Friday, July 31, 1931: Dow 136.93 +.0.74 (0.5%)

Assorted historical stuff:

15,000 reported drowned in Central China flood; Yangtse Valley crops ruined.

Labor Sec. Doak says immigration no longer an economic menace; average of about 5 aliens is leaving the US for every 3 entering; expects fewer than 50,000 immigrants in 1931 vs. 1.3M in 1914; Pres. Hoover has helped situation by ordering strict enforcement of law barring immigrants “likely to become a public charge.”

Editorial critizing statement of War Sec. Hurley that spending on inland waterways is not to be restricted by Pres. Hoover's austerity program. Subsidized waterways make transportation cheaper for the favored few in position to use them, while drawing traffic away from the rails and making transportation more expensive for the country as a whole. "No better way to sabotage the President's economy plan could be devised than to seek out in advance points at which it can be made subject to exceptions ... because of political considerations." Waterways appeal to voters in many areas due to misconception that water transport is always cheaper, and to "a spreading conscious willingness of the individual to get something for his personal use at the public expense"; Congress must be on guard against this "predatory human instinct."

Editorial calling for research to find new uses for agricultural products; cites example of cottonseed, which once was such an unwanted nuisance that states made it a crime to throw the seeds into streams, but is now valued at $250M annually. "If the Department of Agriculture, which has in it some of the best trained minds of the country, were to be given annually for research purposes a moiety of what the Farm Board has wasted there would be reason to expect a real farm relief that would lift up agriculture and help the whole country." E. Joliet, Illinois farmer, burns 75 acres of oats rather than harvest crop at additional loss of 4 cents/bushel; can only get 11 cents/bushel for crop it cost 40 cents to raise.

Iowa officials adopt tentative plan for destruction of grasshoppers by spreading poison from planes.

The US Weather Bureau is experimenting with a mobile weather station carried in a truck to help those fighting forest fires in California. The German Army may have originated the idea during the war, when they maintained a "field weather service" with instruments transported in automobiles.

A "little red schoolhouse" built in 1863 is still in use in Washington state; it was Pacific County's first school house and is still a one-room school, now the only one in the county.

Henry Ford was 68 years old Thursday. There was no special celebration; he spent the day at his estate and the Dearborn labs.

"American cities are slowly transforming themselves, but most have been unable to solve the automobile parking problem satisfactorily." Cities built since the car became popular are taking a more systematic approach to the problem. For example, Boulder City, built for workers on the Boulder Dam, will allow no parking or stopping of cars in the streets for any reason, but open parking spaces will be provided all over town, so it's always possible to find a convenient place to stop.

Germany special:

Bankers meeting in Berlin have drafted a detailed plan for prolongation of foreign short-term loans to Germany by 6 months; outline was cabled to heads of world central banks. Amount involved is about 5.5B marks, of which about 2.5B are acceptances (short-term bills) and 1B deposits. Dutch, Swiss and French creditors, "whose attitude is not very conciliatory," weren't represented at the meeting, while the British attitude will depend on results of the French-British credit negotiations; unless London is insured against renewed withdrawals of French balances, its ability to extend German credits will be "seriously restricted." However, it's hoped the "vast majority" of creditors will give their approval in a few days and that ultimately 80%-90% of credits will be prolonged voluntarily, with "the recalcitrants ... dealt with under a special decree." Failing an agreement, a moratorium would be inevitable. It's understood interest payments due Aug. 1 have been provided for.

Indications of brisk German retail trade, possibly reflecting public desire to turn money into goods, has aroused concern of inflation once banks are fully reopened; it's uncertain if money withdrawn will be "hoarded" or spent. It's believed it may be impossible to fully reopen savings banks since most only have "3% to 5% liquidity." Reopening of commercial banks is believed essential to avoid "stoppage of business and huge unemployment. On the other hand, the continuance of restrictions on savings banks would not affect general business."

Bank of England raised rate again, to 4 1/2% from 3 1/2% previously; seen as effort to avoid proposed Bank of France credit and support sterling through “straight central bank measures.” Sterling rose to more than a cent above the gold point against dollars, although it remained only slightly above the gold point against francs. London clearing banks raised rates on current accounts to 2 1/2% from 1/2% two weeks ago, while 3-month bill rates rose to 4 1/4% - 4 5/16%. NY bankers expect a substantial flow of funds from NY to London, attracted by the higher rates. However, the Paris-London flow remains uncertain; French investors "seem not yet relieved of their scare" and British loss of gold continues at a lower rate. Bank of England reported rather dramatic deterioration of position in past week; gold holdings fell to 133.3M pounds sterling vs. 150.0M; reserves 33.9M vs. 53.9M; reserve ratio 32.4% vs. 49.3%; holdings of govt. securities 52.6M vs. 34.4M. Bank of Sweden raised rate to 4% from 3%.

British Chancellor Snowden says budget outlook serious unless considerable savings are made, but strongly refutes “the impression that the budgetary position of Britain is in a hopeless state of bankruptcy”; argues British position better than that of any other country. Says govt. anxious to undertake huge war loan conversion, giving large savings of interest.

Bank of France offer of credit to Bank of England was made in francs (2.5B), first time since the war that the Bank of France didn't use dollars or sterling in important international credits; this is seen signifying “future French efforts toward definite leadership in European finances.” Bank of France gold holdings hit record high of 57.9B francs.

Market commentary:

Market wrap: Market fluctuated through a dull session. Prices opened lower, with steel and can shares particularly pressured. A recovery set in before mid-day on short-covering, but the rally failed to draw public interest and prices fell back off the day's highs in late dealings. Bond trading continued midsummer dullness, with prices generally slightly lower. Foreign issues mainly moved narrowly with no important news developments on the day; S. American issues continued yesterday's downtrend. Domestic issues generally heavy; US govts. slightly lower; rails weak but utilities relatively steady. Commodities mixed; grains moderately lower; cotton slightly higher. Crude rubber hit new record low at 5.50 cents/pound. Copper at 7 5/8 - 8 cents domestically with buying small; some "second-hand" copper sold at 7 1/2 cents; foreign buying somewhat better. Silver up 1/4 cent to 28.

Conservative observers continue to recommend sidelines; many believe market will "face a test in the near future" since trading range was broken on the downside.

Chrysler provided the most action, rallying on pool operations and speculation the Ford shutdown would help position of its new low-priced Plymouth car. Textile shares were strong, with American Woolen preferred hitting a new 1931 high. AT&T has been subject to some selling in the past few days; there's relatively little of the stock "in the Street," allowing operations on either side to easily affect the price. Deere hit a new yearly low after omitting dividend; Case fell on dividend nervousness. Barnsdall and Childs fell after omitting dividends. Humble Oil fell following testimony of pres. Farish at Texas House oil industry investigation.

Rails stocks have been pressured on poor first-half earnings and outlook; there's renewed speculation that some leaders may be forced to cut dividends, including NY Central, Pennsylvania, and B.&O.

Severe reaction to US Steel dividend cut attributed to small short position in the market, leading to lack of short-covering.

Survey of investment trust [similar to mutual fund] first half transactions on the 25 most popular stocks they hold reveals some interesting trends. Stocks more heavily bought than sold were largely utilities including Consol. Gas, PG&E (no sellers at all for those two), and Public Service of NJ; GM was also in this group. Stocks heavily sold were a diverse group including AT&T, NY Central, US Steel, American Can, Union Carbide, Standard Oil of NJ, and Liggett & Myers. International Harvester held the distinction of drawing no buying or selling at all.

