction but by "unbalanced economic situation"; unbalanced factors include: international balance sheet; money and bond markets; production of more export goods than can be sold under existing trade restrictions; unbalanced prices, with violent breaks in raw materials and farm products compared to manufactured goods; costs, particularly labor, that have not fallen as fast as prices. Problem is "merely one of keeping the different kinds of production in proper proportion"; this requires "flexible prices, competitively worked out."

J. Barnes, US Chamber of Commerce chair., “handed down 11 commandments” that the govt. should make effective as remedies for the depression, including removal of restrictions against private unemployment insurance, revisions of capital gains tax, antitrust law, rail regulation and tariffs, adherence to World Court, etc.

Economic news and individual company reports:

Settlement Day in London passed without “undue incident”; Bank of England weekly statement failed to reveal any "signs of undue stress" or unusual calls for funds; London stocks mostly higher, showing some relief from recent nervousness. British gold holdings rose 1.192M pounds sterling from last week, to 151.205M vs. 1931 low of 140.141M; steady rise together with relative firmness of sterling "gives promise of eventual solving of the Bank's gold problem for the rest of the year unless some unforeseen event completely alters the situation." Foreign currencies irregularly higher; sterling steady near year's highs and further strength anticipated.

Cook County has made little progress in relieving “embarassed financial condition” due to unsatisfactory collections of delayed 1929 tax levy. Most likely solution is for units within the county to issue bonds, but this would have to be approved by the State Legislature, and there's considerable opposition to the plan.

Philadelphia Clearing House Assoc. advances $15M in funds to First Penny Savings Bank to meet "present unusual demand"; says bank is solvent.

Eastern railroads vote to ask ICC to raise rates to level that would restore their credit standing and partially reverse the “whittling away” of rates since 1921. ICC seen likely to give request prompt attention. Nat'l Assoc. of Mutual Savings Banks convention to consider petitioning ICC on behalf of the rails. H. Bruere, Bowery Savings Bank pres., speaks in favor of rail rate increase; also urges employers to cooperate in enabling workers to buy insurance for old age, unemployment, and sickness, speaking against creation of system such as that in Russia.

Earlier reports from the world wheat conference in London were that all delegations except the US “tentatively agreed to the quota plan, with slight reservations.” However, it was later reported that “due to failure at the last minute to reach a compromise,” the conference will break up without reaching definite plan for controlling exports; failure attributed to Russian demand for quota on basis of prewar exports, and to opposition to US proposal for mandatory cut in acreage.

Money in circulation May 20 was up $12M to $4.639B, total Reserve Bank credit outstanding down $24M to $894M. Member banks in NY City report brokers' loans down $40M to $1.631B; loans on securities to non-brokers down $4M to $1.755B.

Dow average of 8 iron and steel products fell to $43.58, a new post-1922 low.

Oil operators in Oklahoma and adjoining states with large fields under strict curtailment are closely watching developments in East Texas to determine their stand on future curtailment proposals.

Life insurance sales in Apr. were down 16% from 1930, showing some improvement from 18% decline in Mar. and 19% in Feb.; comparison is difficult due to record sales in early 1930.

BLS reports building permits in 340 cities with population over 25,000 were $161.7M in April, up 6.2% from Mar.; April permits in 292 identical cities were down 14.7% from 1930, with new residential building down 6.7%.

Van Dusen-Harrington Crop Report finds no serious crop damage except in some dry areas in N. Dakota and Montana.

German tax receipts in Apr. were 983M marks vs. 1.153B; budget deficit now estimated at 700M; cut expected in unemployment dole, now $14/month for unemployed married worker. Ruhr coal mines and Saxon machine industry demand 10%-20% wage cuts.

Canadian public works projects have reportedly supplied 4.857M man-days of work up to Mar. 31. Canadian whiskey exports in April plunged to $169,000 vs. $2.178M a year earlier.

Russia plans 5.683M of cotton sowing in 1931 vs. 3.840M in 1930.

Spanish Republican govt. rescinds oil monopoly granted to monarchist govt. of Romania and transfers it to Russia.

Colombia enacts new general tariff substantially raising duties on most non-food products.

NYSE seat sold at $230,000, down $5,000 from previous sale.

Sears midsummer catalog showed average price decreases of 9% from the spring-summer catalog and 11.4% from a year earlier.

Du Pont reports greater than seasonal gains in almost all lines in Q1 and so far in Q2; expects to cover dividends in Q2 by fair margin..

Companies reporting decent earnings: Connecticut Electric Service.

Revue:

Billy Rose's Crazy Quilt - with Fanny Brice, Phil Baker and Ted Healy; a revue staged by Mr. Rose at the Forty-fourth Street Theatre. “Clowning, mimicry, balladry and barking back-talk from these three eminent entertainers” produce a successful hybrid between revue and vaudeville. Paths of the three stars cross and re-cross throughout the evening in song and sketch. Scattered between are a large and comely dancing chorus, “graceful interludes with dancers Gomez and Winona” and some good numbers, particularly “I Found a Million Dollar Baby in a Five-and-Ten-Cent Store” in which all three and Lew Brice participate. Another winner is a plaintive number sung by Tamara wherein Mr. Baker displays his versatility by accompanying on the accordion, to the audience's delight. Other noteworthy acts include Miss Brice's Peter Pan “travesty,” and the Crazy Quilt Sextette, “consisting of six young and comely but excessively world-weary damsels who utter jaded observations in straight-faced unison.” Costumes “are bright without being dazzling,” as can be said for the “jests that are tossed about with expert pace and pungency”; some will cause the more modest to blush, but otherwise “recommended as a very funny and jovial show.”

Jokes:

[Note: I heroically refrained from changing this to a blond joke.] "A lovely lady was a dinner guest recently at the home of Jules Bache, the banker. Dinner passed, and he offered to show his guests his collection of paintings. Throughout the tour of the gallery, the lady observed the masterpieces with a sprightly interest and at the end turned enthusiastically to her host. 'Oh, Mr. Bache,' she exclaimed. 'I do hope sometime you'll find time to paint me.' - New Yorker."

"Willie Kane, representative for the World-Telegram, tells about the query that stumps all applicants for jobs in the New York Fire Department. The question that drives them all cuckoo is: 'What piece of fire apparatus won't go up a one-way street?' No applicant has ever answered it correctly. The answer is 'A fire-boat.' - New York Mirror."

"Pastor's Wife - Ah, Mrs. Miles, one-half of the world is ignorant of how the other half lives. Mrs. Miles - Not in this village, ma'am."

"You demand a quarter of a million for a breach of promise?" "Yes." answered the determined woman. "Sentiment demands it. I would not have him think, even now, that I valued his affections lightly."

Thursday, May 21, 1931: Dow 137.74 -1.12 (0.8%)

Assorted historical stuff:

Editorial by T. Woodlock on Prof. Irving Fisher's modest proposal to stabilize purchasing power of the dollar by adjusting the amount of gold it corresponds to based on the cost of living. This would not help directly with fluctuations of various commodities compared to each other, which many economists believe is the crucial problem; for example, it wouldn't prevent prices agricultural products fluctuating widely compared to other goods; this results "from an unstable equilibrium in the productive structure, lack of balance in which seems to be the chief cause ... of our current depression." Fisher's proposal might stabilize debts compared to value of goods and services, making the doubtful assumption that lenders wouldn't start stipulating payment in gold. However, it seems likely that whatever is ultimately done by gold standard countries "will be done ... under the pressure of inexorable necessity rather than ... rational planning. When it is done, moreover, we shall probably see a good many curious happenings which at present are beyond the capacity of the imagination to predict."

