Friday, August 14, 1931: Dow 140.22 +2.59 (1.9%)

Assorted historical stuff:

The Farm Board proposed that cotton farmers voluntarily plow under every third row of cotton growing in their fields in order to increase prices; in return for this cooperation in reducing the surplus, the Board offered to hold its own surplus cotton off the market for a year. Reception to the proposal could, at best, be characterized as mixed. The cotton trade responded apoplecticly; "chimerical, impracticable in the extreme, were some of the mildest designations used." Even a cable from "staid Liverpool" was rather caustic, noting "your weather is perfect for the crop and perfect for plowing too." Practical obstacles were also cited, particularly the likely reluctance of indebted farmers and creditor banks to destroy the crop securing existing loans. However, cotton prices did rise sharply on apparent concern that the proposal might be carried out. Editorial: Farm Board proposal is "the crowning act of the Board's two-year record of ineptitude and foolishness. The proposition is one of appalling waste." If a group of traders "set up incubators and bred untold billions of weevils and scattered them over the cotton belt with the intent of destroying this amount of cotton, they would have been given prison sentences, yet the Board gives this advice in all seriousness. If the advice is good," why doesn't the Board start by destroying its own holdings of surplus cotton and wheat? Instead, the Board should "go into complete seclusion for a year, and carry its surplus cotton with it."

[Note: Strangely Familiar Dept.] Letter from "R.N.D." notes that over $600M in bonds held in the US had defaulted in the first half, and notes "not a single bond house or bond department of a bank" had yet taken any responsibility for bonds they sold, even for the ones they had underwritten. Asks why "a reputable bond house or bank should decline responsibility for bonds which they have sold to investors any more than a merchant of high standing would decline responsibility for a defective or shoddy piece of goods." Editorial by T. Woodlock sets R.N.D. straight in no uncertain terms. "It is a propensity of human nature to blame others for one's troubles, for it at least soothes one's pride ... Putting the matter upon the lowest ground, that of mere expediency, there is the strongest motive to induce an 'issuing house' to exercise great care in the selection of securities" that it offers. “Nevertheless, it is also true that in this country investors as a class seem to have rather short memories and are apt to forget - perhaps to condone - mistakes.” In any case, holding issuing houses responsible for defaulted bonds is impossible unless the public is willing to pay the necessary premium.

Letter from "E.R.W." responding to Gov. Ritchie's implication that if business can't take care of the unemployed, govt. will have to raise taxes to provide relief. “That would work fairly well as long as the well-to-do had anything to tax, but that would only be a few years. ... If Gov. Ritchie's threat is carried out ... common stocks will be worth just about as much as cancelled postage stamps, and not rare old issues either. Please do not meet the issue by saying that prosperity is just around the corner. I am so sick of hearing that ... I do not believe it. I think we are in the process of an economic evolution, which can and very likely will develop into a social revolution. Europe ... is well on the way to socialism, and socialism must be followed by communism. ... When will we wake up? Not until starving people have taken up communism?”

AFL pres. Green asks Pres. Hoover to call immediate industry-labor conference on unemployment; demands five day workweek. The administration was reportedly opposed to the conference, believing it would lead to immediate proposals of wage cuts by employers and open conflict. "In view of the difficulties which are more severe in some industries than others, administration officials believe that the best method now is to tamper with the situation as little as possible and avoid large face-to-face conferences."

Assoc. of Community Chests and Councils has notified Pres. Hoover that organizations in 227 cities are completely confident they, in cooperation with cities and other local agencies, will be able to handle unemployment relief this winter; plans are actively proceeding and more cities are reporting daily.

Gov. Roosevelt, addressing smaller industries conference, urges US business to adopt "more progressive attitude toward political economy and take up seriously experiments with long-range planning." Suggests major change from current conditions in moving industries away from extreme urban concentration.

Editorial: The experts' committee has finally, after much study, finished working out details of the Hoover debt moratorium. However, ten months from now debt payments are supposed to resume, when it should be universally clear this will be impossible without "a miraculous intervention of Providence. ... Why in the name of common sense do we not look this fact in the face now, instead of waiting until the fire in the cellar blazes up again?"

Strikers in several Spanish cities returned to work as "labor situation appeared to be moving toward clarification."

To prevent forest fires, engine crews of the NY Central RR have been instructed not to throw “hot clinkers” from the fire boxes of locomotives.

A remarkable natural phenomenon is the spring migration of about 2M seals from their "winter quarters in the tropics seas of the Pacific" to their summer breeding home on the Pribiloff Islands off Alaska. "In the water, they look at close range like millions of dogs swimming on the surface of the sea." By international agreement, there is no slaughter of the seals while migrating; govt. boats accompany them to guard against lawless hunters.

Market commentary:

Market wrap: Stocks opened irregularly after Wednesday's late reaction, but a good rally then set in, starting in the leading shares and spreading across the list. Some profit taking developed in the afternoon. Bond trading featured improvement in European issues, led by rally in German bonds; Hungarian issues rose sharply on report of $25M loan. S. American bonds irregular on rumors of default by Antioquia (area of Colombia). US govts. were steady and industrial bonds improved, but liquidation was again evident in railroad bonds, extending to all grades. Grains were lower after report of record 319M bushel US wheat carryover. Cotton rose sharply after Farm Board proposal.

Conservative observers see contest in progress between bears and bulls; recommend waiting it out on the sidelines.

Strong spots included stocks of companies likely to benefit from seasonal improvement, notably food and chain store issues; oil shares moved up after Texas Gov. Sterling signed new oil and gas law. Dow averages for both high-grade and second-grade rail bonds fell substantially, again hitting new yearly lows.

NY Central sold off on dividend fears following poor earnings report. Recent selling in Kreuger & Toll attributed to "confused state of affairs" in Europe, where the company has most of its investments. Traders who have been active in the stock in the past haven't yet turned bullish on it, expecting further liquidation. First Nat'l Stores has shown exceptional stability in both earnings and stock price over the past 18 months; the stock is about 59 1/2 vs. the high last year of 61 3/8.

Interest in consolidation of investment trusts [similar to mutual funds] is reportedly strong. There's a general belief among trust executives that some large units “would welcome an opportunity to retire from the field if it could be done on somewhat higher levels of value than now prevail.”

Many floor traders continue to expect "the market to encounter a real test" when rails test the lows of early June. An age-old dispute continues between market observers, with one camp seeing recent dull trading as characteristic of "the final phase of a prolonged bear movement" while the other maintains that in spite of "technical rallies from time to time ... the real turn will not come until a selling climax has taken place."

One of the most optimistic on an August stock market rally is longtime bear operator turned bull W. Danforth; he was also active in the June upswing following the Hoover debt holiday proposal and believes technical market conditions are similar now.

As usual, market observers were divided on whether Tuesday's rally had marked the start of a seasonal recovery in stocks; August has produced higher prices in every year since 1921, including 1930 when business results were bad. Bears have plenty of ammunition in the wage problem, uncertain steel industry outlook, rebellion in Cuba, proposed debt moratoriums in S. America, and concern over the British credit situation. Bulls argue [note: kind of feebly] that "the recent sharp rally ... in the face of a flood of unfavorable news should not be lightly dismissed" and hope "seasonal influences may overcome, temporarily at least, the effect of unsettled economic conditions throughout the world."