This year promises to be better for aviation transport companies; with mail payments from the govt. on a "definite basis," transport lines are gradually turning profitable thanks to additional revenues from the passenger and express business. Number of passengers is slightly below a year ago, but longer-distance lines are seeing an increase; transport cos. are increasingly branching into providing express [delivery] service.

G. Hill, Amer. Tobacco pres., says cigarette business has held its own thanks to “extraordinary efforts in scientific merchandising, backed by enormous expenditures for advertising”, but other outlets for tobacco are declining; warns against current tobacco overproduction and effect on prices to the farmer.

More talk of wage cuts is heard each day, with some economists insisting that maintenance of high industrial wage rates after prices have fallen so sharply is “one of the major influences retarding business recovery.” Considering higher purchasing power of the dollar, it's argued wages could be cut in those cases where they've “kept up costs and prevented industrial concerns from showing a reasonable profit on the small business being done.” Editorial by T. Woodlock citing large gains in railroad wages since 1915 (average rate up 89%). Question of rail wages concerns the public since they must ultimately pay for them; since rail profits are restricted by law, "the public has undertaken a certain responsibility to railroad security owners and can not fairly expect them to bear alone the burden of increasing or maintaining wages in bad times."

Economic news and individual company reports:

W. Green, AFL pres., estimates 175,000 lost jobs in July, bringing total unemployed to 5.2M.

Bethlehem Steel reports sharply lower Q2 earnings ($1.5M vs. $7.7M and slightly below preferred dividends) but keeps 50 cent dividend on common, vs. $1 last quarter and $1.50 previously. E. Grace, pres.: “I don't see any indication of a pickup in business. I must say that we pray for an improvement rather than anticipate it.” However, discussing general business, says “Industry in the US was never in a sounder or better position to take care of itself in a depression than it is today.” No comment on possible wage cuts; wage rates have been maintained so far. Steel price situation appears more stable.

NY, Chicago & St. Louis Rwy. (popularly known as the Nickel Plate) omits both common and preferred dividends. Pennsylvania RR operating earnings for first half down over 50% from 1930; seen unlikely to earn dividend in 1931 but has most cash of any US railroad.

Bell System reported loss of 100,000 telephones in the first half (out of over 20M in use at end of 1930). However, AT&T revenues showed an increase and it's expected to cover its 1931 dividend.

Unconfirmed reports say Justice Dept. is investigating whether simultaneous rise in prices of major cigarette brands was a conspiracy violating antitrust law.

Acting Wyoming Gov. Clark telegraphed Pres. Hoover asking him to stop sale of crude oil on govt. land at below $1/barrel.

Money in circulation July 29 was down $14M to $4.780B, total Reserve Bank credit outstanding up $3M to $945M. Member banks in NY City report brokers' loans down $26M to $1.390B; loans on securities to non-brokers up $4M to $1.683B.

1.3M bales are being held by the Cotton Stabilization Corp; however, total held by the Farm Board and agencies created by it is estimated at 3.5M bales. These huge holdings "hanging over the market" are causing grave concern in the cotton trade on where prices will go when the new cotton crop starts moving in a few weeks. Farm Board vice chair. Williams says Board had $117M loaned to cotton cooperatives and the Cotton Stabilization Corp. as of July 1; says Board doesn't expect to sell any of its "stabilization cotton" at present. Texas Gov. Sterling receives no acceptances in response to invitation to 15 cotton state Governors for conference on acreage.

Agriculture Dept. reports Midwestern wheat farmers plan to reduce 1932 acreage due to low prices; summer plowing below normal; Farm Board continues to urge 20% cut in acreage.

Canadian govt. "has flatly refused to establish a federal wheat board"; suggests three Western provinces form a corporation that Federal govt. would help finance; proposal has been subject of three-day discussion among provincial leaders; decision anxiously awaited by thousands of farmers.

Nitrate cartel apparently off again; German syndicate cuts nitrate prices 37% and blames Chileans for breakdown in cartel agreement.

German govt. revenues in Q2 were 1.808B marks vs. 2.122B in 1930. Austria, Switzerland and Czechoslovakia protested German $25 tax on travel out of the country, saying it's causing serious hardship to the hotel and tourism business.

Argentine Provisional Govt. applies duties of 5%-50% to many articles previously admitted free.

Irish Free State imported $375M in Russian goods in year ended May 31, vs. only $15M in previous year.

Lord Kylsant, former Napoleon of the shipping world, found guilty by Old Bailey jury of issuing misleading prospectus; sentenced to 12 months imprisonment under “easy treatment rather than the hard labor sometimes specified.”

World's largest mining co. by production in 1930 was Union Miniere Haut-Katanga, which produced 138,949 metric tons, an increase of 1,957, refusing to curtail production until "the situation became desperate."

Youngstown district steel production is up 3% since Monday, to 45%. Dow average of 8 iron and steel products unchanged at $43.98.

NYSE seats sold at $210,000 and $205,000, down $25,000 and $30,000 from last sale.

Ford announced annual summer vacation shutdown to start Aug. 1. Standard Oil of NY - Vacuum Oil merger approved almost unanimously. Diamond Match [Kreuger-associated] will raise match prices about 1%.

Earnings reports: Consol. Gas of Baltimore Q2 $1.18/share vs. $1.26; half $2.81 vs. $2.93. Engineers Public Service year ended June $2.18 vs. $2.67. Pacific Lighting year ended June $3.97 vs. $4.33. Bell Telephone of Penn. Q2 $15.81/share vs. $14.36; half $31.33 vs. $28.95. Pittsburgh & W. Va. Rwy. half $.54 vs. $2.60. National Tea Q2 $.24/share vs. $.21; half $.51 vs. $.75. McGraw-Hill Q2 $.54/share vs. $.94; half $1.16 vs. $1.84. Crown Cork & Seal half $1.18 vs. $2.34. Hazel-Atlas Glass Q2 $1.80/share vs. $1.01; half $2.57 vs. $1.56. Bon Ami Q2 $1.65/share vs. $1.77; half $3.00 vs. $3.25.

Companies reporting decent earnings: Consol. Gas of Baltimore, Pacific Lighting, Bell Telephone of Penn., Kelvinator, Hazel-Atlas Glass, Bon Ami.

Movie:

Son of India - MGM film. A "handsome production" concerning "interracial love." Ramon Novarro stars as Karim, a young Indian jewel merchant who barely survives an attack by bandits. Managing to preserve a single valuable diamond, he is accused of stealing it; his life is saved by the intervention of an American man. Years later, with Karim now wealthy, he meets Janice, an American visitor, when she presents a trophy to him after his team has won an international polo match. They fall in love on a tiger hunt in the jungle, and "Janice decides to throw convention to the winds and marry the handsome Hindu." A few days later, Karim is delighted by a visit from the man who saved his life, only to find he is [note: wait for it ...] Janice's brother, and has come to "ask Karim to practice the Hindu creed of renunciation by relinquishing his claim to Janice's love." He does so, and the film "ends on a sad note, with the shattering of a beautiful romance upon the rocks of racial prejudice."

Joke:

Judge - How far were you from the spot where the cars collided? Witness - 22 feet 9 inches. Judge - How do you know it was exactly that distance? Witness - Because I measured it, thinking some fool might ask me.