Editorial: Statesmen at the League of Nations Council in Geneva "averted another of their recurring political crises." Agreement to submit Austro-German customs union to World Court replaces political agitators with an impartial tribunal, and offers hope of ultimate agreement after some delay. However, German reaction has been unfavorable, with some Germans at Geneva predicting withdrawal from the League in despair, and German press blaming French war psychology for blocking "the one means that Germany and Austria have to rescue their peoples from destitution." Matters not helped by French bankers' action to link loan for the Creditanstalt rescue to abandonment of the union. While European scene is a little more encouraging than last week, main impression from the Council is that until Europeans disarm their mutual suspicions and move towards peace, "there will be little use in their looking across the Atlantic for help."

Acting NY Gov. H. Lehman urges extensive study of unemployment insurance and stabilization of employment "under state auspices and with the full cooperation of industry and labor." V. Ridder, NY State Board of Social Welfare pres., warns old-age relief may soon cost the state over $1M a month; believes industrial depression has added greatly to volume of applications for pensions since law became effective Sept. 1; total now 60,600.

Textile strike in northern France intensifies, with 110,000 of 125,000 workers out. M. Langeron, prefect of northern France, fears a long strike since workers are resisting wage cuts rather than claiming increases as in past strikes.

Soviet authorities begin preparations for second five-year plan starting in Jan. 1933; this means first five-year plan will be completed ahead of schedule in 4 1/4 years. Private cables to several grain brokers with European connections report internal dissension in Russia, with one suggesting imminent revolt. Authenticity of reports considered very dubious, but grain circles believe any disturbance might retard Russian wheat exports.

Cuban Pres. Machado acknowledges revolutionary conditions prevailing in Cuba; says will again suspend Constitutional guarantees if necessary.

A number of swindlers have reportedly taken advantage of the Depression to work a clever racket in both the US and England. From disgruntled employees of reputable brokers, the sharpers got lists of people who had invested in legitimate securities; they then induced them to trade worthless paper for legitimate. The more ambitious conmen then ran the swindle for another round, getting victims to put additional money in for "reorganizations" of the worthless securities.

The Post Office is being enlisted as detective by creditors to track down deadbeats who vanish for parts unknown. For a mere 23 cent additional charge, a letter can be sent "return receipt requested showing address where delivered." If the Post Office succeeds in delivering the letter using a forwarding address, a receipt will be returned to the sender showing the new address.

The next Congress will be asked to provide a memorial for Samuel Wilson, buried at Troy, NY. Wilson, of course, is said to have been the original "Uncle Sam"; he was known as such by friends, and when he supplied the U.S. Army with meat during the war of 1812 in barrels stamped "U.S." a natural misunderstanding occurred. Wilson, also of course, is said to have been a tall, spare, dignified but kindly man who usually wore a tall hat, striped trousers, and a frock coat.

Market commentary:

Market wrap: Stocks rallied moderately in early dealings; Steel advanced to par (100), and active issues rose. Early improvement was largely eradicated by noon, as renewed selling broke out in many sections of the list; selling was not heavy across the list but was severe in some individual stocks, including GE, GM, Continental Can and AT&T; the latter hit a new bear market low. Market was heavy in the last hour and hit day's lows late in the session. Highest-grade bonds continued firm while lower-grade and convertibles rallied modestly; S. American issues worked lower though liquidation eased. Commodities firm; grains steady to firm, wheat up moderately; cotton up sharply on technical rally. Copper remained at 9 cents most of the day, but two producers sold at 8 3/4 late, setting a new record low two years after peak of 24 cents; foreign buying remained fairly active and domestic quiet. Silver rose 1/4 cent to 27 1/2.

Conservative observers continue recommending sidelines; believe market will indicate change of trend; expect bears to continue testing the market.

Many investment advisers contend that buying becomes less risky as the market declines, but few of them are actually advising buying and the public hasn't been buying in any case. Huge increase in savings bank deposits so far this year seen reflecting "conservatism prevalent all over the country"; much of it "has been banked by persons who have lost confidence in securities, temporarily." However, this money on the sidelines will, sooner or later, be released; it represents "underlying demand which will make itself felt, when sentiment brightens." Short position seen possibly growing overcrowded; many "outsiders" who frequent brokerage houses have been able to profit by selling short and have been gaining confidence; on the other hand, some [professional] bear traders have been quietly taking in part of their short positions. Fortnightly settlement [I believe bank] takes place in London today. There have been recent "disquieting rumors" on conditions in London, reportedly leading "more than a few" interests here to sell stocks. Passage of the settlement without problem would probably help the market at least temporarily.

Delaware & Hudson RR has sold off along with other rails in spite of strong position; stock has sold below 125, while co. has securities valued at $126/share (mostly US and Canadian govt. bonds), and earnings from railroad and coal properties of $4.60/share even in the poor year of 1930. Coca-Cola declaration of another extra dividend of $0.25/share seen as reflecting management confidence in both current and future operations (Q1 1931 net was higher than 1930).

Editorial: Conference of 11 wheat exporting countries in London has so far only produced one tangible plan, a Polish one for an international organization to control exports from each country. This is similar to previous plans for coffee, rubber, silver, etc., all of which "exploded" and left matters far worse than before. A little study would reveal that the world is not oversupplied with wheat, but that there are obstacles to its distribution. The chief one is tariffs; one example is Germany, where the tariff on bread wheat was raised from $0.62 to $1.62 in the past year; this "tariff epidemic" has spread throughout Europe. If wheat importers could be persuaded to remove this obstacle to free movement of wheat, this might give permanent relief to the wheat market. G. Ferguson, Int'l Wheat Conference chair., says delegates appear to be generally agreed on what steps “should be taken to dispose of the world's surplus wheat and otherwise to solve the economic crisis. He did not, however, reveal the nature of the steps.” Russia says will cooperate with other nations in solving wheat crisis as long as no efforts are made to prevent her return to prewar status as exporting power.

Farm Board critic Sen. Brookhart (R, Iowa) says Board powers should be extended to allow creation of its own cooperative banking system; Federal Land Bank system has failed in mission of aiding agriculture; interest rates to farmers are rising while funds for “speculation and gambling” are at record lows.

H. Sinclair, Sinclair Consolidated Oil chair., says believes oil prices very close to bottom; gasoline consumption up slightly over 1930 but industry as a whole "not making any money." Proration (curtailment) hasn't accomplished much over past 2 years; while production has been prorated, prices have also been. Drilling should be stopped to permit oversupply of oil to be absorbed; industry has too many companies and requires consolidation.

A veteran trader who's been through every depression since 1890 says scores of explanations for the current depression have been advanced, with almost as many suggestions for cures. Asserts true cause, as in past depressions, is "overproduction, brought on by one thing or another"; cure is underproduction for some time, as is currently occurring.

Dr. J. Klein, Ass't Commerce Sec., says improved US credit facilities have prevented percentage of business failures from reaching level of previous depressions.

Baar, Cohen & Co. say if stocks in 1929 were held on too much borrowed money, it's equally true that they're now "going through the wringer." Brokers' loans keep declining, and banks keep forcing liquidation of security loans; eventually, amount of borrowed money will be negligible. "In the meantime, our credit structure becomes stronger and stronger every day ... billions of dollars would like to be invested in securities ... but the deterrent is lack of courage and inability to see ahead. It is our opinion that we are laying a wonderful, solid base for the next bull market." While skeptics may question when it will come, US "industrial leaders are solving the depression by being on the job more than ever"; a number are already starting to get results and this will be reflected in their stock prices.

Irving Trust mid-month review says poor stock market in past month has obscured some encouraging developments, including striking improvement in auto industry, better than seasonal improvement in rail traffic and various lines of trade, fewer business and bank failures, and improving high-grade bond market.

