Friday, August 21, 1931: Dow 141.93 +0.21 (0.1%)

Assorted historical stuff:

Yet another editorial by T. Woodlock arguing "root of the present world depression is political" [meaning European tensions persisting from the war] and reparations and war debts must be adjusted permanently. It's shocking that even at this stage, France threatened to withdraw from the bankers' conference at Basel if reparations were discussed. "When did it happen before that in face of absolute unanimity of the world's bankers, economists and financiers, on so important a matter as that of German reparations and world debts, the world's statesmen were either flatly determined ... that it should not even be discussed [France] or unwilling ... to force its discussion [US]. ... And the bankers, who of all men best know what the end will be, are compelled to patch ... a cancer with no hope beyond that of averting an immediately fatal result - not only that but they are obliged to ... choose their words as to do no more than vaguely hint at what everyone knows." [Note: There seems to have been a sharp difference here between banking and popular opinion. Good thing that hasn't happened again.] Editorial along similar lines, this one concentrating fire on the “invincible ignorance” of US politicians opposing reduction of reparations or debts.

Washington report: W. Gifford, appointed by Pres. Hoover to direct unemployment relief this winter, will meet with the pres. this weekend at his Rapidan Camp [predecessor to Camp David, now open to the public.] F. Croxton, who has headed the President's emergency employment committee since A. Woods left, will assist Gifford. "Statements from ... political opponents of the administration that the relief needs of the country for next winter are being underestimated are not supported in any way by talks with officials who are handling this particular problem. There is no disposition to gloss over or minimize conditions ... likely to be faced with the coming of cold weather." After extensive study, it's been decided that local resources, properly organized, "can be made ample to care for the situation" and "Federal aid should not be generally necessary." Problem in most cases seen as "failure adequately to organize for collections and expenditure of relief funds," although some "one- industry towns" and agricultural areas may require aid from outside. It's hoped that effective functioning of local relief agencies may prevent Congress from enacting extensive Federal aid when it next meets in December. Pres. Hoover seen almost certain to be the Republican candidate in 1932 in spite of intermittent discussion of drafting Coolidge. While Coolidge remains a popular favorite, he appears to have no desire to run again, and in any case there would be practical obstacles to his doing so. "The situation seems to be that the Republican party must stand or fall with Mr. Hoover in 1932. Candidly many leaders are not sanguine of success, particularly if there is not considerable improvement in economic conditions. However, they recognize the futility of failing to back their own administration while asking four years more of power."

“Gov. Roosevelt, stressing dark outlook for coming winter,” says close cooperation among govt. branches needed for industrial recovery.

Relief fund committee chair. E. Ryerson estimates Chicago and Cook County will need $8.8M to take care of destitute families this winter, 76% over last year; Samuel Insull, Jr. is chairman of the campaign to raise funds to be distributed through charity offices.

Further veterans relief legislation “looms” at the upcoming Congressional session in Dec.; possible proposals include compensation for dependents of hospitalized veterans, pensions for their widows and orphans, and lower interest rates on bonus certificate loans.

High Soviet official, with harvest well along, predicts Russian grain crop this year will exceed last year's bumper crop. General previous impression had been that crop would be somewhat smaller due to summer drought.

Labor Dept. has begun inquiry into conditions in W. Virginia coal fields where 6,000 miners are on strike; results will be given to Pres. Hoover within two weeks, along with report on outlook for general industry conference, favored by labor but opposed by many mine operators.

Census Bureau reports number of radio sets in the US far below estimates; total sets as of Jan. 1930 only about 10M vs. industry estimates of 15M. Census Bureau reports US rural population fell to 43.8% of the total in 1930 vs. 48.6% in 1920.

There are 1,196 brands of ginger ale in the US, but only four with nationwide distribution. One of the four is made by a “St. Louis concern” that before Prohibition was one of the world's largest breweries, with output of over 1M bottles of beer daily. Thanks to diversification into ginger ale and many other articles including marine diesel engines, it now has revenue as large as the days when beer was its main product.

Despite rapid growth in popularity of US magazines, Japan probably leads world in output of children's magazines. In Tokio alone there are 20 monthly children's magazines, some with a circulation of 200,000 copies; the largest has about 300 pages, printed in four colors.

The French govt. has made Louis Mathurin a knight of the Legion of Honor. He recently retired after 41 years as switchman at the St. Nazaire railway station. In that time, the lives of about 594M passengers were in his hands; no serious accidents occured. [Note: I once babysat a cousin, returning her with only a minor concussion.]

Market commentary:

Market wrap: Stocks opened strongly after reports of seasonal steel improvement but then turned sluggish, fluctuating listlessly in a narrow range for the last four hours. Corporate bonds mixed; second-grade rails continued decline but high-grade rails rose; industrials and utilities fell. The Dow average of second-grade rail bonds has declined 7.31 points to 88.29 in the period since July 13. Oil bonds rose sharply on merger news. S. American issues suffered heavy liquidation; Colombian issues weak in spite of reports govt. had declared against moratorium. Grains rose after Farm Board statement of willingness to negotiate with China for wheat sale; cotton also higher.