Economic news and individual company reports:

Texas Legislature finally passes oil and gas conservation bill with aim of curtailing production, only 6 hours before end of their special session. Gov. Sterling signed the bill but maintained the threat of martial law to curtail east Texas production. Bill gives broad authority over production to new oil and gas division of the Texas Railroad Commission; it apparently intends to move at once to clean up the situation in East Texas, where production has continued to rise. Consensus of major oil executives was that the new law was an improvement, though "not all they had hoped for." East Texas oil price rose to 25 cents/barrel; some offers of $1/barrel reported in Oklahoma. Gov. Murray of Oklahoma repeats demand for $1/barrel oil price, threatens to take over pipelines if major buyers attempt to boycott Oklahoma oil; proposes to force Oklahoma producers to "unitize" (cooperatively develop) fields.

Gillette involved in still more litigation; files lawsuit charging patent infringement against Segal Lock (also made safety razors at the time). Segal, in turn, will sue Gillette charging violation of Clayton antitrust act and asking $1.5M in damages.

German situation continued to improve. Money market rates fell; call money was about 8.5%. Further cut in Reichbank discount rate (now 10%) believed possible. Plan to reopen stock exchange Wednesday not yet assured. Leading German bankers are in Basel negotiating on extension of short-term foreign credits; "at least a partial agreement" is anticipated; difficulties attributed to Dutch and Swiss banks. German savings banks a trouble spot as withdrawals exceed new deposits; indebtedness to Reichsbank now about 200M marks. French Premier Laval will visit Berlin before end of month.

British Labor govt. considers financial situation a “national emergency,” may convene Parliament a month early in late Sept.; agrees “in principle that all classes must make equal sacrifices.” Govt. and opposition leaders including PM MacDonald, Neville Chamberlain, and Herbert Samuel, are gathering in London; Stanley Baldwin arrived back in London “almost without baggage,” returning early from a vacation in France. British bonds sold off on fears a “conversion” (to lower interest rate) was being discussed. “While financial circles are willing to support the govt. patriotically in any measure that may be necessary, ... they are insistent” that austerity measures should “affect all classes equally.” Sterling again rose slightly. Bank of England statement was scrutinized carefully to determine whether it had used any of the $250M US-France credit, but yielded “little satisfaction ... as the institution is extremely chary in the matter of reporting its operations.” Bank of France statement showed yet another record high in gold holdings at 58.556B francs, up 149M in the week ended Aug. 7.

Hungary receives 18-month $25M credit from French, Dutch and Italian bankers.

Detroit arranged "one of the most important municipal loans of 1931" as a syndicate of banks bought $30M in bonds as part of program between NY and Detroit bankers and city officials to refinance short-term debt maturing within weeks. The bonds will take priority over other city obligations for the next five years.

Money in circulation Aug. 12 was up $42M to $4.890B, total Reserve Bank credit outstanding up $138M to $1.105B. Member banks in NY City report brokers' loans down $17M to new low of $1.329B; loans on securities to non-brokers up $9M to $1.697B.

Dow average of 8 iron and steel products rose $.27 to $44.25.

Manufacturing Chemists Assoc. testifies against 15% rail rate hike; says it would restrict their markets and divert traffic from rails to trucks and pipelines.

Standard Oil of NJ follows the lead of Standard of Indiana and Sinclair Oil, introducing a new low-priced third grade of gasoline to combat "bootleg" gasoline.

NY City Board of Education adopts record-high budget of $146.3M for 1932, up $6.0M from this year; expects more high school students due to depression.

Earnings reports: NY Central Q2 $.93/share vs. $2.93; half $.90 vs. $4.63. Int'l. Nickel Q2 $.08/share vs. $.20; half $.16 vs. $.50.

Companies reporting decent earnings: Monsanto Chemical, Best & Co., Int'l. Cigar Machinery, Claude Neon Electrical Products.

Report from Paris:

After 150 years of "spasmodic protests," the legitimate theater in France is finally being granted relief from the 10% "right of the poor" tax applied to their tickets for benefit of French charities. This may seem like an unduly long wait, but "nothing moves quickly in France, except taxicabs. Life is leisurely. Frenchmen find life sweet and take time to live it. Diplomacy, legislation ... and taxes alike, all are shelved on a golden day." [Note: C'est vrai.] "Recent halting dramatic seasons riveted governmental attention on the condition of the legitimate theater. ... As in America, the movie has increased the hazards of theatrical production by halving audiences and doubling costs"; this has been particularly true in France since advent of the talkies.

Jokes:

"I'm worried about my husband. After breakfast, he left a tip on the table, and when I handed him his coat he gave me another tip." "Well, that's nothing to worry about. It's just force of habit." "The problem is, when I gave him his hat, he kissed me."

"I don't know whether to be a barber or an author." "Toss for it - heads or tales."

Thursday, August 13, 1931: Dow 137.63 -2.53 (1.8%)

One hundred years from now (2031):

"The finance ministers of the Council of Friendly Nations met in Geneva as customary ... to review accomplishments and to discuss their problems. Assembled in the historic library, the politenesses of greeting over, the great men sat in brooding silence. There seemed nothing to talk about: they had no problems! It was the Chancellor of the British Exchequer, Sir Eric Playfaire, who opened the floodgates. 'It's the perfection of it all that crushes the spirit,' he said sadly. 'The international money systems are in flawless balance, all war debts are paid, ... the people never were so prosperous.' 'We ourselves might as well be automatons,' jointly affirmed Ministers Gutfreund and Bonhomme, who sat together. ' ... truly the Millennium means monotony to us.'" The aged US Treasury Sec., John Smith, recalled how different things were a hundred years ago. "'Pessimism hung over the cities like a black mist. Ruin was the watchword.' ... 'Just how did they come out of it?' asked the more youthful minister from Rome. ... 'It's a valiant tale, to be told and told again,'" said Smith. "'Let us begin with August 1931 ...'"

Assorted historical stuff:

Sen. Fess, Republican Nat'l. Committee chair., says Pres. Hoover will have concrete program for unemployment relief to present to next Congress. AT&T pres. Gifford had a breakfast conference with Pres. Hoover Wed. to discuss the general business situation; the President was "so interested in the facts laid before him that he remained at the breakfast table far beyond the hour when he usually goes to the executive offices." Even some govt.-employed economists are now reportedly in favor of a dole for the unemployed. "This is in decided contrast to the views of other students who point out that the dole in England has increased unemployment, if anything, and might have the same result in this country." Detailed review of past and planned measures by local govts. for unemployment relief, including NY City (combination of public and large private efforts), Detroit (spent $15M on unemployment relief in year ended June, plus other relief spending and private efforts; city council has been criticized for lavish spending and is planning to cut back), Chicago (not much city relief spending due to strained fiscal condition), Boston (1930 spending $3M, budget for 1931 $5M), Pittsburgh (private work-relief efforts with materials supplied by city), etc.

Nat'l. Commission on Law Observance and Enforcement, after finding many instances of abuse during its investigation of criminal prosecutions, makes numerous recommendations to Pres. Hoover. “Some kinds of lawless enforcement of the law, such as the 'third degree'” or searches without warrants seem due to official policy in certain regions; “the remedy ... involves the serious difficulty of altering rooted official habits.” Recommendations include: inclusion of qualified people on jury lists regardless of color; granting appeals courts the power to reduce sentences without a new trial; abolition of payment of judges and prosecutors from fines; and many others.