Dow industrial average closed at a new bear market low; there were 4 new yearly highs and 99 new lows [Note: all new highs were preferred stocks except Alaska Juneau Gold].

Economic news and individual company reports:

Mayor J. Reich, of North Bergen, NJ, says next steps "in connection with our deplorable financial condition at this time" are reassessment of all taxable property and immediate adoption of refinancing plan. Hialeah, Fl. plans refinancing of existing bonds over a period of 30 years; bondholders said generally approving of plan. City has cut operating budget and assessments to reduce tax delinquency, which increased from 40% in 1926 to 85% in 1930.

Rail freight report for May 9 week was disappointing; decline of 27,842 cars from previous week was far more than seasonal, while percentage decrease from 1929 was greatest this year. NY Central's report for the following week indicates a still greater decrease. ICC member G. Eastman is noncommittal on the ICCs response to a possible rate increase request, but does observe that “managements must consider ... whether it is wise ... especially at a time when all other industries are suffering and when no other is contemplating an increase in prices.” Extent to which Western rails have had to cut maintenance to preserve earnings is seen in reports of seven main rails operating out of Chicago; five of the seven showed Q1 operating income below their decrease in maintenance from 1930.

Wheat growth was good to excellent in much of the country but heat, lack of rain, and wind damage was reported in some areas including in Western sections of Nebraska, Kansas, Oklahoma and Texas, and in the Northwest. Farm equipment decline in manufacturing is partly seasonal, but also reflects continuation of very slow domestic sales that characterized the first quarter. Inventories are still large enough to prevent a real production increase until sales rise; sales are being inhibited by current state of rural credit, which has led manufacturers to reduce prices and extend more liberal long-term loans that would have been thought inadvisable a few years ago.

US electric output for week ended May 16 was 1,614 GWHr, down 3.3% from 1930, vs. a 2.4% decline prev. week and 3.0% two weeks ago.

US Employment Service reports employment in outdoor labor improved in April, but "considerable idleness" was apparent in some sections; curtailed schedules continued in many establishments, affecting a large number of workers.

Several NY banks reduced interest paid on thrift and "compound interest" accounts from 3% to 2%.

Weekly steel reviews had little constructive news; steel market drifted lower in spite of comments a week ago that decline had been checked; construction demand sustained but automotive sagging; reviews continued to predict decrease to mid-summer would be relatively small; some price weakness in finished product clouding profit outlook. National machine tool index for April was 105.1 vs. 117.6 in Mar.; further decline in orders expected in May; manufacturers practicing "rigid economy," postponing taking action on requirements. Percentage of blast furnaces active indicates steel industry in better condition than during the 1921 depression; low in this depression of 30% was hit in Jan., while the low in 1921 was 16% in midsummer.

BLS reports wholesale index of 550 commodities fell to 73.3 in April from 74.5 in Mar. and 90.7 in Apr. 1930.

Texas Railroad Commission writes to Gov. Sterling warning of serious oil overproduction in East Texas, and asking for wider powers to enforce curtailment; says current unrestricted production is causing great loss of oil and gas, and will cut total oil recovery by half.

Iraq Parliament ratifies oil pact with Iraq Petroleum Co. to build pipeline by 1935 from Kirkuk, branching at Haditha to Haifa and Tripoli, a distance of 1,200 miles at cost of 10M-12M pounds sterling. Company is partnership of French group, US group, Royal Dutch-Shell, and Anglo-Persian Oil; will be granted 70 year exclusive rights over parts of Mosul and Bagdad provinces.

Ten of the largest banks operating in Mexico, including Nat'l City and Chase Nat'l, have formed syndicate to trade in silver money with object of improving price.

Foreign currencies were quiet; sterling was steady close to the year's highs; market seen "marking time for a few days under the influence of various rumors circulating throughout the Street."

Commerce Dept. reports German business conditions showed seasonal improvement in April and May; exports gained while imports continued to fall, giving Apr. trade surplus of 236M marks; unemployment at end of April was 4.389M, down 240,000 in two weeks but a record high for this time of year.

Silver production down sharply; worldwide output in Q1 was 44.2M ounces, down 20.3% from 1930; US output in Apr. was 2.858M vs. 3.528M in Mar. and 4.627M in 1930, lowest total in recent years.

Earnings outlook for meat packers seen unfavorable; US and foreign consumption is down, and inventories higher; price situation appears relatively stable.

Chevrolet says sees no sign yet of sales decline in May; expect to match April total of 100,000. Woolworth reports sales steadily increasing since end of April. Glidden says turned profitable in March, outlook favorable.

Companies reporting decent earnings: Tuckett Tobacco.

Movie:

Monsters of the Deep - at the Cameo. Documentary on fishing trip off Southern California with objective of capturing a giant ray, A.K.A. devil-fish, A.K.A. manta. Film includes scenes of uninhabited islands the party discovers; photography is excellent and “fight to land the fish, while overly drawn out and artificially acted in places, is interesting.”

Book:

[Note: I smell iPhone app ...] For golf players needing to unlearn bad habits, Golf at a Glance: The Pocket Pro by Bob MacDonald is “the greatest investment for one dollar to be had today.” Book is a mere quarter of an inch thick and half the weight of a pocket checkbook; it's meant to be carried around the links and referred to while playing [Note: if you like getting beaten up]. Coincidentally, the first “pocket” size books were published in the Netherlands, where golf itself is said to have originated in a similar game played on ice.

Jokes:

First Furniture Maker - That bookcase isn't an antique, is it? Second - No, but in another day it will be.

Maid - Are you going out in the car on Sunday, ma'am? Mistress - No. Maid - Then I'd like to ask for the loan of it; mine is being repaired.

Wednesday, May 20, 1931: Dow 138.86 -0.66 (0.5%)

Assorted historical stuff:

AFL pres. Green continues aggressive campaign against wage cuts, cites cases of bankers refusing to extend credit to manufacturers unless they cut wages as “coercion of a most reprehensible character”; calls on workers to “resist with all the power they possess the attempt of these banking interests.” Says high wages have always been coincident with prosperity; wage cuts have already had severe economic effect, but “it will be infinitely worse if the nation is forced to pass through another winter of unemployment.” Worker productivity increased 49% in 1920-29, while buying power only increased 24%; cost of living is only down 6% since 1929. Labor Sec. Doak says sees no indication of general wage cuts; Administration resisting cuts everywhere it can and hopeful standard can be maintained.

Cook County deputy controller tells bankers conferring on "Chicago tax predicament" that govt. is on the verge of bankruptcy; funds will be exhausted in a month. US Att'y. G. Johnson of Chicago estimates income of Al Capone gang in 1925-28 was $6.077M; indicates that income tax net is closing on the gang.

Editorial: Rail situation critical. Operating expenses, workforce, and maintenance already cut to the bone. Rail income must be raised; it's declined to the point where it's not a question of dividends or “satisfactory return” but of maintaining the credit of many rails. Barring cuts in wages or further layoffs, only alternative is a general rate increase; this will draw criticism that a depression is no time to raise rates, but “this is no 'normal' depression but a very exceptional one, and ordinary rules do not apply.” Rail plan to ask ICC for general rate increase reportedly has progressed much further than generally thought; rail representatives are to meet shortly in various sections, and a formal request will most likely be drawn up; it's thought the ICC “might look favorably upon such an application.”

Delegates at int'l wheat conference "expressed unanimous readiness to undertake concerted action to solve the wheat surplus crisis."

European union commission adopted resolution by British Foreign Sec. Henderson proposing appointment of subcommittee to recommend practical proposals on 13 plans offered to the commission to combat the world economic crisis.

Over 20,000 Polish miners go on strike over proposed 10% wage cut.