Thursday, July 30, 1931: Dow 136.19 -5.34 (3.8%)

Assorted historical stuff:

Editorial: Recent reports from the Northwest indicate a serious situation is rapidly developing; drought, heat, and grasshoppers are combining to cause partial, and in some locations, complete crop failure. Western half of the Dakotas was already in bad condition, but Eastern half and much of Minnesota had previously been in better shape; now, extreme heat is changing the picture. Damage also reported in Nebraska and Iowa; situation in Canada similar and possibly even more severe. Regions involved will suffer grave losses. Crops including spring wheat and corn will come in below expectations. "The situation ... has not been fully realized up to now." One misleading factor has been repeated reports of beneficial rains, which can't make up for dry subsoil; as a leading Canadian crop expert said, "If would help a lot if ... folks who have no practical knowledge of the matter could ... refrain from writing of the beneficial effects of a teaspoonful of rain on a country that has been dry for three years."

Flood in Central China drowns thousands and destroys crops, threatening famine.

Editorial by T. Woodlock: Two great US industries, coal and oil, "afford a spectacle to the world which for combined waste of labor and material and chaos in human relations can not be matched." Situation in these industries demonstrates folly of the US idea of antitrust law, that "whatever lessens or 'may tend to lessen' competition 'restrains trade'"; this idea is "entertained nowhere else in the civilized world" and is "flatly inconsistent with modern economic conditions."

Judge John B. Payne discussed the unemployment situation with Pres. Hoover. After leaving the White House, said they discussed best way of coordinating all the agencies dealing with unemployment. Payne said main responsibility lies with local govts. and there's no reason for Federal govt. to be called on for funds to create a dole system. Believes the question can be dealt with by the country if kept where it belongs. Says Red Cross hasn't received any alarming reports, and conditions are going on as well as last winter, not taking into account the drought.

Rep. S. Major (D, Missouri) dead at 62; his death restores Republican majority in the House to 2.

Provisional Spanish govt. established after overthrow of King Alfonso formally resigned, enabling Constitutional Assembly to elect a new one. Provisional leader Zamora said greatest achievement was creation of civil power not dominated by army or clerical factions; if elected by Assembly would continue with same cabinet.

Overthrown Chilean leader Ibanez, exiled to Argentina, said would remain there "at the disposition of my govt."; insisted he had not fled Chile but retired, retaining claim to Presidency. New Chilean regime headed by J. Montero attempting to restore normality and tackle pressing economic problems; two army regiments ordered to provinces to handle rumored trouble planned by state police; govt. will seek foreign loan of $21M to meet immediate urgent obligations.

Political riots in Sao Paolo, Brazil paralyze business; authorities fear serious outbreaks from 70,000 striking textile workers; 4 reported killed.

Mexican financial circles in “utter confusion” following enactment of law putting country on the silver standard; it's feared the Pachuca gold and silver mines may increase production, worsening silver price situation. Mexican Pres. Rubio says passage of new Labor Code a necessity, criticizes those attacking the bill; says govt. will continue policy of protecting the laborer.

Accidents at highway grade crossings in the first 4 months were 1,480 vs. 1,643 in 1930, injuries 1,691 vs. 1,474 and deaths 645 vs. 643.

Wired Music, a NY organization, asks for ruling on whether NY Telephone must lease lines for "transmitting audio frequency currents which can be converted into music in the home."

Within 18 months, the US govt. expects to report definitely on the commercial feasibility of a long-discussed proposal "for destructive distillation of straw to produce gas and various chemicals." The US Bureau of Chemistry and Soils is cooperating in experiments at a plant in St. Paul, and is also working with full-size commercial equipment at a new location.

Giant German flying boat, the Dornier DO-X, to be placed in permanent service between the US and Brazil; first trip from Brazil to NY planned for this week.

"The young people of Germany are becoming a race of sportsmen. All the energy that formerly went into military training now goes in to team work in various forms of athletics." Youths are going so far as to abstain from alcohol, to the delight of the dry crusade but the consternation of liquor interests. Even breweries have converted to making soft drinks; because of oversupply, alcoholic drinks are now very cheap throughout Germany.

Interesting Lincoln story correcting a joke published on July 17 that had him entering Richmond by stagecoach after it fell. In reality, he landed in Richmond by boat on April 5, 1865 and walked through the still fiercely burning city protected only by a guard of 10 armed sailors. [Note: after walking unscathed through the war zone, he was assassinated on April 14 at Ford's Theater.]

Market commentary:

Market wrap: Stocks "distinctly reactionary" on heavier trading, apparently due to disappointing US Steel dividend cut; main body of stocks broke sharply at the open and further setbacks developed as the session progressed. Weak spots included US Steel, Bethlehem and American Can, but pressure spread across the market and many leading shares came close to the June 2 lows. "Rallying tendencies were apparent" in the final hour, but trading slowed and and closing prices were near the day's lows. Bond prices worked generally lower in quiet market; foreign list reactionary, particularly S. American issues; German bonds slightly lower; US govts. and highest-grade utility bonds were steady while rest of domestic list was weaker in sympathy with stocks. Commodities mixed; grains higher, with corn up sharply on short-covering; cotton moderately lower. July corn shot up 9 7/8 cents to 68 1/2 on heavy short-covering in the last few minutes, with other months up 1 1/8 - 1 1/2; "action of the July position was the cause of considerable comment." Copper remained at 7 3/4 - 8 cents; some copper reportedly sold Monday at new record low of 7 5/8.

Market observers generally bearish; most "interpreted the US Steel dividend action as reflecting the attitude of leading industrialists and bankers toward business in the immediate future"; general advice was to keep out of the market, use technical rallies to reduce long positions, and use stop-loss orders to protect accounts.

Large overnight declines uncovered stop-loss orders under the previous closing prices; "this increased the supply considerably."

US Steel dividend cut to $4 annual rate came as a shock to the Street, as $5 had been widely expected. Considerable liquidation came into the stock; this was likely responsible for "considerable selling in other directions" due to large public ownership of Steel. Foreign stock markets were generally unsettled after the US Steel dividend cut.

Editorial coming close to complaint that US Steel directors, after cutting the dividend 42% and executive salaries by a reported 10%, have still maintained a "discreet silence" on wage scales. That wage scales are apparently not yet going to be cut, while dividends have been slashed even with an accumulated surplus ample to cover them for another year or more, has "put a deep 'crimp' in the theory that any common stock dividend is a stable thing, no matter how deeply buttressed in accumulated liquid resources the corporation concerned may be. On the record to date, the Steel Corporation directors have come close to saying ... that its resources are subject to a wage earner's lien senior to that of the common stockholders." Bethlehem Steel seen likely to cut dividend rate but maintain some payout in spite of not earning any balance for the common stock; “this will recompense common stockholders for the periods when no payments were being made on the junior shares.”

Sherwin-Williams is close to its 1931 high after reporting strong earnings trends. Worthington Pump declined on poor earnings report.

Freight loadings report showing a small decline for the July 18 week was disappointing; gradual gains had been hoped for.

T. Hentges of the NY Auto Club says proposed Federal gasoline tax of 1 cent/gallon would cost US car owners over $150M/year.

The oil industry generally believes little will be accomplished by Oklahoma Gov. Norman's "extreme" threat of an enforced oil well shutdown unless prices reach $1/barrel by Saturday. However, voluntary shutdowns already taken should bring higher prices than the current 50 cent maximum, provided there's no further increase in East Texas output.

Another opinion piece about why wages must be cut, in this case by the rails. An industry can't continue paying workers more than the economic value of their labor; rails are now doing so by a wide margin. Management talent, on the other hand, is rare and always in demand, so if their salaries are cut too much, “the brains will leave the railroad business.” [Note: it's pretty amazing that this argument is still being made today in the financial “industry,” several orders of magnitude later.] Finally, rails must cut dividends since much of the corporate surplus on balance sheets isn't available for dividends but has been reinvested in equipment, etc.