Persistent bond market weakness attributed to liquidation by banks in difficulty; steady decline in bond prices therefore hasn't caused "the concern that would result if the reason ... was not so readily apparent."

Stocks continued encouraging pattern of dullness on reactions. Public buying in the market remained at a minimum.

While the forced oil-well shutdowns in Texas and Oklahoma have stimulated some buying in oil shares, many observers are concerned about future "efforts by states to control business actions in other directions in the future."

Opinion on whether rails will get a freight rate increase is split, with some observers now more encouraged they will get at least part of the requested 15% increase but others less confident on the prospect of early relief.

Early estimate of July output of 221,000 cars and trucks in the US and Canada drew concern since it's an 18.5% decline from June vs. the usual seasonal 12% drop. Many economists now predict that due to unemployment in fall and winter, car output will be much smaller than predicted earlier in the year.

Tobacco shares fell on reports of lower July production vs. 1930, though July 1930 output was abnormally heavy. Automotive equipment cos. in the Chicago area did relatively well in the first half, covering dividends by a good margin, though a few reduced their dividends; some smaller cos. even reported income higher than 1930; cos. were helped by replacement demand and development of new parts and accessories. Coca-Cola stock has been well-supported over the past few months; earnings so far this year have continued the streak of 7 straight years of increases. The co. has benefitted from lower sugar prices, but success is mainly attributed to stable sales and aggressive merchandising steps in the past year (advertising budget is $1M higher than in recent years).

Economic news and individual company reports:

Toledo banks are reportedly helping businesses so they can remain open and give credit to customers; it's pointed out that no commercial failures were reported since the four big banks failures last Monday. However, plans to release part of deposits to small depositors have fallen through. Union Savings & Trust of Warren, Ohio closed after 120 years in business; deposits $2.3M.

Southwestern farms are holding onto their bumper wheat crop to an extraordinary extent due to low prices; almost no wheat is now being sold, and it's estimated farm wheat holdings are as large as the entire 1930 crop. "Farmers' bins are loaded and immense quantities are piled on the ground. ... Country bankers are exerting almost no pressure for sale as current prices would not enable farmers to pay notes"; bankers, along with farmers prefer to delay selling in hope of price increase. Cash wheat premium over futures has advanced to 7 - 8 cents/bushel. Farm Board chair. Stone says willing to negotiate with Chinese govt. on wheat sales. Editorial favoring Farm Board sale to China on whatever terms can be obtained. “Of far greater importance than the possible loss of a part of the price of the wheat is the value to us of China. Not the war-torn bandit-infested China of today, but the China of tomorrow. Give that country a stable government” and a chance to develop, “and it would be one of the greatest markets that the world could offer to us.”

Refiners in Oklahoma are “faced with a rapidly approaching oil famine” and are reportedly “seriously considering a drastic upward trend in prices,” though as yet there have been no major price increases due to the shutdowns. Chicago wholesale gasoline market is at 5 - 5 1/4 cents/gallon but with little available. Kansas oil producers are considering shutdowns to cooperate with Texas and Oklahoma. Rise of 25 - 30 cents/barrel in midcontinent oil prices expected shortly. Five independent oil cos. (Sinclair, Prairie Oil, Prairie Pipe Line, Tidewater and Rio Grande) consider merger into large co. to be named Commonwealth Oil; would have over $1B in assets, largest pipeline system in world, and distribution in every state and many foreign countries.

Money in circulation Aug. 19 was up $62M to $4.952B, total Reserve Bank credit outstanding up $36M to $1.141B. Member banks in NY City report brokers' and non-brokers loans both reversed trend; brokers' loans were up $14M to $1.343B, while loans on securities to non-brokers were down $25M to $1.672B.

British inter-party conferences on solving budget crisis and closing $600M deficit continue; govt. is reportedly considering general 10% import tariff as revenue-raising measure.

Foreign currency market quiet; pesetas advanced on stabilization rumors. Bank of England lost no gold, and currency circulation is decreasing as is normal seasonally. Bank of France continues converting maturing bills to cash.

Chilean govt. orders complete moratorium on foreign debts for rest of the year.

More sentiment seen for worldwide curtailment of rubber production after recent record low prices below 5 cents/pound.

Representatives of Montgomery Ward and Sears have reportedly met to discuss a merger; no definite decisions yet reached.

Companies reporting decent earnings: Connecticut Electric Service.

Movie:

The Last Flight - First National film, at the NY and Brooklyn Strands. "Curious" film about "psychological maladjustments of a group of ex-aviators and a girl" also apparently affected by "the ravages of war." The men have "been through hell and choose to forget by remaining in Paris in a more or less uninterrupted state of intoxication, rather than return to America to face ways of living that no longer have any meaning for them." They encounter the girl in a Paris cafe and "become intrigued by her odd sense of humor"; she becomes their constant companion, though the audience never finds out "how she came to her present state of disillusionment." Problems of the characters are "arbitrarily solved" by killing one in a bullfight, having two shot in a gunfight and another fleeing to avoid the police. This leaves Nikki and Gary to find what looks like mutual happiness. [Note: I love a happy ending!]