Editorial against Supreme Court decision allowing Indiana anti-chain store tax. "One man may be in a market covering a city square [block] ... and he will pay a tax of $3 and another one owns 25 little stands each under a separate roof, and on those he must pay a tax of $25 each. To the non-legal mind this classification looks like a distinction without a difference." This decision gives states the power to "shear the chain store sheep close to the point of skinning them ... if they are wise they will not abuse that power." Counsel for Nat'l Chain Store Assoc. say regardless of constitutionality of anti-chain laws, public has now turned definitely against them; they and their representatives “have come to realize during this depression that the chain stores are providing ... the necessities of life at the lowest possible prices”; high tax on chain stores is indirect tax on people who can least afford it; only 6 of 48 states have enacted anti-chain laws. H. Parson, Woolworth pres., takes more optimistic view on the tax, saying decision establishes it must be reasonable, and that companies paying it will be operating under a license “and therefore entitled to protection against agitation such as has taken place in the past” against chain stores.

Wool Institute urges all weaving and spinning mills under their auspices in woolen and worsted industry to end night work for women and children by July 31.

RCA work on television has progressed to the point where engineers at their N.B.C. and RCA Victor subsidiaries are testing the effects of steel buildings in NY City on wavelengths suitable for television broadcasting. [Note: they never did get that figured out.] Television broadcasting on a commercial basis is now expected by the end of 1932 in NY City and "a few other important centers."

[Note: Sheer Genius Dept.] Prof. K. Weisinger of Zurich Polytechnicum, after 30 years of experiment, has proposed propeller driven train with light aluminum coaches, speed of 223 mph.

Claude Neon Lights receives contract to provide neon lighting for NY City's airport, Floyd Bennett Field on Barren Island [now part of Brooklyn].

NY City Transit Commission plans to submit unification plan within a week without substantial change from Untermeyer proposal; hearings on the plan to begin in June; some investors accumulating NY City traction [mass transit] stocks.

One of the curiosities in the National Museum is the "Flying Dutchman," a (literally) one-horsepower railroad engine powered by a horse walking an treadmill in the center of the car. This contraption won a design competition sponsored by the S. Carolina RR a century ago; it hauled 12 passengers at a speed of 12 mph.

The oldest investment in the world is the real estate mortgage. In ancient Babylon, 2100 BC, during the reign of King Khamuragas, money was loaned on mortgage, while the great banking houses of the Egibi family, founded about 600 BC, invested large sums in mortgages on both farm and city property.

Market commentary:

Market wrap: Stocks opened under heavy selling due to liquidation of impaired margin accounts and bear pressure; weak spots included chain store stocks, US Steel, AT&T, and Atchison. Selling slackened after the early flood, but intensified again in early afternoon; Steel worked lower on cut in output, followed by other leading industrials, while sharp breaks took place in individual issues including J.I. Case and Warner Bros. Support finally appeared in late dealings, and general recovery from the day's lows took place in major industrials. Highest-grade bonds were again firm, with US govts. reaching record highs and prime corp. issues generally firm with some new highs. Lower-grade and speculative bonds weakened again, and convertibles followed the stock market lower. NY City traction issues rallied on unification prospects. Foreign issues were mixed, with considerable liquidation in S. American issues; Brazilian govts. reached record lows. Commodities mixed; grains up substantially on “oversold” condition; cotton down moderately to new lows. Copper buying continued in good volume abroad and moderate domestically, price unchanged at record low of 9 cents; price trend uncertain. Silver fell 3/8 cent to 27 1/4.

Conservative observers continue to advise against buying stocks since market has not yet indicated end of liquidation.

Both foreign and domestic investment trusts [similar to mutual funds] have reportedly been steadily selling stocks in the past few weeks; this is seen likely to "continue for a time at least." International banking circles denied persistent rumors of liquidation for the account of King Alfonso. Some of recent selling attributed to "liquidation for the account of a prominent capitalist of the Northwest" due to illness. Much of selling again attributed to foreign accounts, but opinion differed on whether it was forced. Brokers report customers with available funds not inclined to go long.

Bull traders discouraged by action in US Steel. AT&T has suffered heavy liquidation recently. American Can has sold off on can industry pessimism in spite of semi-official statements that sales are only slightly below 1930. New Haven RR seen in relatively better position than other rails since New England seems to be doing better industrially than most other sections. United Fruit drawing attention; stock is selling at 7% yield and about 80% of book value; co. said to be carrying land and fleet on books at about 1/3 of duplication cost. Texas Corp. rallied after reduction of dividend rate to $2 from $3.

Editorial by T. Woodlock: Recent reports make a broad comparison possible between electric rates in Britain and the US. British consumption in 1929 was 7,801 GWHr, or about 10% of US consumption, while population was about 36% of US. About 57% of British power was generated by govt. plants. Overall average rate was 2.93 cents/kwh vs. 2.78 for the US, while rate for lighting and residential customers was 6.17 vs. 5.13 in the US. Figures make apparent the extra costs of serving residences, which draw so much suspicion from critics such as Gov. Pinchot.

Clinton, Gilbert & Co. say investors now looking for higher returns on bonds by carefully investigating lower-rated issues; says yields of 6 1/2%-9% can be obtained on good bonds; points out possibility of increasing return by taking bank loan against 50% of bond value, paying 4% interest on the loan.

Weekly bank reports showed apparent slowdown in liquidation of total security loans; actual increase continued in loans of NY City banks to nonbrokers; "This may indicate some additional borrowing for security purchases at current low prices." Liquidation also appeared to slow in "all other" loans, but this may be due to holdings of bankers' acceptances rather than a revival of commercial borrowing.

Some observers and brokers are now saying the possibility must be faced of the business depression continuing past the summer; this would mean "many popular ideas as to security values would have to be revised"; many corporations would be forced to cut dividends by another winter of poor earnings. Many brokers now advise clients with new funds to stay out of the market until definite signs of sustained upturn.

More talk is heard of wage cuts and possible resulting labor trouble, though a crisis is seen unlikely until serious attempts are made to cut steel and rail wages. Many industrialists still hope to avoid cuts, but economists believe them inevitable.

Dow industrial average closed at a new bear market low; there were 4 new yearly highs and 195 new lows [Note: all new highs were preferred stocks except American Express]. Rail average closed fractionally higher.

Economic news and individual company reports:

Fed. Reserve continued its extraordinary campaign to drive funds into long-term investments, cutting buying rate on bills for the fifth time in a month; rate is now 1% up to 90 days. Call money renewed at 1 1/2% but was expected to drop to 1% eventually following the other recent rate cuts. Foreign currencies were stimulated by the cut, with sterling rising to a yearly high.

US April exports of $217M were a new postwar monthly low; imports of $187M were at the level of the 1921 depression. Some observers believe decline in Apr. exports reflected drop in Russian purchases; Europe has taken some of this trade by offering govt. guarantees for credits of up to 75% and up to 5 years.

Rail freight loadings for week ended May 9 were 747,449 down 27,842 from prev. week, down 19.8% from 1930 week, and down 28.7% from 1929.

Steel production for week ended Monday was 44% vs. 46% prev. week, 47% two weeks ago, 74% in 1930, and 96% in 1929. American Metal Market says steel demand now largely down to "ordinary everyday needs"; sees further decreases up to the usual summer low likely to be small. In past depressions, steel output falling below 50% would prompt manufacturers to predict it couldn't remain there for too long because that level "represented less than the actual needs of consumers." No pronounced gain is looked for in the summer, but an upturn is expected before end of Sept. Steel Institute will meet at the Hotel Commodore Friday, with industry leaders coming from around the country; meeting seen as one of most important in years; wage scales are likely topic of discussion.