Editorial blasting Sen. Nye's call for price-fixing of farm products and a debt holiday to relieve distress of farmers in some parts of the Northwest. Editorial blasting petition of Railroad Commissioners of 6 Western states against the 15% rail freight rate increase; that petition argued that a finding of financial emergency in itself isn't enough to authorize the ICC to increase rates in order to provide relief for the rails.

Directors of China Famine Relief ask the Farm Board to sell 30M bushels of surplus wheat to China on reasonable terms, in order to feed an estimated 10M Chinese who face starvation as result of floods.

Sen. D. Walsh (D, Mass.) says US should insist on a free and unbiased election in Cuba; believes rights of common people trampled on and elections a travesty under Pres. Machado. Based on report from Ambassador Guggenheim, State Dept. believes Cuban situation is well in hand. Bill expected to become law in Cuba provides for two-year moratorium on mortgages; millions of dollars in US loans involved.

Newfoundland Executive Council denies reports from Ottawa that Newfoundland govt. is prepared to sell Labrador for $110M.

Light from the star Arcturus will be used to start the machinery at the Century of Progress Exposition in Chicago in 1933; the light will be "turned into power and amplified, and used to throw switches in Hall of Science." Arcturus was chosen because the light from it started on its journey here in 1893, during the World's Columbian Exposition.

Wild elk, which once roamed in countless thousands over the Northwestern part of N. America, have now been reduced to a few scattered herds. However, the British Columbia game board now plans to give the species another chance to multiply on the wild lands of the Queen Charlotte Islands off Western Canada; the islands are being stocked with elk from some of the finest herds on the mainland.

Plans filed for $7M International Music Hall on 6th Ave. between 50 St. - 51 St.; unit number 10 in $250M Radio City.

Market commentary:

Market wrap: Stocks experienced rather indecisive session following Tuesday's explosive upturn; early trading featured considerable selling, but this was absorbed without extensive setbacks; stocks then settled into narrow range for most of the day; attempted rally in the last hour gave way to renewed selling on news of decline in Youngstown steel output. Bond trading quieter, with modest improvement in many sections; European and S. American bonds rallied mildly; US govts. steady; amusement bonds were a strong feature of the industrial list. Liquidation of second-grade rail bonds eased, though the Dow averages for both high-grade and second-grade rail bonds hit new yearly lows. Grains closed higher after "erratic fluctuations." Cotton declined close to the lows hit at start of the week. Copper remained at 7 1/2 - 7 3/4 cents, with buying small and large producers out of the market at 8 cents.

Observers generally believed the market's technical position had been weakened by Tuesday's sharp rally. Some declines were therefore expected over the next few days, but observers differed on what would come next. Bulls expected a rally to discount seasonal business improvement in the fall, pointing to strong recent resistance shown by industrials; also encouraging was higher volume during the rally Tuesday. Bears believed "considerable bad news was ahead" and attributed Tuesday's rally to clever exploitation of an overcrowded short position; they also cited persistent weakness in rail stocks and bonds.

Technical analysis: owing to clear double-top pattern in the industrials in July, "the limits of a technical rally at this juncture are clearly defined." The critical level is 147 on the industrial average; an early rise above this level "in a substantial way" would indicate a more-than-technical rally.

Testimony before the ICC that savings banks and life insurance cos. hold over $3.4B in railroad securities seen having "considerable weight with the commission in granting some relief to the carriers."

Composite dividend yield of 21 leading NY banks and trusts is now 4.75% vs. 1.5% at the 1929 market peak.

Past depressions have brought greater industrial efficiency that "could not have been attained during a prosperous period. The more drastic the depression, the greater the resulting efficiency. The current business depression, therefore, has some favorable points which will be reflected in industry once a definite turn for the better sets in."

W. Dickerman, Amer. Locomotive pres., returning from Europe on the S.S. France, was optimistic: "I found a basis for better feeling for the business outlook in Europe lately. The recent vote in Germany ... improved confidence throughout Europe. There is a sense of security developing gradually and I think that when this is fully grounded prosperity will begin to return."

Middle West Utilities monthly survey finds recent improvement in business conditions throughout Eastern half of the US is continuing, though at a somewhat slower pace. Eastern states are showing slightly increased industrial activity, while better crop outlook is stimulating business elsewhere. "Brisk tourist trade" is helping business in most sections, particularly New England.

Economic news and individual company reports:

"A change from monarchy to republic in Spain has evidently had no influence" in stopping decline of the peseta. "The current threat of financial disaster facing the new regime can no longer be ignored - immediate steps must be taken to stem further inflation and to stabilize the peseta within narrow limits with the eventual prospect of placing it on the gold or gold exchange standard." Reviews peseta's movements since 1914, culminating in current crisis; "each passing week sees a substantial rise in the currency circulation" and govt. is having increasing difficulty supporting value of the currency against sterling and francs. Until recently, Spanish banking authorities had kept hope of bringing the peseta back to par, but now a target of half that is suggested.

Hope is expressed that US and European banks will sign an agreement Friday freezing for 3 months their short-term credits to Germany, estimated at $750M. BIS bankers committee continues to discuss a long-term credit for Germany.

British Labor govt. hopes to balance budget with "sympathetic cooperation" of the opposition conservatives, who will support spending cuts proposed by Labor. Sterling continued recent moderate but steady gains; "much of the nervousness which was so apparent a short while ago has been dissipated"; weekly Bank of England statement is expected to show gain in gold holdings through release of "gold held under earmark."

Australian Premier Scullin appealed to 400,000 bondholders to “accept the sacrifice of a lower interest rate ... and give a demonstration of national self-help”; announced conversion already accepted on 150M pounds sterling, mostly in hands of financial institutions.

Philadelphia banks will lend $3M to the city to pay 4,700 policemen and 2,000 firemen over the next three months; loan made after city failed to sell notes.

Total resources of 6,805 reporting national banks in the US, Alaska and Hawaii on June 30 were $27.643B; this was a decrease of $484M from Mar. 25 when there were 6,935 reporting banks, and a decrease of $1.474B from June 30, 1930 when there were 7,252.

Texas Legislature now considering compromise measure empowering the Railroad Commission to curtail production. Gov. Sterling says may call Legislature into another special session if it fails to pass effective oil and gas conservation law. Gasoline prices continue to firm; "demand growing in face of a diminishing supply."

Weekly steel reviews report confused picture due to mixed trends in different lines, but overall outlook is seen as moderately encouraging. Bright spots include pipeline and structural steel, and rail demand seems to have bottomed; on the other hand, tin plate (used for cans) and sheet steel (used for cars) are still declining; total demand is little changed. However, whether or not steel output has hit bottom, indications point to upturn in near future; vacation shutdowns by various manufacturers will end this month, and retail car demand is encouraging, indicating higher automotive production. Steel production for week ended Monday was a little under 32% vs. a little under 31% previous week, 33% two weeks ago, 56% in 1930, and 93% in 1929. Youngstown district steel operations may drop as much as 5% at midweek from 42% starting the week. Tin plate rate is down to about 50%.