An observer at a leading broker says present state of US trade and agriculture along with foreign situation demands conservatism in forecasting business outlook. Expects some seasonal recovery in fall but "certainly no boom"; period of limited corp. profits likely to extend well into next year. "Perhaps we are not going any deeper into depression; but there is a fairly hard winter ahead," even granting good seasonal fall gain; any recovery likely to be slow and get little help from exports.

F. Croxton, chair. of Pres. Hoover's Emergency Employment Committee, reports "improvement in employment conditions in some directions and little change in others"; NY City among centers showing some improvement.

Paine, Webber says “disappointment coming from the key industrial corp. [US Steel], and its implications with respect to wages, may represent the final element of deflation in a liquidating movement that is now of nearly two years duration.”

Economic news and individual company reports:

Negotiations for $100M credit from French banks to the Bank of England have been suspended and may be on hold until Gov. Moret of the Bank of France and Gov. Norman of the Bank of England meet Sunday in Basel before the BIS directors' meeting. Reported French willingness to grant British credit seen as “complete reversal of French opinion,” reflecting realization that in spite of little direct French exposure to Germany, French balances in London have been reloaned to Germany and so may be threatened by a continuation of the British gold drain. Bank of England lost 400,000 pounds sterling in gold to Holland, but gold drain to France has apparently stopped; sterling is being supported above the gold export point in Paris and NY and Switzerland is refraining from importing British gold even though sterling is below the gold point there. Austerity committee appointed to advise British govt. will reportedly recommend drastic cuts amounting to 90M pounds, including large cuts in social services and govt. salaries; likely to meet with strong opposition from Labor; no action will be taken until Parliament reconvenes in October. Negotiations for a 7M pound loan to Hungary reportedly near completion, but London banks are unable to participate due to "large amounts of credits which are locked up in Gemany."

Yet another analysis of the roots of the German crisis, this one from a leading German banker. In five years after the Dawes Plan (original reparations plan) took effect, the reparations debt was converted “into an enormous number of individual debts”; this made the “crowd of creditors” impossible to control. There followed the scares of the Young Conference, the Reichstag elections, and finally the Creditanstalt collapse; this caused creditors to pull back. The Hoover moratorium plan might have saved the day, if not for delays in its acceptance; Germany wound up like a patient laid on the operating table, opened up, and left exposed. Banking suspension was inevitable, and in fact delayed too long, allowing “less worthy creditors to get away at the expense of the more worthy.”

US savings banks set records; in the year ended July 1, depositors rose 966,826 to over 13M, and deposits gained $831M to $9.977B. Rate of gain in deposits accelerated in the first half of 1931, reaching 5.41% vs. 3.67% in last half of 1930.

Weekly steel reviews report some positive news, including unseasonal rise in output and apparent decision of US Steel to maintain wages. However, too early to say if output gain will reverse; sharply lower automotive production schedules for August and decline in canning “do not augur well”; pipe line orders are falling and railroads are only buying absolute essentials. Construction continues to be a relative bright spot, and price picture in scrap and finished products appears firm, though untested. Steel production for week ended Monday was 33% vs. a little over 31% previous week, 31% two weeks ago, 57 1/2% in 1930, and 96% in 1929. Almost all of the increase was at smaller independents. Disturbing trends in canning continue; output at tin plate mills fell again to 55% vs. 65% two weeks ago, at what should be the seasonal peak of production; further declines are predicted. Major can mfrs. including American Can and Continental Can had been expected earlier this year to approach their 1930 record earnings; this is now unlikely.

Price war in the cement industry that broke out some months ago continues with little sign of an end; inventories are at the year's low but some manufacturers persist in "price shading and the offering of secret concessions" and have been "getting more than their fair proportion" of available business; the more responsible companies that have "attempted to stabilize the industry by adhering to a one-price policy" have been losing business and may be forced to match the price cuts.

Officers of the Southern Rwy. voluntarily reduced their salaries but said the rail didn't contemplate cutting wage scales for unionized labor at this time. Int'l. Shoe announced pay of office and stockroom employees will be cut 6%; officers accepted a 15% cut two months ago.

Rail freight loadings for first 29 weeks this year were 21.169M cars, down 18.0% from 1930, and 26.1% from 1929.

US electric output for week ended July 25 was 1,680 GWHr, down 1.9% from 1930, vs. a 1.6% decline prev. week and a 0.3% rise two weeks ago.

Earnings of 103 telephone cos. in May were $23.721M vs. $23.062M; first 5 months $117.7M vs. $114.9M.

J. Lang, New South Wales premier, asked Australian govt. for 500,000 pounds sterling to cover the state's July needs. PM Scullin replied this couldn't be done until the state accepted responsibility for overseas interest on its debt and cut spending by 20%, among other things.

About 7M acres in East Africa, including the entire year's corn crop, devastated by locusts; worst infestations around Lake Victoria.

North Atlantic Shipping Conf. agrees to reduce transatlantic passenger fares 10%-30% in effort to stimulate recently diminished travel.

Deere & Co. omitted dividend "until business conditions revive"; company remains in "excellent financial condition but directors believed it wise to discontinue common dividends in view of the present situation." [Note: fairly common language for these announcements.] The Street is also expressing doubts on whether the J.I. Case dividend will be maintained. Farm equipment sales showed some pickup a little earlier in the season but have fallen off sharply since.

Earnings reports: American Ice Q2 $.91/share vs. $1.35; half $.62 vs. $1.09. Warren Foundry & Pipe half $1.05 vs. $.68. Conde Nast Publications Q2 $.43/share vs. $1.04; half $1.12 vs. $2.68. Standard Brands Q2 $.33/share vs. $.31; half $.63 vs. $.57. Royal Baking Powder half $.50 vs. $.47. Endicott-Johnson half $2.51 vs. $2.12. United Piece Dye Works half $.78 vs. $1.85.

Companies reporting decent earnings: Warren Foundry & Pipe, Standard Brands, Royal Baking Powder, Endicott-Johnson (shoe mfr.).

Joke:

"Radio," said one reporter, "will never replace the newspaper. You can't wrap up a lunch in a radio." [Note: replace/radio/iPad/.]

Wednesday, July 29, 1931: Dow 141.53 +1.89 (1.4%)

Assorted historical stuff:

US Steel announced first dividend cut since 1915, to a $4 annual rate from $7 previously. For Q2, Steel reported earnings of $7.391M or $.12/share vs. $3.02 in 1930; almost none of the quarter's profits were from operations. Directors also announced salary cuts for officers and white collar workers, indicating "question of reducing the wage scale in the plants will be decided shortly." Earnings this year look to be smallest in history of the company. Govt. officials reportedly discussed wages with a number of steel makers; officials made clear their view that wage cuts in a basic industry like steel might influence other industries, and they “are loathe to see this take place, but it was emphatically denied that any pressure had been brought to prevent it.” Officials denied knowledge of a report that Pres. Hoover had personally appealed to US Steel on wages. White House officials including Labor Sec. Doak denied any change in Administration policy on wages. Commerce Sec. Lamont, whose recent letter on the possible need for wage cuts had drawn much attention, was on vacation; officials made no attempt to explain the letter.

One man was killed and thousands endangered by an exploding oil tank that created a "lake of flames" within two blocks of the business district of Kilgore, Texas.

Dr. Nicholas M. Butler [philosopher, pres. of Columbia U. 1901-1945] says that unless postponement of war debt payments is quickly followed by progressive policies reconsidering “the whole present disastrous situation, conditions will be worse in June, 1932, than they were in June, 1931. There is no time to be lost.”