Refineries ran at 68.2% in week ended May 16; stocks of gasoline fell 147,000 barrels to 45.663M. Crude oil production in week was 2.426M barrels/day, down 41,900 from prev. week and down 181,100 from a year ago. After 8 months of unsuccessful efforts to fight curtailment of Oklahoma oil output in the courts and legislature, opponents are now attempting to put the issue directly to the people using a ballot initiative.

World production of copper averaged 4,280 tons/day in April vs. 4,402 in Mar. but above low of 4,174 in Jan. Average in 1930 was 5,020.

Price of aluminum has held firm at 23.3 cents/pound, making it less competitive with copper than two years ago when the two sold at almost the same price, raising talk of widespread substitution. However, continued expansion of uses has helped offset decline in demand from established lines.

Italian trade experts discussing further expansion of trade agreement with Russia to 600M lire from current 350M; ask govt. to raise limit on guarantee of trade invoices over the current 75%.

Many sections of the Canada wheat belt received a much-needed 12-hour soaking rain.

Montreal Stock Exchange announces leading banks, “in order to show their confidence in the present situation,” have reduced margin requirements to 15% on call loans to stock exchange brokers.

Brazilian milreis rose sharply to $0.0690, half a cent above their recent low, on indication Sir Otto Niemeyer will soon issue report and recommendations on Brazil's external debt. The Coffee Congress is also currently meeting, though informed circles aren't optimistic on prospects of raising prices substantially.

London reportedly will postpone attempt to convert the $2B 5% war loan to a lower rate for up to a year, but may announce plan for some smaller issues.

New orders for electrical goods in Q1 at 84 mfrs. were $181.3M vs. $208.9M in Q4 and $314.3M in Q1 1930.

NY City seen floating a large bond issue this year to pay for transit unification; at least $162M will be needed at the start.

Sears expects 1931 earnings may exceed 1930, when they fell to $3/share after heavy charge-offs.

Ford, Ltd. (British subsidiary) is completing a plant at Dagenham [East London] with annual capacity of 200,000 cars.

Companies reporting decent earnings: Brooklyn-Manhattan Transit.

At the galleries:

Museum of Modern Art is showing much of the collection of Lizzie Bliss, one of its founders, who died Mar. 12. Miss Bliss had already left the Museum, established Sept. 1929, her paintings by Cezanne, Matisse, Picasso, Gauguin, and other leading French moderns. The rest of her collection will be widely scattered among the Museum of Modern Art, the National Gallery in London, the Metropolitan Museum, the Brooklyn Museum, and various others. Kennedy Galleries are showing Bertha Lum's color prints of Asian dancers, especially the Japanese No Dancers; these use an interesting printing method apparently of her own devising. Also being shown are an interesting group of those amazing bird prints that John James Audubon produced almost a hundred years ago.

Theatre:

Old Man Murphy - farce comedy, at the Royale. Patrick Murphy, liquor dealer in Dublin, comes unannounced to a Midwestern US city to find his son Charles in midst of a mayoral campaign. However, Charles has changed his last name to Murfree under influence of his socially ambitious wife; this has enraged "the Irish constituents of 'The Patch,' back of the railroad tracks," and Patrick must now convince the voters that Murfree is the authentic old Gaelic spelling. An Irish holiday of a play, featuring "good vaudeville and much lusty bush-whacking." Arthur Sinclair, as Patrick, is convincing indeed; "Cuchulainn could not have drawn his sword from the scabbard with more heroic poise and verve than Mr. Sinclair can whip a quart of Irish whiskey from the hip pocket of his capacious tweed pants."

Jokes:

Tourist - Is it an offense to park on Fifth Avenue? New Yorker - No sir; if you can park on Fifth Avenue it's a miracle.

"I never had such a tough time in my life. First I got angina pectoris, followed by arteriosclerosis. Just as I was recovering from those, I got tuberculosis, pneumonia, and phthysis. Then they gave me hypodermics. I tell you, that was the hardest spelling test I've ever seen."

Tuesday, May 19, 1931: Dow 139.52 -3.43 (2.4%)

Assorted historical stuff:

Community Councils of NY City asks Pres. Hoover to accelerate work on $2B govt. construction program approved by last Congress to relieve unemployment. Pres. Hoover returns to White House from weekend conference with Interior Dept. officials; plans worked out for savings of $17M-$20M over next three years. Future weekend conferences on cutting govt. spending will include officials from the Treasury, Post Office, Agriculture, and Navy depts. Editorial: Urgent requests of the Community Council for faster govt. spending, and of M. Hart for the opposite [see yesterday], demonstrate the "diametrically opposed conceptions of the way to meet business depression" now widespread across the country. Situation calls for cutting public spending that doesn't contribute directly to employment and business revival, while speeding up spending that does so contribute. Both Federal and local officials have a "compelling obligation" to concentrate spending on works that can quickly be brought to the employing and material buying stage; a recent White House report on Federal building projects with ultimate cost of $453M found that projects costing close to $300M had no sites or plans yet.

F. Croxton, acting head of Pres. Hoover's unemployment committee, says believes current wage rate will be maintained, most capital and labor doing the best they can to live up to the agreement made with Pres. Hoover over a year ago; doesn't believe AFL statements foretell any widespread disturbance.

Supreme Court hands down two decisions seen as important precedents. Allows Indiana tax charging higher rate per store to chain stores on grounds it's not prohibitive in that it won't drive them out of business; about 20% of US merchandise is sold through chain stores, but the proportion has been growing quickly. Sustains oil conservation policy of Pres. Hoover under which all applications for oil and gas prospecting on public land have been refused since Mar. 1929.

Uruguayan Chamber of Deputies passes law for state control of foreign exchange designed to eliminate speculation blamed for current low value of currency. Conference of bankers in Mexico City will form syndicate to take charge of Mexican exchange.

100,000 French textile workers went on strike in area of Roubaix to protest 4% wage cut. A force of 20,000 troops and police is patrolling the strike zone.

League of Nations Council discusses legality of Austro-German customs union; French submit long protest; matter likely to be submitted to World Court.

Although the US operates airways with total mileage about 3 times that of any other country, (50,000 miles; France second with 18,000), longest airmail line in the world is operated by the Netherlands, from Holland to the "Dutch East Indies" [Indonesia]. Air passengers carried in 1930 by US airlines were 417,505 vs. 173,405 in 1929 and 5,782 in 1926. Air transport in Q1 1931 showed continued growth in miles flown (7.428M vs. 5.044M in1930) and in airmail poundage (up 15% to 2.097M) and express air (up 279% to 209,004); passengers carried fell 11.3% to 65,604, but were up about 24% from month to month in the quarter. 88.5% of mileage scheduled was completed vs. 86.7% in 1930; almost all cancellations were due to bad weather.

Chicago business stimulated by Jubilee celebration; crowds thronged the city and transportation operated at capacity around the Loop for the various events.

As England rose to industrial preeminence because of its cheap coal, so Canada is rapidly developing as a manufacturing power due to its abundance of "white coal," or hydropower. Some $1.4B is now invested in hydropower developments throughout Canada, much of it to power the paper and pulp industry.

A generation ago, alfalfa was a troublesome weed; now, it's one of the most valuable agricultural crops in the US, particularly in Western sections requiring irrigation. In irrigated parts of California, six crops are produced on the same land each year. Farmers call it "the cows' delight."

A Wall Street analyst recently found the railroads "are not missing a trick in guarding their revenues." On a business trip, he encountered the celebrated "Siamese Twins" of circus fame; upon returning, he wired a rail executive asking if one or two fares were charged. The reply: "No 'double-heading' these days ..."

Sir Arthur Conan Doyle left estate valued at $270,740 net.