NY Industrial Commissioner Frances Perkins reports NY State factory employment fell 2% in July, about double the usual seasonal decline. Number of factory workers in July was down 14% from 1930 and 26% from 1929; payrolls were down 20% and 35%.

Little prospect seen for abandonment of cotton in the fields even though a price considerably below the cost of production is expected. "With business generally so bad there is little else that the farmer can turn to for a livelihood, and ... the farmer will need to sell all the cotton he can."

Agriculture Dept. estimates US wheat carryover at 319.1M bushels as of July 1, up 28.5M from a year ago. While the Farm Board has "persistently refused to divulge" how much surplus wheat it's holding, indications are it still holds over 200M of the total.

Copper situation continued to worsen. Refined copper inventories in N. and S. America on Aug. 1 were 440,417 tons, up 26,943 in July and up 118,378 over 1930; production of refined copper was 96,408 vs. 98,275 in June and 123,179 in July 1930; shipments 69,465 vs. 83,468 and 117,902.

US electric output for week ended Aug. 8 was 1,643 GWHr, down 2.9% from 1930, vs. a 2.0% decline prev. week and a 1.9% decline two weeks ago.

Companies reporting decent earnings: Bendix Aviation, Commercial Credit, Nat'l. Oil Products.

Movie:

Young as You Feel - Fox Film, at the Roxy. Will Rogers stars as a "dyspeptic widower who has amassed a fortune as a meat-packer" and taken his sons into the business, only to find them more interested in golfing, dancing and other such frivolity. He's at a loss to solve the problem, when he fortunately meets Fleurette, a charming French singer who "persuades him that he is really not old and introduces him to Chicago's nightlife." Shortly thereafter, it is he who "shows up at the office in mid-afternoon and refuses to join in important conferences on the plea that he must be off to the races." The sons become worried when they discover Fleurette is associated with "notorious blackmailers," and follow her and their father to Colorado along with a lawyer and their fathers' partner. However, upon arrival they find Fleurette isn't as bad as she seemed, and their father quite able to look out for himself. Happy ending ensues as Fleurette, her husband, Mr. Rogers, his partner, and "two beguiling ladies" go off to Paris; "the youngsters are left behind to manage the meat-packing business."

Joke:

"How long have you been working here?" "Ever since they threatened to fire me."

"There was only one painting at the exhibit I could look at - yours." "Thanks, old fellow." "Yes, there were so many people around the others."

Wednesday, August 12, 1931: Dow 140.16 +5.90 (4.4%)

Assorted historical stuff:

Floods in China cause over $50M in damage; 4M homes destroyed [note: those two numbers seem out of whack unless homes could be built for $12.50]. 23M people in "dire straits." Hupeh province most affected, with 18,000 square miles under water. Drainage expected to take months, with many areas remaining submerged through next winter. Rainfall over past month, unprecedented in 61 years, was cause of the flooding. Nat'l govt. to float $20M relief loan.

British Premier MacDonald "hurried back" from his holiday in Scotland to meet with his cabinet; dissension is reported on severe austerity measures recommended by the Economy Committee, particularly restriction of those eligible for the dole; this was seen as conflicting with "campaign promises to increase social services."

"Jobless actors in Germany have found a profitable side line. Their job is to mingle with crowds in cafes and places where politics are talked and boost fascism. Hitler is said to believe that with their smooth manners, good diction and persuasive tongues, actors make first-class spellbinders."

Editorial on remarks of Judge Cardozo from his decision in the case of Dr. William “Horse Doctor” Doyle. [Note: Doyle was in fact a horse doctor, taking care of NY City's fire department horses, but was also politically well-connected. As a result, the motorization of the city's fire departments, which might have impoverished a lesser man, was taken in stride by Doyle. He became a fixer for builders seeking permits from the city's Board of Standards. By 1930, aged 60, he had accumulated the astonishing total of nine children and the even more astonishing total of over a million dollars. At that point, Doyle became involved in an investigation started by crusading Republican D.A. Charles Tuttle targeting the Tammany machine. Refusing to testify, he was jailed for contempt. Cardozo found that Doyle himself could be compelled to testify with a grant of immunity, but that alleged conspirators couldn't.] Sees decision as reflecting fundamental principle that “rights of the individual are to be protected against ... tyranny at the hands of the 'majority.' Upon that principle ... depends all our liberties.”

Leading US banks by deposits as of June 30 remained Chase Nat'l.($1.90B), Nat'l City ($1.46B), and Guaranty Trust of NY ($1.35B); these were the only banks over $1B; there were 11 banks over $500M.

New England potato crop estimated at 55.9M bushels [note: at an average weight of 54 pounds/bushel, and 3/4 pound per potato, this is about 4B potatoes].

Reminiscence from H. Alloway of E. Berry Wall, a former denizen of the financial district who was once known as King of the Dudes. "Cheery, gracious, fellowshipping soul was Berry, his ultra ways with fashion putting him at the fore of the town's freakish dressers. Given to canes, curio-brimmed top hats, collars that choked, sparkling socks, gloves that shouted, waistcoats that were rainbows ... of such was the attire of the Kingdom of Berry. He adorned brokerage offices by day; and Delmonico's, clubs, roof gardens ... by night. Everybody loved him. Only the market treated him carelessly. But he was the good loser, perfect." One fine day, Berry sailed for Paris to stay; occasional visits back here have shown him grown into a dignified old age. However, unlike many Wall Street stories, this one has a happy ending - Berry is now a rich man again. It seems he inherited a substantial sum but "not quite what's requisite to maintain ... an entourage." He turned to the stock market to augment his wealth, but, with the wisdom of experience, adopted the short side. The results were most fortunate; he went short of a line of NYSE shares at one or two hundred points higher than they are today.

Market commentary:

Market wrap: Following further selling of rail shares in early irregular trading, major industrials led a general recovery across the whole market. Extensive short-covering developed in the favorite bear targets; rally gathered momentum and trading increased as the session progressed, with the ticker running a few minutes behind in the final hour; industrial leaders including Steel and Can showed substantial gains while leading rails and trading favorites including Auburn and Case rallied sensationally; "retreat of the bears took on the aspect of a rout." Session ended with "buoyant tone." Bond trading more active, prices irregular; European issues rallied sharply, led by Hungarian. S. American bonds irregular. US govts. slightly higher. Rail bonds remained under pressure, with selling extending to some of the highest-grade issues. Industrial and speculative bonds rallied along with stocks. Commodities were weak in spite of the stock rally; cotton and most grains were down moderately while corn fell sharply to post-1901 lows.

Conservative observers believe that yesterday's rally, because of its vigor, is likely to carry for at least part of today's session; advise clients with long positions to sell stocks into the recovery, believing they can be replaced at lower levels later.

Market has shown some encouraging indications recently; industrials have stayed in a narrow range in spite of discouraging business news and decline in rails, and the decline in rails itself has come on very low volume. However, many market observers remain cautious, pointing out that with rails hovering near their bear-market lows, a further decline in that section could "subject the whole list to a severe test." It's also noted that industrials similarly stayed in a narrow range in the first half of April, only to resume their decline.

Reassuring front-page article on high likelihood of AT&T's dividend being maintained.