French Minister of War Maginot says France has reached limits of disarmament unless guarantee is granted at upcoming Geneva [disarmament] conference providing for mutual assistance through coalition of all forces against any aggressor.

Editorial warning that, while details of Mexico's new currency law (dropping the gold peso and adopting silver as the single currency standard) are as yet unclear, it's likely to be unsuccesful in its objectives of improving the price of silver or conserving Mexico's gold supply. Central Banking commission appointed in Mexico. Rate of exchange not yet determined for silver pesos; "quotation boards blank." Mexican press praises move abolishing gold as legal tender. NY bankers regard move as purely internal and without great significance outside Mexico.

The monsoon rainfall, because of its economic importance to India, is the subject of intense efforts at prediction. For the past 45 years, British meteorologists have attempted to predict the amount of rainfall; they have now reached a "fairly accurate" level, based on "weather observations in numerous distant regions."

A leader in the truck field is developing a new design of large motor bus featuring aluminum body construction that it claims will travel 70 mph.

Alaska leads the world in airfields per capita; with about 60,000 people and 65 airfields, it has an airfield for every 908 inhabitants.

Banks are heavy users of airmail in order to save interest. They generally want mail to be flown at night since checks can be then cleared in cities 1,200 miles away the next morning and mail can be moved between the coasts with a loss of only one business day. It's estimated airmail saves banks one to three day's interest on $10B a year.

General Iron Works of Cincinnati and Frigidaire are now marketing a unit that can provide comfortable temperatures for the small home in both summer and winter; unit is called the Hot-Kold and is an "automatic gas-fired system of the forced air type."

New Zealand govt. has prohibited all forms of trading stamps and gift coupons, including cigarette coupons, as "uneconomic."

The London Evening Standard reports US Shakespeare investigators are more original than British ones, who tend to concentrate on proving Shakespeare "did not write his own works." One Illinois professor has spent years researching Shakespeare's income, and found that in his best years it averaged about 250 pounds sterling ($1,250). This isn't as pitiful as it sounds, since it would be about $10,000 in 1931 dollars.

Germany special:

Germany postpones reopening of banks to Monday, though amounts permitted for withdrawal were increased to allow for rent and interest payments. Delay was attributed to concern that month-end payments might cause new run, and to desire to finish negotiating maintenance of foreign credits in order to avoid keeping a moratorium on foreign payments. Second objective will be difficult due to large number of small creditors. Private German banks will establish new institutions to give credits against securities (for small bankers with no assets except securities) and to liquidate assets of savings banks. Savings bank illiquidity seen possibly necessitating 1B mark credit from the Reichsbank before bank reopening; total savings balances amount to 12B. German govt. issues new emergency decree in effort to determine extent of Germany's foreign debts; all people and cos. owing more than $12,000 to foreign creditors must report full total within 10 days.

Collapse of Nordwolle, Germany's largest woolen yarn and fabric plant, which came at height of the recent crisis and caused "a sensation in the banking world here and abroad," attributed to speculation in wool prices by the Lahusen brothers using a Dutch subsidiary apparently unknown to Nordwolle's board of directors.

British Premier MacDonald and Foreign Sec. Henderson met with German officials in Berlin.

Foreign currency market was “at a complete standstill” pending definite news on the proposed French loan to the Bank of England; the Bank continued to lose gold, but at a slower pace. Reports from Paris and London on the loan were conflicting. It appears that French bankers are prepared to offer the loan, but reports from London indicate it's unpopular in banking circles there and the British Treasury has failed to approve it; it's believed the Bank of England can overcome the crisis through regular banking measures, and accepting the loan might “reflect on the standing” of the Bank. However, with French banks still in a “jumpy” state, it's believed there's danger of the gold drain resuming if the loan falls through. French financial circles are critical of Bank of England Gov. M. Norman, blaming him for scuttling the previously proposed French loan to Germany; on the other hand, British bankers are giving “much unfavorable criticism” of the “hasty French attacks on sterling,” contrasting it with restraint shown by NY banks.

Sec. of State Stimson calls for complete change of national psychology in Germany if the country is to recover from its economic ills. Stimson "pointed out that any nation which has fallen into the habit of excessive complaining naturally finds it difficult to reverse its methods ... It is difficult to persuade a man to lend money to another man or a nation which continually says it is broke, was the thought Mr. Stimson brought home." However, feels German themselves are realizing "that although the crisis is not over, conditions are considerably bettered already." Stimson will now go to Scotland for a few days of hunting and fishing, after which he will spend two or three weeks in Europe before returning to the US.

Editorial on Dr. H. Schacht's (former Reichsbank pres.) recent book on the "reparations muddle"; "for all his national and personal bias," the book "throws a bright light upon a German financial situation which still, under the surface, defies the glowing urbanity of half a dozen mobile premiers and secretaries of state." Dr. Schacht's argument that Germany has been paying reparations by borrowing isn't exactly news, but, while criticizing govt. extravagance, he shows almost conclusively that this foreign borrowing was Germany's only choice. Dr. Schacht estimates total value of German reparations payments at 88B marks, or 220 percent of peacetime "annual national income" (he contrasts this with the milder reparations assessed by the Germans against the French in 1871 of about 25% of national income; in addition, he appraises value of lost colonies at 80B-100B marks). With Germany almost stripped of convertible capital and running large balance of payment deficits, foreign borrowing was inevitable; much was short-term, which is "notoriously sensitive to ... instability." It's hard to avoid concluding that a large part of remaining reparations claims are worthless. It's therefore unfortunate that at least some at the London conference "were instructed not to go into the one question which must be answered before Germany, or Europe, can again get its feet on solid ground." Asst. Commerce Sec. Klein said US entered no "political engagements" in offering Germany relief but simply acted in "vital interest of our people as producers and as investors."

Market commentary:

Market wrap: Stocks "meandered along in an aimless way in another apathetic session and volume was at the lowest proportions"; "the entire Street was waiting for the result of the meeting of US Steel directors" (released after the NYSE close). Prices opened irregularly, fell a little and were heavy around noon, then "gradually crept back" and displayed a firmer tone in the afternoon. Bond trading unusually dull, but showed reversal of recent trends. German issues rallied sharply on reports banks would reopen shortly; most European and S. American issues also rose substantially though Chilean bonds were irregular. Domestic list very quiet; highest-grade issues steady while second-grade and speculative sagged. Commodities weak; grains lower, with Sept. (50 1/4 cents/bushel) and Dec. (54 1/4) wheat dropping to lowest levels in CBOT history and corn down sharply; cotton down sharply to only slightly above season lows hit in early June. Copper remained at 7 3/4 - 8 cents with buying somewhat better.

Trading on San Francisco Exchanges turned down sharply after announcement of the US Steel dividend cut. Over-the-counter securities also broke sharply in the final hour of trading after the announcement; bank and trust stocks were heavily pressured.

Street sentiment was pessimistic after the US Steel announcement, since new rate of $5 had been anticipated. Conservative observers advised clients to "wait for a good-sized reaction" before gradually buying stocks.

Retail chains drew some buying, with J.C. Penney and Safeway particularly strong. A large short interest reportedly exists in steel shares. Rails were irregular, with NY Central selling off in response to estimate of sharply lower share earnings.