Market commentary:

Market wrap: Stocks opened under pressure Monday after the Dow industrial and rail averages broke through to new lows Saturday; sell orders accumulated over the weekend; selling again converged on Steel and Can, both of which broke below par (100) in spite of expected resistance at that point. "Selling poured into the market in a steady stream as the morning progressed"; rails sold off heavily. Industrials began moderate recovery about 1 pm, but a sharp break came in chain store stocks following Supreme Court ruling on Indiana anti-chain tax. Market turned sluggish in the last hour, but selling picked up again at the close. Bonds continued recent trends; US govts. moved to new high territory, highest-grade corp. issues continued strong, while bonds of many corporations with high debt or doubtful earnings reached new lows. Foreign bonds were mostly firm, but S. American issues suffered a bad break late. Commodities weak; grains down, with some new season lows in corn and oats; cotton down sharply to 16-year low, with May selling at 9.00 cents. Copper producers lowered asking price to 9 cents; foreign sales were active as price was brought to parity with domestic, while domestic buying was moderate. Silver declined 3/8 cent to 27 5/8.

"It is difficult at the moment to find an optimist in the financial district." Conservative observers continue to keep customers on sidelines, "contending that the market is in control of the bear contingent, with bullish demonstrations entirely absent."

Thin markets developed in some high-priced stocks, particularly rails; specialists [market makers] had difficulty establishing an opening price for Atchison. “Many and varied rumors are being circulated again to influence selling.” Dividend cuts in recent months have reduced investors' income and curtailed amount of money reinvested. “Blue chips” have been consistently liquidated for some time; this has disturbed investor sentiment since these shares are widely held. Many investors have been switching from common stocks to preferred shares and bonds. After recent downtrend, stocks of some of the larger banks are now yielding over 5% (Chase Nat'l 5.4%, Nat'l City 5.1%).

Interests on floor of the NYSE report steady support in GM, with bears meeting resistance and at times run to cover; some public buying has been attracted by good business reports. Bethlehem Steel continues to draw better support than US Steel, holding above its 1931 low. Liquidation in Texas Corp. has been increasing as time for dividend action approaches.

Steel production continues to decline; sustained uptrend is seen unlikely until end of the summer.

Sen. Nye (S. Dakota) advocates nationwide organization of independent merchants as only effective defense against chain store dominance.

J. Farrell, US Steel pres., says gradual improvement now apparent in depressed conditions affecting agriculture, commerce and industry.

E. Clark, Newton Steel pres., says steel output and business in general in June and July, while seasonally slower, won't decline as much proportionally as in 1930.

J. Klein, Asst. Commerce Sec., says installment sales have stood up remarkably to the depression, demonstrating right of system to survive.

F. Lisman advises against panic and selling "at any price" of railroad bonds that lose "legal" status [as investments for savings banks and trustees; these were required to cover interest charges by a relatively wide margin].

Harvard Economic Society predicts preponderance of gains in business in coming months. At end of first quarter, allowing for seasonality, "decline in the general volume of business was checked, and in April an upturn occurred." Unfavorable developments include increased commercial failures and decline in stock prices, but "current statistics indicate that they have not caused a general setback." Rate cuts should benefit business.

Bank of Nova Scotia reviews of 4 Canadian business indexes since 1890, noting progress has been maintained despite war and severe depressions. “It would be remarkable if the momentum established so long ago, which was resumed unfailingly following each interruption ... were to be lost now ... simply because another serious depression has occurred.” Experience suggests that, though the timing is uncertain, “the momentum of Canada's progress will presently be resumed.” Canadian PM Bennett speaks out against Progressive proposal to establish govt.-owned central bank. Says Canada's banking system safe; cites only one bank failure since 1914 vs. thousands in US; differences with US system include larger reserves and writeoffs each year, and double liability of stockholders.

New book: Banking Concentration in the US - by J.S. Lawrence. Argues against prevailing opinion favoring larger banks; "in his opinion the economic factors so favorable to industrial combinations do not hold with banks, and the advantages enumerated by advocates of branch banking are greatly exaggerated."

Dow industrial average closed at a new bear market low; there were 5 new yearly highs and 163 new lows [Note: all new highs were preferred stocks]. The rail average also hit a new bear market low, down 3.82 to 75.58.

Economic news and individual company reports:

Bank suspensions in April fell to 63, least since May 1930, with total deposits of $49.5M; 23 banks reopened with deposits of $21.1M. W. K. Macy, NY Republican State Committee chair., says joint legislative committee will investigate State Banking Dept. Chelsea Bank reorganization plan approved; depositors with claims totaling $9.5M to be paid in full.

Asheville and Buncombe County officials will meet with bondholders' committee to discuss refinancing of over $35M in bonds that officials admit they will be unable to repay. Financial crisis was precipitated when Central Bank & Trust failed last Nov. with $8M in public funds on deposit.

Austrian govt. loan of 150M schillings for Creditanstalt bank approved by committee of nations guaranteeing Austria's 1922 loan. B.I.S. will permit National Bank of Austria to discount 100M schillings of Austrian commercial paper to alleviate current disturbed financial situation.

NY Clearing House member banks reduce interest rates paid 1/2% to 1% on time deposits and 1/2% on demand deposits.

Fed. Reserve reports member banks' security loans fell $400M in Q1, while other loans fell $573M, reflecting lower business activity; since start of 1930, the declines were $1B and $2.250B. Investments at member banks rose $931M in Q1, of which $920M was in govt. securities. Further easing in money rates in April and May has been reflected in lower rates on deposits throughout the country. However, in spite of low rates influx of gold has accelerated since start of April.

Editorial: Bradstreet's report of April building permits in 215 leading cities is encouraging. While total of $151.2M is below the $180M total from Apr. 1930, the gain from $142.1M in March was more than seasonal; building permits in NY City are up substantially vs. 1930. Building is one of the most reliable business indicators; it's therefore hopeful the trend has been up since Feb. Amer. Bankers' Assoc. reports banks generally will proceed as planned with their building programs this year; 428 banks are planning new buildings and 828 are planning improvements.

Oil curtailment in East Texas has been complicated by numerous lawsuits and completion of "a multitude of new wells."

Wheat situation difficult. Indications point to bumper N. American crop of about 1.340B bushels; together with a record carryover of 445M, this would leave an exportable surplus of about 1.050B after domestic demand, vs. exports this season of 380M. Farm Board member S. McKelvie, addressing int'l wheat conf., said most important part of solution is curtailing planting in exporting countries; hits “pressure sales” by some govts., not mentioning Russia by name; also hits uneconomic measures by some govts. but defends Farm Board intervention; warns US will remain exporter; says Board will sell surplus but “in orderly fashion.”

Commerce Dept. estimates record sugar production in 1930-31. T. Chadbourne says int'l sugar agreement will help exporters, though uptrend won't be immediately noticeable.

Foreign currencies generally higher; sterling strengthened against francs. Canadian currency disappointingly weak, not responding to usual seasonal factors. Silver price has fallen gradually over the past week in spite of improving "statistical position." However, observers point out "the decline is orderly and bears no resemblance to the striking declines of the past two years."

Institute of Amer. Meat Packers reports average wholesale prices of meat for week ended May 16 were 13%-30% below a year ago.

Worldwide conference of tin producers decides on further 15.9% restriction of allowed production.

New car registrations in France exceeded those in the US in 1930, in spite of a much smaller car market; France gained 178,000 registrations, or 13.5%, vs. a gain of 126,094, or 0.5% in the US.

Many German workers are returning to the farm because of the scarcity of jobs in larger cities. In the first half of 1930, Berlin saw a drop of 8,000 inhabitants vs. a gain of 17,000 in 1929, and the pattern in other large cities was similar.