Companies said to be doing well include Drug Inc. and Woolworth.

A number of economists now contend that wage cuts in basic industries and the rails must come before "a base will be reached from which it will be possible to start moderately constructive activities in the stock market. ... Quite a few market interests are still of the opinion that wage cuts will mark one of the last steps in the readjustment which has been brought about by the business depression."

Editorial arguing in favor of rail rate increase. “The railroad industry is not an 'ordinary' industry in that it is 'regulated' in such a way that it cannot accumulate enough flesh and fat in good times to carry it through a prolonged season of bad times.”

Economic news and individual company reports:

Reichsbank cut discount rate to 10% from 15%, as "anticipated in view of the passing of at least the worst phases of the financial crisis." Rates on call money and bankers' acceptances are about 9%; further reductions in money rates anticipated "owing to the satisfactory banking situation." Reichsbank gold drain has completely stopped, and note cover ratio is up to 40% vs. 35.8% on July 15. Particular satisfaction expressed over lack of currency hoarding by the public, enabling the Reichsbank to keep circulation down and avoid currency inflation. "Steady improvement in the situation" is now expected, "though it is freely admitted that full return to normal is still a matter of some time." Next step will be reopening of stock market; reports from Berlin indicate this may happen Monday.

Bankers' committee on the German short-term credit situation is now studying the Hungarian situation, "which is said to be the most pressing at the moment." Hungarian govt. and banks attempting to stop capital flight; efforts being made to raise a $25M loan.

Sterling strengthened again; sentiment improved by cut in German discount rate and fall in cotton price, (since Britain buys a large amount of US cotton in the fall). NY bankers feel “the fall period should pass with little or no strain on sterling from the US”.

Consul F. Warren reports that "while it will take Colombia several years to emerge from its economic troubles, leading Colombians have expressed determination that their country shall not default its obligations"; notes that "throughout the political unsettlement in S. America, Colombia has remained undisturbed."

While no state has yet followed Okahoma's example of declaring martial law to close down oil production, Texas Gov. Sterling has now threatened similar action if the Legislature doesn't enact an effective oil law, and a Kansas official has also threatened to close all wells; such action appears to be drawing increasing support. Gasoline shortages are developing in the midcontinent area; prices are firmer. Texas Legislature adopts Woodul law regulating oil and gas pipelines; some operators interpret the law as having effect of curtailing oil and gas production if properly enforced. Refineries ran at 66.7% in week ended Aug. 1; stocks of gasoline fell 861,000 barrels to 35.881M. Crude oil production in week was 2.556M barrels/day, up 54,900 from prev. week and up 75,200 from a year ago; increase again due to East Texas area, which rose 56,500 barrels/day to a new high of 654,200 while production in Oklahoma and California was little changed.

Mississippi Gov. Bilbo's suggestion that cotton farmers "pick two rows of cotton and leave the third" decried as "nonsense" by La. Agric. Comm. Wilcox: "What farmer, after plowing, planting, fertilizing and cultivating, would abandon one-third of his crop when it is waiting to be taken off the ground?"

NY Supt. of Banks Broderick files application to pay Bank of US depositors 30% dividend. Remaining Bank of US assets will be reduced to cash as quickly as possible; time to do so is uncertain since a large portion is in real estate, speculative real estate securities, and loans. Several institutions have looked into possible reorganizations of the Bank, but all plans so far have fallen through "for one or another reason." State Bank of Omaha, largest state bank in Nebraska, closed; deposits of $2.7M; bank pres. Schantz blames closing on adverse publicity given to Nebraska banks, says depositors will be paid in full.

Some ICC commissioners apparently doubt whether finding of a financial emergency for the railroads would in itself authorize them to grant a rate increase. Rail freight loadings for week ended Aug. 1 were 757,293, up 15,541 from prev. week, down 17.6% from 1930 week, and down 31.5% from 1929.

Amer. Machinist reports upturn in the machine tool market in some districts; others are "marking time, though good prospects are cropping up."

Latest bank statements showed reversal of bank security purchasing in previous week, as holdings of US govts. fell $16M and other securities fell $36M. "All other" loans rose $52M, but this was attributed to buying of acceptances (short-term bills) rather than an increase in commercial borrowing.

BLS reports overall US cost of living in July was down 6.5% from Dec. 1930; food prices down 13.8%, fuel and light 5.5%, clothing 4.6%, rent 3.1%.

Unit (cooperative) development in Kettleman Hills field of Calif. seen reducing huge wastage of natural gas (waste estimated at 221B cubic feet last year, or more than a third of total gas production of 617B).

Companies reporting decent earnings: First Nat'l. Stores, Interstate Dept. Stores, Equitable Office Bldg.

Report from Paris:

"Broadway showmen, sipping their tea - or what have you? at Ciro's or the Ritz," are wondering at the hold exerted on the French public by the great Tour de France. "For no revue, however bizarre of costume or bereft of it ... ever thrilled the French public as do these bicycle races where news is awaited as eagerly at vantage points in Paris as ever a crowd in Times Square ... watched the score in a world series game." These bicycle contests, now being revived with such enthusiasm, are "as old as the two wheeled chariot" - the first long-distance race was from Paris to Rouen in 1868; winner was an Englishman named Moore who covered the 79 miles in 10 hours 25 minutes on the high-seated machine of the time, known as a "bone shaker." Motorcycles have also become very popular in France, introducing many couples to the joys of the open road. "The sidecar as used in America is seldom seen. The lady sits behind the gentleman, looking thoroughly uncomfortable and supremely happy."

Jokes:

Merchant - Look here, you've been owing me this bill for a year. I'll meet you halfway. I'm ready to forget half of what you owe me. Debtor - Fine; I'll meet you halfway. I'll forget the other half.

Old Man Jones on how wars start - "Things that a fellow thinks don't amount to a darn will sometimes pile up a mountain of trouble. Why, just the other night my wife was working over a crossword puzzle, and she looked up and said 'What's a female sheep?' And I said 'Ewe.' And there was another big war on."

Tuesday, August 11, 1931: Dow 134.26. -0.68 (0.5%)

Assorted historical stuff:

Radicals in the Prussian election fell far short of the total needed to dissolve the Diet and call new elections; total was 9.793M vs. the required 13.656M. General relief was felt since a close vote had been anticipated; Chancellor Breuning's rule is now believed assured at least until the Reichstag convenes in the fall. Sentiment is improved, and "the feeling is general here that the German situation is fast clearing." There have been no heavy runs on banks since they reopened, and even savings banks now report more deposits than withdrawals. Bond prices rose sharply after the election results; some over-the-counter trading is taking place in stocks. A cut in the 15% Reichsbank rate is anticipated shortly. Total German unemployed on July 31 were 3.976M, a surprisingly small increase from the 3.954M on June 30 considering the crisis in July. "Serious rioting continued in Berlin, but this was regarded as a natural sequence to the failure of the radical parties and its significance was minimized, bankers maintained that the Berlin police were in complete control."

The Yangtze Valley of China suffered the worst floods in 50 years, threatening crops that 100M people depend on. A reporter described the Valley as a vast inland sea for hundreds of miles over one of the country's richest areas. Widespread epidemics are feared when the floods subside; no real relief is expected for another 3 weeks.