American Can has been sold by interests who claim this year's earnings won't match those in 1930 as expected; however, the stock has drawn good support on reactions. McKeesport Tin Plate is likewise subject of downward estimate revisions on lower canning activity. National Biscuit has drawn some concern on possible overexpansion and problems coordinating new divisions; it's made some important executive changes in the last few months. American Tobacco continues to be well supported when selling appears; recent cigarette price increase believed beneficial; many important brokers have recently recommended the stock, bringing in some public buying. B.F. Goodrich operations have reportedly improved in recent months; first half results are expected to be considerably better than in 1930, showing an operating profit before inventory adjustments. Loews has drawn buying in anticipation of good earnings report; seen as most successful of the amusement cos. Bigelow-Sanford Carpet rose to a yearly high following surprisingly favorable first half earnings of $1.91/share vs. $1.41 in first half 1930 and a sizable loss in second half 1930. However, at about 30, the stock was still selling only a point or two above net quick assets.

Brokers again complain of lack of business as customers remain on sidelines. However, leading brokers also report that the public bought considerable stock when the market was strong in Feb., and many have continued to hold stocks since; this has raised fears of renewed liquidation "if conditions are disturbed seriously." No evidence recently seen of "bank sponsorship" of stocks; many observers don't expect this "until a definite change comes in domestic and foreign conditions. In recent weeks, the leading bankers of the world have been giving most of their attention to the affairs of Germany."

Municipal bond dealers believe very light volume of offerings in recent week has given "market an opportunity to digest" and put it in good position to absorb upcoming offerings; remaining supply on dealers shelves is believed very low, not exceeding $50M.

Street sentiment improved regarding the foreign situation thanks to slowing of British gold drain; little news came from Germany, "but in this instance no news was regarded as good news" and it's believed "German bankers now cooperating ... will work their way out of the present situation."

Economic news and individual company reports:

Fed. Reserve member banks weekly report showed loans and investments fell to a new yearly low; "this continued contraction of bank credit ... clearly indicates that deflation is still the order of the day, despite Fed. Reserve efforts to stop the movement."

Texas House investigation of oil industry likely to conclude Wednesday, but "the mass of testimony introduced ... differs so widely in many of its essential statements and the recommendations of the witnesses are so lacking in uniformity that the Legislature is confronted with the problem of what kind of laws to enact ..." Oklahoma City report says Gov. Murray has threatened to shut down all wells in the state except stripper [small] wells unless price reaches $1/barrel by Saturday; order is to be enforced by military police. Refineries ran at 69.0% in week ended July 25 vs. 67.8% prev. week; stocks of gasoline fell 88,000 barrels to 37.289M. Crude oil production in week was 2.487M barrels/day, up 40,150 from prev. week and about the same as a year ago; increase due to East Texas area, which rose 96,100 barrels/day to a new high of 504,900.

Northwest crops suffered severe crop damage due to heat wave and drought; numerous spots in the Dakotas and Minnesota reported temperatures over 100 degrees. Plains states and central valley also need rain. Nebraska and Western Iowa badly infested with grasshoppers; extent of damage to grain unclear. Canadian govt. reports disastrous weather week for Western crops, with high temperatures, hot winds and almost no rain.

Bill introduced in Texas Legislature to reduce 1932 cotton acreage 50% from 1931 to conserve soil.

NY Superintendent of Banks Broderick files list of claims received against the Bank of US; $131.0M in claims accepted and $117.6M rejected; over 270,000 claims examined since June 29; intends to apply for order authorizing initial payment of 30%; additional dividends to be paid as liquidation progresses.

First 71 rails report net operating income in June $45.7M, down 26.5% from 1930 and 51.6% from 1929; gross was $342.0M, down 16.3% and 29.9%. The same rails in May reported net of $38.7M, down 38.1% from 1920, and gross of $341.9M, down 21.3%. Rail freight loadings for week ended July 18 were 757,555, down 6,026 from prev. week, down 18.3% from 1930 week, and down 29.8% from 1929.

Extremely detailed editorial by T. Woodlock on costs for delivering electricity to home consumers; argues utilities make little profit on those who use less than the average annual US consumption of 550 KWHr, but have much lower costs per KWHr to supply larger consumers; "thus the facts point to a relatively high minimum charge for small consumption and a rapidly decreasing charge for increasing consumption as the proper method of making rates for this class of service."

Some difference of opinion emerges regarding $10M Newfoundland loan reportedly arranged by "Miss Jeanette Lewis." Newfoundland govt. says has received no direct offer. Lewis replies no direct offer has been made but money ready to go; "the capital was at the disposal, subject to certain terms, of the Premier and his govt. at any time they chose to take it up."

US investment in Chile estimated at $700M, of which $300M is in bonds held by US investors. Chilean revolution marks end to proposed economic conference of American republics excluding the US that deposed Pres. Ibanez had championed. Conferences of European and Chilean nitrate producers on control of production were resumed.

New Canadian bond offerings for year to July 20 were $965.4M vs. $427.5M in first 7 mos. of 1930 and $385.6M in 1929.

Analysis of low-priced car price trends since July 1930 reveals costs per pound have declined 2 1/2% - 8 1/2%; the dollar price per car has been declining and pounds per car rising. Variation in price per pound between the three leading companies is lower than a year ago. Companies also have increased value of cars through intangibles including more dependable parts, rustproofing, "free-wheeling," better paint jobs, more attractive interiors, etc.

Survey of factory wages in NY State finds average hourly wages for: engineer - 95 cents; skilled worker - 78 cents; truck driver - 69 cents; machine operator - 60 1/2 cents; laborer - 51 cents.

Paramount-Publix plans to start production on 22 new talking films in the next 70 days; to break ground on two new sound stages totalling 37,500 sq ft.

Earnings reports: US Steel Q2 $.12/share vs. $3.02; half $.17 vs. $6.46. Youngstown Sheet & Tube Q2 ($.91)/share vs. $2.17; half ($1.53) vs. $4.09. Foster Wheeler half $.03 vs. $4.27. Middle West Utilities year ended June $1.40 vs. $1.48. Norfolk & Western Rwy. half $6.14 vs. $10.15. Consolidated Cigar Q2 $1.59/share vs. $1.41; half $2.63 vs. $2.48. Curtis Publishing Q2 $.83/share vs. $2.32; half $2.54 vs. $5.07.

Companies reporting decent earnings: Middle West Utilities, Sherwin-Williams, Consolidated Cigar.

Movies:

The Common Law - RKO-Pathe film, at the Mayfair. Joel McCrea "as John Neville, a young American artist living in Paris, is assigned the task of making us believe he is shocked when he learns that the beautiful model whom he has employed, and with whom he has fallen in love, had an affair with another man before she came to work for him." Revelation causes bitter anguish; he parts with the girl but meets her again at a party; she persuades him she loves him, and "will live with him, unmarried, until they are both sure their love will endure despite the social barrier that separates them." On returning to the US, "marriage presents itself to them as the only way out when the two ... join his family's social circle ... they are heading for the nearest Justice of the Peace as the film ends." Considering weakness of the story, cast does rather well; "they manage to go through the necessary motions and to read the naive lines without actually boring their audience."

The Magnificent Lie - Paramount film. Cabaret singer, Poll, as a practical joke, impersonates old flame of an ex-soldier, Bill, who has gone blind, but then falls in love with him. When she finally reveals the truth, Bill is "naturally angry." However, as Poll is driving him home, she crashes the car into a ditch, which fortuitously restores Bill's eyesight. "The sight of the face of the girl ... is so pleasing that he changes his mind about bidding her a final farewell." Main deficiency of film is "failure to amalgamate successfully the elements of pathos and comedy in the story." However, film is a good vehicle for Ruth Chatterton and Ralph Bellamy is "quite believable as the afflicted hero."