Rails serving Port of NY testify in favor of NY City in "free lighterage" case; a number of industries in NJ also favor NY City's position. Some contend the case is sponsored by Newark real estate interests.

Kreuger & Toll analysis shows substantial hidden assets in undistributed earnings of associated companies; K.&T. only reports dividends received as income.

Westinghouse operated at a profit in April, improving markedly from the first quarter.

Companies reporting decent earnings: Coca-Cola, Pillsbury Flour.

Movies:

Bachelor Apartment - Among the best of the light comedies this week; Lowell Sherman directs and stars as wealthy bachelor; "farcical complications over his various women arise; they are fortunately more originally contrived than is customary with these dramatic plots."

It's a Wise Child - Bright, swift moving cinematic farce; Marion Davies plays spiritedly, but James Gleason as the iceman is the hit of the show; Sidney Blackmer competently plays Joyce's trustee, the only of her male friends who doesn't scurry to cover when it's intimated she is about to have a child.

Six Cylinder Love - a Fox film, at the Roxy. Lorin Raker is mechanical in the lead role of Gilbert Sterling, a weak husband "milked ... of his savings by a group of pleasure-loving acquaintances, as if he were turned by a crank"; film as a whole is long-winded and dull, although Spencer Tracy is excellent as the automobile salesman who starts the Sterling family on the downward road by convincing them that they need a $2000 Lincoln car for social reasons.

Jokes:

Motorist in very old car - How much to park? Garage owner - I'll have to ask you a five spot - in advance. Motorist - My gosh! A five spot in advance? But I'll come for the car in the morning! Garage owner - Ah. That's just it. Will you come?

Monday, May 18, 1931: Dow 142.95 -1.54 (1.1%)

Assorted historical stuff:

Austrian govt. loan of 100M schillings for aid to the Creditanstalt bank has been granted, carrying 7% interest. Idea of placing the loan abroad has been abandoned due to small size. The loan may require approval from League of Nations Control Committee. Int'l Control Committee for protection of Austrian loans has issued report that Austrian gov't., "far from initiating economies, has allowed unnecessary expenditures"; demands further budget details as authorized by 1922 protocol, with view to possible spending restrictions. Bank of England believed to be taking a decisive role in reorganization. Past few days have brought some reports of heavy stock liquidation from abroad, particularly in rails, with orders coming mostly from Berlin, Amsterdam and London. However, “a careful check fails to reveal a preponderance of selling over buying orders”; while there has been some selling, it's “commensurate with the declining stock market.”

“A powerful financial pool has been formed” by Canadian interests to support Canadian stocks now selling “at what they believe to be ridiculously low levels.” Some buying has already been done under the plan. Members consider the “stock market at rock bottom levels” even with no business improvement.

Washington report: Financial circles here interpret the Bank of England rate cut to 2 1/2% as “meaning that the English financial strain may be considered as passed”; recent relief of gold shortage there “removes ... the London money market as one of the sore spots.” Washington attitude skeptical on proposed unemployment conference; it's questionable whether the one in fall 1929 did more harm than good. American Legion's advocacy of the conference is noteworthy considering failure of the veterans' bonus to stimulate business as promised. Discussion by Progressives of Gov. Gifford Pinchot as possible Republican candidate in 1932 not believed a serious threat to renomination of Pres. Hoover.

M. Hart, NY State Economic Council pres., calls on businessmen to take interest in local govt. affairs, particularly enormous rise in public spending at state and local level over the past 12 years.

Editorial: A nonpolitical meeting on unemployment, as called for by the American Legion, may be hard for Pres. Hoover to arrange at this point. A better plan might be that "half a dozen businessmen of Chicago ... should meet more or less by accident at luncheon ... after having eaten frugally, these men should telegraph to five or six of their like in each of such cities as NY, Baltimore, Pittsburgh, ... Atlanta, New Orleans ... and perhaps others, to meet them a week or two later in French Lick, Indiana. No resolutions, no credentials, no agenda, no publicity ... no predetermined objectives save the one and only purpose to bring about a brutally outspoken discussion of what ails business."

Editorial: More consideration should be given to complaints on tariffs at the recent Int'l Chamber of Commerce meeting. "If we are to lead the way out of the present world wide set-back, we must be prepared to consider world problems occasionally from the other fellow's viewpoint." Sir Arthur Balfour, British steel mfr., says tariffs will have to be reduced along with reparations payments.

About 10,000 workers at Pennsylvania silk mills are idle due to general strike conditions in raw silk industry.

In the brisk competition among oil companies to find the best spots for drilling, a number of companies have taken to the air, using planes equipped with stereo cameras to film prospective fields, producing detailed relief maps and allowing location of crown, or lowest point, giving likely spot for underground oil deposits.

NJ Supreme Court rules playing the stock market is not gambling, reversing previous decision relieving client of $7,637 debt to a brokerage.

One man reports that several NY City subway clerks were kind enough to give him a nickel for a ride when asked. Upon investigation, he found this was not the general subway policy; the nickel was apparently coming out of the clerk's pockets. The man reportedly now feels guilty.

Dr. L. Williams, "physician of international reputation," recently announced bald man are usually immune to colds due to thicker skin on top of the head, while blondes are more susceptible.

Treasury Sec. Mellon reportedly buys life-size bust of Alexander Hamilton for $15,000.

Week in review:

After a brief rally following the NY Fed. rate cut, stocks resumed downtrend, with both rails and industrials reaching new bear market lows. US Steel reached its lowest level since June 1924, before start of the memorable Coolidge boom. Poor rail conditions were emphasized by NY Central's report of a first-quarter loss; it hit a post-1922 low while many other major rails hit new bear market lows. Bank stocks were sharply lower on the week. Berlin, London and Paris stock markets slumped. Steel decline continued, but opinion was stronger that it was near stability; however, price weakness clouded profit outlook. Creditanstalt of Austria, largest bank in Eastern Europe, ran into difficulty but was bailed out by Austrian govt. Fed. Reserve continued aggressive campaign for money ease, and the money market now expects the Fed. to persevere until results are visible. Rate cuts in NY and London caused francs to strengthen well above point at which gold might be exported from Paris. Bonds continued two-tier trend; highest-grade issues showed pronounced strength with many record highs, given further impetus by rate cuts, while many second-grade and speculative issues displayed acute weakness, carrying them to new lows. US govts. reached 1931 highs and in several cases record highs; NY City $52M 4-year issue sold for record low rate of 2.997%; highest-grade corp. bonds including utilities and the best rail issues were firm; NY City tractions [mass transit cos.] rallied on progress of unification plans. European issues were mostly steady, while S. American were erratic. Grain prices trended downward, with corn relatively weaker than wheat. Cotton sagged almost continuously, with new current deliveries reaching new lows.

Market commentary:

Market wrap: Stocks fluctuated in a light Saturday session; bears looked to take advantage of unfavorable news with industrials near bear market lows; Steel and Can came under attack, causing "dragging declines" in the first hour. However, selling showed little sign of broadening and trading turned very light. Some efforts were made at bull operations in individual stocks including Auburn and Montgomery Ward in the final hour, but the market was unresponsive. Near the close, American Can sank to a new 1931 low and the market became unsettled. The Dow industrial and rail averages both closed at new bear market lows. Bonds continued trend of firmness in highest-grade issues, weakness elsewhere; foreign issues generally steady. Commodities weak; cotton down substantially to new lows, with May selling at 9.31 cents; grains weak with wheat down sharply.

Dow theory students focused on the Dow rail average. On Friday, it closed below 80 for the first time since 1924. This brings it into an interesting range; there have only been 3 periods since 1897 when it broke below 80. In 1900 and 1917, it held above 70; in the severe bear of 1921, it bottomed at 65.52. Rail action now seen as telltale for the general market; support would be bullish, while "further extensive declines ... would point to indefinite prolongation of the bear market."