Based on current cotton prices and crop forecast, this season's crop will be valued at only about $585M vs. $781M last season and an average of $1.5B in the previous five seasons. There are over 2M farm families that raise cotton, and almost all of it is raised on credit; about 20M people in the South are dependent, directly or indirectly, on the cotton production industry. "That this will mean a drying up of purchasing power and be troublesome for Southern banks is obvious." "Wild scenes were witnessed" in British cotton exchanges after publication of the govt. crop estimate Saturday; "anxious traders rushed about, gesticulating while prices sagged throughout the morning ... The visitors' galleries ... were crowded with spectators eager to watch the excited trading below." Possible unified action of Southern states to curtail cotton planting was nullified when the Texas Senate defeated a bill for 50% curtailment of cotton acreage; opponents argued it was Socialistic and unconstitutional. C. Williams, Farm Board member, said drop in cotton price was just a "panicky" reaction; saw no reason why cotton prices should go much lower.

Editorial favoring Gov. Roosevelt's stand for operating self-supporting public works projects through independent agencies. In addition to advantage cited by Roosevelt of avoiding "legal red tape," this prevents incompetence in carrying out the projects from being "unloaded on the taxpayer."

Jackson Brothers, Boesel & Co. note that while percentage of US population engaged in farming has declined from about 38% in 1900 to 20% now, farm products still supply raw materials for about 30% of all factory operations, or 40% including leather and lumber. While no immediate improvement appears in sight for farm prices, study of the past 55 years shows regular pattern of high farm prices being followed by industrial depression, and vice versa.

Census figures show 193,562 US manufacturing plants that normally employ 500 or fewer people, vs. 2,747 that employ more than 500.

In a single average hour, US railroads load 5,238 freight cars and board 80,371 passengers.

Successful experiments reported at Sheffield, England in casting alloys of aluminum and copper to imitate various shades of gold color.

Cost of holding municpal elections in NY State estimated at average of 76 cents per vote recorded, varying from 43 cents to $1.57.

Leading exporter of candy to the US in the first half was Russia with 1.757M pounds, over seven times the total in the previous year.

[Note: Disinterested Observer Dept.] Return of beer would employ 1.250M people, provide govt. revenue of $400M annually and provide market for 80M bushels of grain, according to August A. Busch, pres. of Anheuser-Busch. The AFL also urges return of wine and beer, saying this would stimulate 60 industries.

Market commentary:

Market wrap: Stock trading continued sluggish; pressure against the rails was again the feature, with many rail stocks hitting new bear market lows. Industrials were also lower but showed better resistance; moderate recovery took place in late dealings. Bond trading dull with prices irregular; German govts. rallied and other European issues were firm; S. American bonds were irregular, with rallies in many groups; US govts. dull and a shade lower; domestic list irregular with losses outnumbering gains. Commodities mixed; cotton fell very sharply in the first NY trading after the high govt. crop estimate; grains were strong with wheat up sharply. Rubber fell very sharply, hitting new record lows; the August contract traded at 5.00 cents. Silver fell 3/8 cent to 27 1/8.

Some market observers anticipate a technical rally, but few are advising clients to buy stocks for it.

Positive result of the Prussian election was countered by break in cotton prices, lower than expected unfilled orders report from US Steel, and rail weakness.

Since GM's declaration of its regular dividend, some "quiet liquidation" has come into the automotive stocks; this is attributed to expected lower production and earnings in the second half. Johns-Manville also ran into selling following announcement of better than expected Q2 earnings and regular dividend. US Tobacco sales are reportedly doing well, thanks to sharp increase in June snuff production and low-priced tobacco for rolling cigarettes.

Wall Street is abuzz with speculation of further dividend cuts in coming months; many stocks that have been highly rated for years are now cited as probable cutters, including Western Union and J.I. Case . "Talk in this strain has been responsible for much of the quiet liquidation in individual issues. The view is spreading that many companies maintained their distributions in the hope of a definite improvement in business beginning with the fall months." If this fails to materialize, dividend actions are likely. Dividend speculation is particularly heavy on rail shares, with a number of important meetings in the near future.

Harvard Economic Society says "incipient business revival" apparent early in Q2 was interrupted by the European crisis; that crisis has now become serious enough to bring up possible analogy to the 1890's; business outlook "is now uncertain."

Economic news and individual company reports:

Recent Chicago bank troubles seen possibly leading to legalization of branch banking in Illinois. The argument is made that larger and better supervised branch bank systems would have avoided "the preponderance of real estate paper" that caused trouble for the failed banks. [Note: banks were too small to succeed?]

Commerce Dept. business survey shows "the more than seasonal decline in business through June was less marked during the first two weeks in July." Seasonally adjusted index of industrial production fell 3.4% in June; average adjusted index in first half was down 16.3% from 1930; factory payrolls were down 5.5% in June and 25% below a year ago. Fed. Reserve reports department store sales dropped somewhat more than seasonally in July; sales were 8% lower than July 1930; sales for first 7 months also down 8%.

East Texas oil situation appears worse. After the Texas House finally passed a conservation bill backed by Gov. Sterling, the Senate rejected it and passed a substitute that practically nullified curtailment; prospects of enactment of any effective bill now seen as remote. East Texas production continues to increase; daily average last week estimated at 662,000 barrels. Oklahoma oil shutdown continues; refiners are using up oil in storage but will apparently go to East Texas for new supplies rather than pay higher prices in Oklahoma.

Of 30 leading railroads, 15 failed to cover fixed charges (interest on debt) 1 1/2 times in the year ending in June. [Note: this was the standard requirement in order for bonds of the railroad to be legal for savings banks to buy. Therefore, a railroad's falling out of this class would tend to lower its bond prices and make it harder to for the railroad to raise needed capital.]

Agriculture Dept. Aug. 1 estimate of corn crop was 2.775B bushels, down 193M from the July 1 estimate; wheat crop estimate 894M bushels, up 24M.

Farmers in Texas have reportedly stored about half their wheat crop in improvised trenches. Much Texas wheat is being fed to cattle and hogs.

As previously in the depression, food companies showed one of the best earnings records in Q2, although the effects of the depression were more in evidence than previously. A group of 17 food companies reported Q2 earnings of $26.4M, down 16% from 1930, vs. a 6.8% year-over-year decline in Q1 and a 6.3% decline for all of 1930. Companies reporting higher Q2 earnings included Hershey, American Chicle, and Loose-Wiles Biscuit.

US Steel unfilled orders as of July 31 were 3.405M tons vs. 3.479M on June 30 and 4.022M on July 31, 1930. Decrease was larger than expected considering very low level of operations during the month.

Australia undertook one of the largest loan conversion operations in history, as Premier Scullin appealed to owners of 556M sterling in internal bonds to recognize the country's grave situation and accept a 22 1/2% reduction in interest paid. Bondholders are given 3 weeks to respond; those not responding are assumed to agree to the conversion. [Note: this voluntary appeal seems bizarre today, but Britain later undertook a much larger one; the result was a great success for the govt. but had awful long-term results for the bondholders who accepted the conversion.]

Sterling strengthened on reported support by a large NY bank; gold losses continued but at much lower level.

Chicago wholesalers reported best buying by retailers in the week ended Aug. 8 that they have experienced in recent months.