Joke:

Farmer 1 - Did you hear the bones of some old prehistoric man were found on old Nicky Coombes' farm? Farmer 2 - Poor old Nicky - but chances are, he'll be able to clear himself at the inquest.

Tuesday, July 28, 1931: Dow 139.64 +1.40 (1.0%)

Assorted historical stuff:

In the first statement from the Administration that acknowledged wage cuts might be needed due to the prolonged depression, Commerce Sec. Lamont said many corporations without strong reserves now are in the difficult position of having to cut dividends, salaries and wages. In letter declining Presidential intervention in Rhode Island textile strike, Lamont noted "marvelous" success of 1929 conference in maintaining wages up to now in spite of the fact that, contrary to Washington belief, industries had made no binding commitments to do so. He went on to say "no one could have done more to maintain wage rates" than Pres. Hoover, and expressed great regret that corporations are now compelled to cut wages, "but I do not believe it is the duty of the govt. to interfere ... neither do I think such interference would be effective." A govt. economist noted that, even if general wage cuts were now approved by the govt., judging by past depressions the reduction in wages wouldn't approach that in living costs.

Henry Ford says most important factors to economic recovery are working and thinking. When asked about possibility of upturn in spring or sooner, replied neither he nor anyone else knew anything about that. Condemned speculation, saying it led to inflation and subsequent depression. Admitted factory at Dearborn was operating about 50%, but declined to say if this was an increase or decrease over previous months.

Editorial by T. Woodlock agreeing with a reader's interesting suggestion that German debts be adjusted for prices (downward if price deflation occurs, upward if inflation does); if this isn't done "and prices continue to fall, a fresh 'crisis' infallibly will arrive. 'Fair' or 'unfair,' that is the inescapable logic of the facts. The 'price-equation' is at the bottom of the entire trouble of the world's finance. A change in that equation has 'frozen' a great mass of bank-credit in all countries and generated in it a large loss ... The all-important thing is to hold the banking structure intact while that loss is being distributed."

Revolt reported in Chile; deposed President Carlos Ibanez, "his strong rule ... broken by a popular uprising," left the country. The US ambassador said there were large crowds in the streets but no particular disorders and that no US citizens or interests had been harmed. The president of the Senate was reportedly acting as President of Chile. Banks were closed from July 27-30 and "a four-day moratorium on commerce effected."

Brazilian govt. reportedly agreed to all recommendations for stabilizing their finances made by Sir Otto Niemeyer of the Bank of England; this was seen likely to "exert a steadying influence" on the country's outstanding securities.

Editorial noting threat from the "militant Attorney General" of Texas to put the San Antonio Public Service Co. into bankruptcy for the offense of selling appliances including "bottle warmers and ... washing machines to unsuspecting females." Judging by a call from the editor of the Texas Weekly for a more business-friendly environment in Texas, "Attorney General Allred will not be wholly without honor in his own country if he calls off his receivers and allows the San Antonio company to surrender its curling irons but to keep its charter and business."

Yet another Farm Board editorial, this one rather humorously calling on the Board to join the Native Americans in Saskatchewan who recently successfully held a rain dance. "The Farm Board was organized ... to give agricultural 'relief'; what greater relief could it give than rain in those parched areas? ... All other means ... have failed, some even were proven failures before the Board tried them, but the rain dance remains officially untried. Why doubt its efficacy? From the land of the Sioux and the Saskatchewans down to the Southwest, where the Hopi ... rake up a few bushels of rattle snakes to add fervor to the ceremony, the rain dance has been held" for time immemorial. "If it did not produce results, how could it have survived through all the centuries?"

Since flying has become commonplace in recent years, weather services have started reporting visibility. This is recorded on a scale of 1 (objects invisible at distance of 1/8 mile, reported as "no visibility") to 10 (objects visible at 10 miles, "unlimited visibility").

The New Yorker Hotel reports that during an 8-month period it found over $20,000 in cash in the pockets of 125,000 guest trousers delivered to the valet shop.

First winter fashion openings in Paris indicate big woolen season; all houses so far feature "thick wool dresses and thicker wool coats."

The miniature golf craze that swept the country last year has given way to two new fads - the golf driving range and the archery target range.

Architects of recent skyscrapers have borrowed the ensemble idea from fashion designers, "to the extent that the modern skyscraper, from jutting gargoyles to telephone booths, is a unit in appearance." One of the newest buildings carries this to an extreme. In a reception room sits an efficient-looking gentleman answering the telephone; when he leans back in his swivel chair, a replica of the building is clearly visible on his socks.

Market commentary:

Market wrap: Stock trading continued "lethargic" trend of last week. Opening was lower, but the general list firmed gradually through most of the session, ending at the day's best levels. However, some leading rails fell and Auburn Automobile plunged over 10 points. Bond trading very quiet, with price trends mixed. Foreign list featured sharp movements in some S. American issues; Chilean bonds fell on reports of revolt while Argentine issues firmed. Trading in German issues was light, with price changes mixed. Domestic issues generally steady, with price changes fractional. Commodities steadied after early declines; corn ended higher while wheat, other grains and cotton finished moderately lower. Copper continued at 7 3/4 - 8 cents with buying small; consumers are covered for the next 4 - 5 months and appear to be waiting for clearer business picture before buying; production continues higher than consumption and current record low price may not hold. Silver up 1/2 cent to 27 7/8.

NYSE volume of 600,000 was lowest since Oct. 1924.

Some heartening signs of improvement seen in several industries including textiles (particularly wool), sugar, and oil; stocks in these lines have drawn buying.

American Woolen preferred was up sharply based on improvement in the wool markets and reports "Paris has decreed woolen clothing for women this fall and winter, even to evening wraps and hats"; even more encouragingly, "the trend in garments is toward longer and fuller dresses." Coca-Cola has been doing better recently; sales in June were particularly good due to hot weather, though sales in earlier months were probably slightly behind 1930; Q2 net expected to show gain over 1930. Allied Chemical fell on reported failure of talks to reconstitute nitrate cartel. Loose-Wiles, "the country's second-largest cracker concern, is making a good showing in this uncertain year." Chrysler has almost doubled from its 1931 low of 12 1/2 on optimism regarding its new line of low-priced Plymouth cars. Nat'l Steel likely only major steel co. to cover dividend in first half, thanks to strategic plant locations, diversified output and decentralized organization.

"The rank and file of the Street" are largely standing aside from trading; some seem disposed to await market reaction to the US Steel dividend decision.

A favorable factor for market sentiment has been better than expected Q2 earnings reports; a group of leading companies in basic industries generally showed improvement in earnings from Q1. Also encouraging was a “rather unusual turn for the better during the week ended July 18.”

While some Q2 earnings reports have been better than the bears anticipated, statisticians are carefully examining reports of some companies that show dividends "earned" through dubious tactics such as cutting allowances for depreciation.

J. Post, Nat'l Sugar Refining pres., says Chadbourne sugar plan has been successful so far; expects recent rise in sugar prices to hold. Russia seen likely to join Chadbourne sugar stabilization plan.

Harvard Economic Society sees slight upturn in commodity prices during July, following decline of over 28% since July 1929; expects upturn in BLS commodity index this month; this rise comes "at a time when business volumes have given evidences of recovery." Also sees possible positive in moratorium on intergovt. debts; if this relieves pressure on foreign currencies, "stabilization of commodity prices would be almost assured."

Inventories are generally "at a low ebb. The whole country is largely on a hand-to-mouth basis, and only necessary replacements are being made. This has created a healthy trade situation, although a very dull one." While this dullness may continue for some time, "sooner or later there is going to be some active buying."