Automotive industry observers continue to expect May production to exceed April; gain expected is about 4%, though abrupt changes are possible. Market students are starting to consider stocks that might do better in the summertime, including Borden, Canada Dry, and Coca Cola. Bears have been meeting stiff resistance in du Pont, with interests close to the management accumulating the stock based on sales increase each month since Dec. Continental Shares [investment trust and holding co.] common stock is now selling at 3 5/8 in spite of liquidating value of about 15; unsettled by shift of management from Eaton-Otis interests to Cleveland bankers. Diamond Match [Kreuger-associated] drawing attention for good earnings performance and strong financial position.

Brokers' loans latest figure of $1.671B, vs. the high of $6.804B in Oct. 1929, shows clearly that forced liquidation of margin accounts is no longer main factor in the persistent stock market decline. Investors seem to be selling due to poor sentiment, particularly discouragement over dividend cuts and concern over how rails and large industrials will deal with the problem of wage rates. However, many companies have already tackled this problem, with workers accepting lower pay either though wage rate cuts or fewer hours. Attention is currently being drawn to subject of wage cuts by strikes against Empire Steel and by mine workers in West Virginia, both precipitated by attempted cuts; problem seen likely to grow unless business stages abrupt revival.

Market students note growing tendency to favor senior securities [bonds and preferred shares] of many companies; safety appears to be in greater favor.

A number of brokers report over half of customers' operations are on the short side, with major industrials and rails favored targets. Short selling seems to have become popular with the public after bear efforts have proven profitable in the past few months.

Foreign currencies showed some improvement to close the week; observers are watching Paris and Berlin for indications of possible rate cuts.

A. Mallon of Pillsbury Flour Co. says US millers of flours for export have suffered most disastrous year since 1904 due to higher tariffs and laws requiring use of domestic wheat for flour in many countries in Europe and elsewhere. Says defenders of the tariff as lower than some previous ones overlook fact that US has become a creditor nation in the meantime; countries must service their debts with additional loans, gold, or by exporting goods and services.

Lord Barnby, Lloyd's Bank dir. and wool mfr., says adversity has greatly increased efficiency of British industry and positioned it well for when recovery arrives. Says England handicapped by inability to make foreign loans as before the war when it was a creditor nation.

Irving Bush, Bush Service Corp. Chair., returning from European trip, says little economic improvement there in the current year, but courage to face problems was apparent everywhere and will ultimately be important factor in recovery.

O. Wolfe, cashier of the Philadelphia Nat'l Bank, says US bankers keenly aware of the need to do something to correct widespread bank failures of the past 6-8 years; "since, so far as we know, there is no method by which the law or official regulations can make banks sound, bankers must take it upon themselves to teach each other ..." Says history of last 100 years shows well-managed banks do not fail.

N.L. Amster, Nat'l Railroad League pres., says increase in rail freight rates would "do more at this time to restore prosperity than any other single move"; cites "magical effect" of large rate increase on general business in 1920. Arthur Curtiss James, large rail stockholder, says it's of paramount importance to the US as a whole that rails be on solid financial footing; points out hundreds of millions of dollars in rail securities are owned by insurance cos., trusts, and savings banks.

Dow industrial average closed at a new bear market low; there were 4 new yearly highs and 54 new lows.

Economic news and individual company reports:

Cook County Treasurer calls meeting of bankers to ask for their cooperation as about $176M of the $276.2M in taxes due for 1930 remains unpaid after payment deadlines; normally about 75% of taxes would have been collected by now. Financial situation uncertain as both Chicago and Cook County are in urgent need of funds. Poor collections attributed to unemployment and efforts by some real estate organizations to discourage payment of 1929 tax bills.

Empire Steel settles strike by rescinding wage cuts announced Apr. 30; will aim for greater efficiency instead. Youngstown district steel output to decline 1% to 41% this week, but seen likely to stabilize for next few weeks.

Canadian crop report finds general lack of rainfall and of surface and subsurface moisture in three provinces; farmers in the most dry and windswept sections have been holding off on seeding; soil blowing has caused serious damage to growing crops in many districts.

BLS reports 15 major industrial groups showed 0.2% increase in employment in April, but total payrolls fell 1.5%.

Commerce Dept. reports April exports $217M vs. $235.9M in Mar. and $331.8M in Apr. 1930; imports $187M vs. $211M and $307.9M.

Q1 earnings for leading industrials showed mixed trends; total profits were down 47%, but only 28% excluding steel and automotive; food had the best showing.

Att'y Gen. Mitchell says will continue vigorous enforcement of antitrust laws until changed by Congress; while depression and unemployment make it "a delicate matter" to take actions that may unsettle business, he has no authority to refrain from enforcement; does see need for "particular care" to avoid unjustified cases.

Savings banks deposits in NY State rose $41.4M in April to pass the $5B mark; gain for first 4 months was $222.9M, more than the gain in any previous full year. Average rate paid on savings as of Apr. 1 was 4.24% vs. average of 4.41% for full 1930 year. Major West Coast building and loan assocs. cut interest rate paid on deposits from 6% to 5%.

Veterans' bonus loan applications to May 9 were 1.888M, of which 1.865M have been processed, for $711.1M.

Fisher's wholesale commodity index decline slowed, but it again hit a postwar low of 71.8 vs. 72.0 prev. week, 73.1 two weeks ago, and 88.7 a year ago. Commerce Dept. says farm price index for May 15 likely to show decline from Apr. 15.

Oil production in Kettleman Hills area of California is rapidly growing due to production outside the “unit” [cooperative] development area; some action is likely to be needed if Calif. production is to be kept within bounds.

France denounces commercial agreement in effect with Brazil since 1900, which expires Sept. 10; will impose surtax of twice general tariff rates on all imports of Brazilian meat and cocoa.

Canadian govt. revenues in April were $14.716M vs. $17.060M in 1930; largest declines were in customs duties and excise taxes.

Retail cigarette prices will be lowered, reversing the price rise established on Apr. 10.

Trading starts today in new wool futures market on floor of NY Cotton Exchange; observers believe this will help producers worldwide hedge against the wide price changes previously experienced. Another editorial by T. Woodlock defending role of speculators on grain futures markets; speculators as a whole lose money, paying costs of operating the market and in the long run getting farmers more for their grain. Restricting futures markets to pure hedging operations and banning speculation would also make markets less liquid.

At the FTC's utility investigation, the FTC utility expert complimented the North American Co. and its Cleveland Electric subsidiary.

Int'l Paper announces price schedule on newsprint for next 6 years; calls for avg. price of $59 vs. current $57; seen as discouraging further industry expansion, reassuring consumers that possible mergers won't increase prices.

Movie:

Party Husband - at the Winter Garden. Laura and Jay Hogarth "enter into marital relations in the so-called modern manner, each retaining an individual latchkey ... Jay, who is susceptible to colds, medicinal stimulants, women and morning heads, oversteps the bounds of privilege, however, and Laura ... retaliates by taking a business trip on the Albany Night Line with her employer. The modern pair are finally reconciled by an astute mother-in-law." Flimsy and flavorless box office concoction.

Poem by F. Caverly:

"You hear it said, where men powwow, 'The finest stocks are cheap;
A man should really buy 'em now, if he'd a fortune reap.
Across the Board the best blue chips are yearning to be bought.'
And then they all have further dips to fret a mind distraught.
That frequent urge harasses me: 'Man, buy - get on the job.'
As if I were, perhaps, J.P., or Henry Ford, or Schwab.
Four times have stocks seemed at their low, (some say this is the fifth),
While men cried 'Buy, you dumb bozo,' but failed to say what with."