NY City Emergency Employment Committee reported $8.551M in contributions from about 225,000 people from Oct. 30, 1930 to July 1, 1931. The funds provided work for 26,039 people at the peak in January.

Companies reporting decent earnings: Canadian Hydro-Electric Ltd.

Movie:

Huckleberry Finn - Paramount film. A worthy sequel to the delightful Tom Sawyer (“one of the finest cinematic achievements of the year 1930”). Jackie Coogan and Junior Durkin reprise their roles as Tom and Huck. Features fine natural acting, beautiful photography, and flawless dialogue. "Humor and pathos from the original book are carefully mingled to produce a photoplay that would make Mark Twain nod with approval if he could witness it."

Jokes:

Jack and Jill went up the hill, at sixty miles or better; A cop unkind was right behind - They're seeking bail by letter.

Diner at a Small-town Hotel - Why does that dog sit there and watch me all the time? Waiter - You've got the plate he usually eats from, sir.

Monday, August 10, 1931: Dow 134.94 -0.19 (0.1%)

Assorted historical stuff:

German savings banks reopened after 4 weeks of drastic restrictions. Depositors lined up outside the banks and thronged at the counters; crowds were large but orderly. Negotiations on maintaining short-term foreign credits to Germany continued; "each group of bankers proposed different measures for safeguarding credits". Restrictions on foreign currency have been lifted for importers but remain on sending capital abroad for other reasons. Italian Premier Mussolini will visit Berlin in September. German govt. offered to buy 500,000 tons of US wheat on credit. Washington offered alternative to Farm Board sale of cotton in which Germany would buy direct from US growers.

Pres. Hoover issued detailed statement on preparations for relief efforts during the winter. For the past 3 weeks, the Administration has been studying "problems of unemployment and relief likely to confront us over the coming winter and the organization necessary to meet the situation. ... The problem, whatever it may be, will be met." With organized effort by local govt. and Federal authorities, “the problem was successfully handled last winter. We shall adapt organization methods in such manner as may be necessary for the coming winter.” Has been communicating with local govts., business and labor leaders. Study will take another month to complete. Sen. Fletcher (Florida) estimates number of unemployed at 6M.

Chinese Min. of Industry estimates China's unemployed at 200M, representing half the country's inhabitants and more than the total US population.

Interesting editorial by T. Woodlock. Main causes of the world depression are Treaty of Versailles with resulting German reparations, and the fall in commodity prices. Cites results of MacMillan Committee on Finance and Industry (Britain), which recently completed its 20-month study. Regarding commodity prices, study concluded central banks worldwide should act more flexibly to increase and then stabilize commodity prices at a level appropriate to existing wages and debts. Proposed program for doing so involves withdrawing gold from circulation in form of coins or certificates; currency in circulation should be "managed" to keep it "stable with respect to gold"; central banks should make requirements for gold reserves more flexible so they could be relaxed or tightened "as their domestic legitimate needs might require"; currently, they should be relaxed.

Editorial: The upcoming disarmament conference in Feb. faces a potential roadblock from the stubborn French stance that they've already reduced their arms "below the level of national security" and that the world can't be "effectively organized for peace" unless all great powers take part, “since such abstention means that such great power may one day be trading with and, as a professed neutral in a military sense, feeding a nation” with which France is at war. US delegates should therefore "be prepared to say exactly what the US will do to meet the French demand for organized peace"; fuller US participation in the World Court and League of Nations may be in order if we wish to solve the crucial problem of arms reduction.

Remarkable gain in Swiss gold holdings (1.164B Swiss francs on July 31, up 451M from year-end) despite heavy trade deficit "caused almost entirely by the extremely heavy transfer of funds to Switzerland for safety, which was not even retarded by the failure of the Banque de Geneve."

GM sued for $250,000 by J. McHugh of Newton, Mass. for alleged use of his invention of adjustable seat and steeing wheel.

At least one outlet for cotton can be found in airship coverings; the US Navy's new dirigible "Akron," christened by Mrs. Hoover on Saturday, has its entire silvery covering made of 36,000 yards of cotton fabric, while another 56,000 yards are used for the gas cells. Durability of cotton in airship construction is demonstrated by the "Los Angeles," which is now 8 years old.

A small group of women, mostly British, is organizing to publish The Call, a daily newspaper in London; it will be controlled and largely edited and written by women and devoted to their interests. Capital of the company will be 5M sterling [note: seems like a sizable sum for a startup then].

About 30,000 Berlin families are living in cellars without light or air, and 50,000 in antiquated homes without bathrooms or gas. Great efforts have been made to relieve the Berlin housing shortage; failure to do so is attributed to official red tape. One Berlin firm planned to construct numerous 2-room portable houses that they could rent for only $8/month due to wholesale construction, but building authorities said the rooms would be too small.

Work on the Hoover Dam halted by walkout of 1,100 workers; Six Companies pres. W. Wattis says no wage cuts made, can attribute no cause to the walkout.

Market commentary:

Market wrap: Stock trading was at a minimum, with traders disposed to wait for results of the Prussian election and "most of the speculative community away for the week-end." Such action as there was continued Friday's pattern of relative firmness in industrials but disturbing weakness in rails, which have sagged dangerously close to the June low. Bonds continued recent trends in a dull session; German govts. were firm while S. American fell further; US govts. and public utility issues were steady while convertibles and industrial issues were generally lower; second-grade rails were particularly weak. Commodities broke sharply. Cotton closed slightly higher in New York before release of the govt. crop forecast, but plunged by over 1 cent/pound to below 7 cents in Chicago trading after the forecast. Grains fell sharply after release of the report.

Conservative observers still advise the sidelines; favor waiting to buy stocks until domestic business prospects show a change for the better; advise using technical rallies to reduce any long holdings, and stop-loss orders to protect "those who are still holding stocks."

Recent investment buying has concentrated on shares of companies making or retailing goods with steady replacement demand or products that are essential; these have included Woolworth, Sears, Penney, Borden, Coca Cola, Drug Inc. and Wrigley; shoe shares have also drawn buying.

Determined optimists on stocks point to extremely low recent volume, fluctuating between 700,000-900,000 shares in recent weekday (5-hour) sessions; considering large increase in listed issues, this is easily the slowest trading since 1921. With brokers loans' drastically deflated and trading inactive, the market has been technically strengthened; "bears have been handicapped in their efforts to cause the downward movement to gain momentum ... Meanwhile, the constant passing of stocks from weak to strong hands is gradually building up a strong understructure for the general market." This places it in excellent position to respond to any seasonal business improvement.

Another optimist notes that in the 1921 bear market [whose movements have been quite similar to the current one], stocks established a low in June, then weakened again in August, breaking slightly though the June lows and disturbing many "chart readers" at the time; a good recovery then developed. This indicates that a break through the June lows now may not be that significant unless "stocks do so on volume and the decline amounts to enough to convince observers ..."

"The nation is looking ahead with no little apprehension" due to the outlook that "liquidation of labor" [wage cuts] will be needed before end of year; while it's believed the readjustments "will be handled in a manner calculated to cause the least disturbance," the unsolved problem is seen as hanging over business.