Asst. Commerce Sec. Klein says US now witnessing last stages of the depression; low point in business reached last spring.

R. Stephenson, Amer. Bankers' Assoc. pres., says business conditions present most optimistic outlook since 1929 market crash; settlement of European debt problem will help world trade; transportation to be regulated; increased freight car loadings a sure index of returning prosperity; “gloom” atmosphere of New York, which has radiated to rest of the country, is being dispelled by improved employment conditions.

Germany special:

Considerable interest aroused by reports from Paris that Bank of France together with leading French banks were arranging 20M pound loan to Bank of England to support sterling. Prolonged conversations reported between Bank of England dir. R. Kindersley and Bank of France Gov. C. Moret. Montagu Norman, Bank of England pres., has apparently withdrawn his previously consistent opposition to aid from Bank of France as result of current conditions. NY bankers are split on whether the loan is needed, since gold drain appears to be ending. British gold losses eased to 1.9M pounds sterling, bringing holdings to about 135.7M; slowdown in losses improved sentiment; foreign exchange circles believe gold losses are gradually ending and danger of Bank of England being forced to raise rate to 5% has passed. French bankers are concerned that accumulation of gold in France may lead to inflation; on basis of current gold holdings, currency in circulation could be doubled.

Heavy British gold losses attributed first to German banks unable to export money to settle obligations drawing down balances in London, and then to scare in which French private banks withdrew balances, reportedly becoming nervous after warning by Sir Arthur Henderson that a moratorium at Berlin would be followed by one at London; “it is understood that the Bank of France did not sell a single pound ... and urged that the private banks cease withdrawing funds from London.”

Restriction on bank payments within Germany will reportedly be lifted Wed., making monetary movement within the country completely free; restrictions on foreign currency movements will remain at least until extension of foreign short-term credits is negotiated. Reichsbank officials not concerned with likely large increase in currency circulation causing price inflation since currency will largely be hoarded rather than used; believe further increase in discount rate (now 10%) not needed; private banks now charging average of 15% on loans. A German acceptance bank has been formed with combined capital of 200M marks from the Reichsbank and private banks; it will stand ready to buy acceptances (bills) from any bank in difficulties, since it's recognized closing of another large bank would have “dire consequences for the entire banking structure.”

Economic news and individual company reports:

Fed. Reserve reports industrial production fell more than seasonally in June; factory employment fell 3% and payrolls 6% between mid-May and mid-June; wholesale prices, which fell until the end of May, rose during June but mostly declined again in first half of July; textiles and shoes continued to be bright spots.

Texas House oil industry investigation hears testimony from W. Farish, Humble Oil pres.; says Humble is currently losing $500,000/month; believes Texas 50% oversupplied with pipelines; wouldn't object to law requiring certificates of necessity to drill a new oil well or build a pipeline; favors modifying antitrust law to allow unit (cooperative) operation. Sinclair Oil raised buying price to 50 cents/barrel for Oklahoma-Kansas crude. Gasoline in Chicago wholesale market firmed to 3 - 3 1/8 cents/gallon

West Palm Beach city commission invites bondholders committee to further discussions. Coral Gables Citizens advisory committee approves plan of settlement reached by city commission with bondholders committee.

NY City net funded debt as of March 1 was $1.658B, or 8% of assessed real estate value; city is $321M below debt limit.

Commerce Dept. reports June factory sales of automobiles in the US 249,462 vs. 315,115 in May and 334,506 in June 1930; half 1.568M vs. 2.199M.

Rail union executives are meeting in Washington to discuss labor problems; unions are expected to support the 15% rail rate increase.

Complete strike against Paterson, NJ silk industry involving 20,000 workers believed possible this week.

Nitrate conference in Brussels ended without agreement on reconstituting a cartel.

Foreign govt. and corp. financing in the US during the first half was $574M vs. $839M in 1930, $720M in 1929, and $1.479B in 1928; so far this year there have been no European securities offered and over 90% of the total was Canadian.

Newfoundland received $10M loan through Montreal interests, running for 35 years at 5%. "Miss Jeanette M. Lewis," who arranged the loan, is involved in numerous mines in Quebec, Ontario, Newfoundland and Samoa; she achieved her first business success by convincing the Canadian Northern Rwys. of the feasability of a tunnel under Mount Royal. NY and British capitalists are reportedly ready to negotiate loans up to $100M for development of Newfoundland.

Mexico adopts law making "gold peso no longer ... usable for circulation"; foreign currency loans payable in Mexican silver coins; no restriction on import or export of gold coins; Bank of Mexico becomes central bank with powers similar to Fed. Reserve of the US. Mexico City Chamber of Commerce petitioned govt. for measures to alleviate the depression, including: substantial increase in import duties; Federal govt. ending imports of goods that can be made in Mexico; "ceasing parcelling out lands to peasants and affording guarantees to large and small rural proprietors"; and a more evenhanded govt. policy between industry and labor to replace "a bias in favor of the workman." Govt. newspaper characterized suggestions as reactionary.

French June imports were 3.194B francs and exports 2.513B, vs. 3.440B and 3.377B in 1930. For the first half, imports were 23.202B and exports 16.235B vs. 26.832B and 22.628B in 1930.

Latest British trade reports "extremely dismal"; unemployment up to 2.643M; Federation of British Industries watching for German dumping of inventories.

Canadian foreign trade in June was "exceptionally light" at $107.8M, largely due to lower commodity prices; this was down 37% from 1930, while trade in the three months ended June 30 was down 31%. Early returns from Canadian govt. sources indicate entrance of US tourists has reached record proportions so far this year; a larger percentage of long-stay permits is being issued.

Argentine imports fell over 25% in the first half vs. 1930, resulting in trade surplus of $28M.

Republican Senate leader Watson says party opposes any tinkering with tariff in next Congress; content with revision by Tariff Commission.

US Shipping Board reports Baltimore was second to NY in volume of foreign shipping during 1930, outstripping New Orleans for second time in history.

NY State motor fuel tax netted over $30M for fiscal year ended June 30, up about $5.3M from prev. year.

Earnings reports: J.C. Penney half $1.46 vs. $1.14. Peoples Drug Stores half $1.37 vs. $1.17. Bangor & Aroostook RR half $4.56 vs. $8.31. Virginian Rwy. half $1.44 vs. $3.95. General Refractories Q2 $.12/share vs. $2.07; half $1.02 vs. $4.60. Consol. Chemical Indus. Q2 $.43/share vs. $.66; half $.84 vs. $1.12. Congress Cigar Q2 $.37/share vs. $1.11; half $1.00 vs. $1.87.

Companies reporting decent earnings: J.C. Penney, Peoples Drug Stores, National Distillers (medicinal whiskey).

Upcoming movies:

RKO - Law of the Night, a story of New York night courts. Warner Bros. - Larceny Lane, with James Cagney and Joan Blondell; The Road to Singapore, with William Powell; Five Star Final, with Edward G. Robinson; The Mad Genius, with John Barrymore. Elstree Studois - Alfred Hitchcock's Rich and Strange. Paramount - "picturization" of Dreiser's American Tragedy "is being withheld from showing pending important developments in the author's suit against Paramount, claiming the producers have turned his novel into a 'Hollywood version of a murder.' Sylvia Sidney is being replaced by Peggy Shannon in Working Girl, in order that she may start work at once on Ladies of the Big House.

Joke:

Mistress - Why did you leave your last place? Prospective Maid - They were too highbrow for me. They were always fighting and fussing, and I had to spend all day running from the keyhole to the dictionary.