Economic experts agree that seasonal business improvement would be underway by now if not for the foreign crisis that developed in early July. Hope persists of some pick-up in the fall due to generally low inventories and clearing up of the foreign situation, though idea that the recovery could exceed normal seasonal proportions has largely been abandoned.

Week in review:

German situation gave signs of return to normalcy. German private banks other than savings banks reopened without disturbances, and demand for currency was close to normal; even the Darmstadter [closed July 13] reopened normally and reported more deposits than withdrawals. Foreign currency restrictions were lifted for importers but remain on sending capital abroad for other reasons. England received a $250M credit from France and the US that provided some reassurance, but sterling curiously continued to show signs of weakness, fluctuating below the gold export point; some disturbing rumors were circulating regarding the British banking situation and how much of the $250M credit had been used; gold losses to France almost stopped but continued to Holland and Belgium. "Mexican currency situation is a welter of confusion" due to the new currency law; silver pesos in Mexico City fluctuated from 2.50 to 5.50 to the dollar in a single day.

Stock traders appeared to turn their attention back to domestic developments, particularly prospects of additional dividend cuts and the looming problem of necessary wage adjustment; industrials and rails fell to new lows on the reaction since June 27, with rails particularly weak; trading was unusually dull.

A seasonal fall upturn in business is still seen as possible, though unemployment and other factors were expected to restrain it to moderate proportions. Steel production gave no indication of trade improvement, falling to a new low for the year excluding the July 4 holiday; firmness in prices seen as positive.

Bond trading was dull but prices moved generally lower, in some cases sharply. Hungarian and Polish bonds broke, while German govts. fluctuated but ended higher; other Europeans were steady while S. American govts. were erratic but mostly lower. US govts. were quiet, while public utilities were in fair demand; however, industrials were mostly lower with particular weakness in second-grade rails.

Commodities were very weak. Cotton hit new season lows almost daily, ending with a final plunge after the high govt. crop forecast. Grains hit new lows, then rallied but fell sharply again after the govt. cotton forecast was released.

Economic news and individual company reports:

[Note: Strangely unfamiliar.] NY Superintendent of Banks Broderick filed suit against Bank of US directors for $60M, asking they "restore the moneys ... lost, misappropriated, wasted, alienated and diverted" and that they be "decreed to account for all gains ... and benefits received directly or indirectly by them ... through the wrongful ... use of the moneys ... of said bank."

Amer. Banks Assoc. estimates small US borrowers require over $11B/year; of this, $2.6B is installment sales, $2.5B “open book accounts,” $2.4B life insurance and veterans' loans, $1.150B by commercial banks, and $2.699B by others including pawn brokers, personal finance cos., savings and loans, etc. Personal loans by banks have grown steadily in the past 6 years; “entrance of banks into the field of personal finance has been dedicated to the proposition that the consuming public should have worthy credit at reasonable rates” and that “borrowers of small income should be encouraged to adopt principles of sound financial engineering.”

US govt. published its forecast for the cotton crop; figure of 15.584M bales was greatly above expectations of about 14M. If this forecast is accurate, total available supply of US cotton this year, at about 24.5M bales (crop plus carryover) would be over two years' consumption at the current rate. Following release of the report at noon, cotton plunged over 1 cent/pound to below 7 cents, and traders were discussing the possibility of 5-cent cotton. Texas Senate votes down proposed law for reduction of cotton acreage.

City of Chicago fiscal situation has improved; received $4.8M payment from Illinois Bell to accept city franchise; Governor's commission working on reorganization of tax system, which may allow sale of 1931 tax anticipation notes; salaries of city employees paid up to date. However, Chicago Board of Education is in worse shape and "still in dire need of funds to carry on its operations"; employees have gone payless for over 2 months and the Board is offering scrip for payment of salaries, "the validity of which has not as yet been formally decided."

Oklahoma oil producers reportedly offered a compromise to Gov. Murray; "reports said producers were willing to post 75 cents a barrel if it could be done without implying that Murray's stand was responsible." However, Gov. Murray "was in a fighting mood" and still demanded $1 a barrel. Oil and gasoline prices showed further signs of firming; minimum oil price paid in East Texas rose to 18 cents/barrel from 13 cents earlier in the week, and tank car gasoline was raised to 3 1/2 - 4 cents/gallon at Oklahoma refineries. Sentiment regarding the oil industry appeared to be improving. Texas House and Senate rejected Gov. Sterling's plan for a new oil and gas commission, leaving regulation in hands of the Texas Railroad Commission. Gov. Sterling warned that the Railroad Commission would be powerless to control the industry since the laws it operated under have been declared invalid; said if Legislature defeats his proposed conservation measures, the oil industry will get no relief at this session. Oil men petitioned Gov. Sterling to curtail the flow of Texas oil. Voluntary shutdown of East Texas wells reportedly only affects a small number of wells; major producers have "shown little sympathy."

GM earnings have been relatively stable compared to other industrials. GM's net profit for the first half was only 20% lower than 1930 and 44% lower than 1929; decline vs. 1930 only 14% if non-operating profits in 1930 are excluded. By contrast, first-half earnings of 171 leading industrials were down 47% from 1930 and down 63% from 1929. GM's results in the second quarter were even better; net profit was only down 9% from 1930 and operating profit was actually up. GM total sales to dealers in July were 87,449 cars and trucks vs. 111,668 in June but up from 79,976 in July 1930. Outlook for car company profits seen poor in the second half due to low current and year-end production and new model costs in Q4.

Decision of ICC to resume rail rate hearing last Tuesday instead of waiting to end of the month has raised hopes the proceedings won't take as long as anticipated; it's now believed a decision is possible in October rather than early next year.

Barron's seasonally adjusted index of industrial production and trade for June was 64.2, only slightly above the depression low of 64.0 in Jan. and well off the April high of 68.3.

Fisher's wholesale commodity index rose to 69.5 vs. the postwar low of 69.3 reached in prev. week.

Youngstown district steel operations will rebound sharply this week to 42%, up 9% from last week.

Canadian govt. ordinary revenue for 4 months ended July 31 was $131.7M vs. $160.9M in 1930; net debt July 31 $2.248B vs. $2.141B.

Companies reporting decent earnings: Knott Corp. (hotel operators).

Movie:

The Star Witness - Warner Bros. film, at the Winter Garden. A timely drama, opening as it does "close in the wake of the recent gangland tragedy on 107th Street." Theme is intimidation of witnesses by gangsters who threaten them with death if they testify to the truth. Film is uneven, with a slow opening, excessive dialogue, and unrealistic plot developments. Film's chief merit is splendid performance of Chic Sale as Grandpa Summerville, the patriotic Civil War veteran who stands up for justice by testifying, and then is able to find his grandson who is being held hostage by walking around the neighborhood playing Yankee Doodle on his fife until the boy hears him and throws a baseball out a window. "Mr. Sale's make-up is perfect; he speaks in a high-pitched voice and walks around as if he were truly suffering from acute rheumatism." Walter Huston is forceful as the District Attorney, though "part is not big enough for his superlative talents."

Jokes:

"What color bathing suit was she wearing?" "I couldn't tell; her back was turned."

Man Boarding a River Barge - Is she going up or down? Nervous Passenger - Well, sir, her planking is leaky so she may go down, but on the other hand her boilers are bad so she may go up.