Joke:

Bumptious Young Man - I'm a mind reader. I can tell exactly what a person is thinking. Elderly Man - Oh! Well in that case, I beg your pardon.

Thursday, August 20, 1931: Dow 141.72 +0.46 (0.3%)

Assorted historical stuff:

Oklahoma and Texas oil shutdown is causing shortages at refineries; maximum oil price offered at Oklahoma remained at 52 cents/barrel, but some “overtures” were made including promise of 77 cents from Morgan Petroleum. Oklahoma Gov. Murray was not receptive - “'Tell those oil men to offer $1 a barrel and we'll talk business,' he snapped” when the offer was made. Texas Gov. Sterling pleased with “results already accomplished” by shutdown. No difficulties reported in closing down East Texas fields by martial law.

Toledo banking conditions reportedly returning to normal; banks that have remained open report deposits larger than a week ago, and were "swamped" with deposits on Wednesday. It's hoped "the recently closed banks can be taken over by some out-of-town bank and the $82M in deposits made available." Mayor Jackson proposed $750,000 bond issue to provide food for the needy.

Pres. Hoover appointed AT&T pres. W. Gifford to set up an organization to cooperate with nat'l., state and local agencies and take charge of “activities arising out of unemployment this winter.” Pennsylvania Gov. Pinchot urged Pres. Hoover to immediately call extra session of Congress to provide relief for the unemployed; says over 900,000 are unemployed in his state. Rep. Patman (D, Texas) telegraphed Congressmen in 23 states inviting them to convene Sept. 14 “in a rump session of Congress to persuade Pres. Hoover to summon a special session to deal with national economic conditions.”

Editorial by T. Woodlock approvingly quoting the Macmillan Committee (British govt.) report on Finance and Industry. "A severe fall in prices upsets the entire balance of every kind of money settlement." Social consequences are severe, raising "delicate issues of equity between different classes. ... A study of history would, we believe, confirm ... that it is in the changes in the level of prices, and in the consequential alteration in the position of debtors and creditors, entrepeneurs and workers, peasants and the tax gatherer, that the main secret of social trouble is to be found." Events of the past decade were extraordinary from this point of view; violent inflation "was sufficient in the immediate post-war period to destroy over a large part of Europe all rational economic calculation and all orderly social and economic development." This was followed by a period of stability and economic progress. Now we have a "violent down-turn of prices the effects of which upon political and social stability have already been very great. The problems thus raised transcend in importance any others of our time ..." Instability in prices attributed to consequences of the war; rapid technological changes in industry and agriculture, and "destruction of the balance" between industries; rigidity of wage scales; and "violent changes resulting from speculation in NY and elsewhere." [Note: curiously absent is the concept that debt might have built up to unsustainable levels, apart from war debts.]

France and Russia were reportedly negotiating a non-aggression treaty seen as a “long step toward peace in Europe,” but reports differed on whether agreement had been reached.

"Detroit and NY capitalists" are preparing plans for a Detroit rapid transit system to cost as much as $200M and include 44 miles of subways and elevated lines.

N.L. Amster reports still more progress in NY City transit unification talks.

Panama Canal capacity seen becoming inadequate within 30 years at current rate of traffic increase.

Germany special:

Bankers committee meeting in Basel reached agreement on extension of short-term credits to Germany. Total such credits estimated at 7.3B marks vs. earlier estimates of 5B; credits are to be prolonged for 6 months. Separate total of 750M in foreign mark deposits is to be repaid in installments, 25% immediately and 15% a month thereafter. Only reference to reparations in the report is "exceedingly discreet and vague," to wit: "We believe that it is necessary before the end of the period of prolongation of credits that the governments give the world certainty that international political relations shall be established on the base of mutual confidence. Nevertheless, we desire to recall that the German problem is part of a broader problem which affects more than one country in the world." [Note: Diplomacy is the art of constructing sentences that mean everything to everybody.]

Germany was disappointed at results of the Basel meeting, particularly the unfreezing of 750M in foreign mark deposits, which could put the Reichsbank's gold holdings below the amount required to back currency in circulation. The committee was criticized for “devoting its attentions to a large number of minor points while ignoring the fundamental question of safeguarding the German gold reserves.” The Reichsbank's position is gradually worsening as, despite a large trade surplus, foreign currency obtained from exports isn't being offered to the Reichsbank while it continues to lose small amounts through payment for imports. Currency circulation remains high due to continued withdrawals from savings banks. Postponement of stock exchange reopening to Sept. attributed to "new wave of pessimism" which also makes further cut in Reichsbank's 10% rate impossible for the near future. Bankof Rhine Province to reopen with almost $80M in aid from the Reichsbank and German govt.

French financial circles were satisfied with the Basel agreement, since it was interpreted as a victory for the "French standpoint against the reopening of the entire reparations question" and limited "discussions to the technical field only." The French were "especially pleased over the committee's insistence on the difficulty of conversion of short-term into long-term credits in the absence of a Franco-German political rapprochement." NY bankers, on the other hand, interpreted the report as suggesting a cut in reparations and international debts, and approved of this suggestion, as well as of the agreement to extend short-term credits. They generally agree a new settlement for reparations is needed before the Hoover one-year debt holiday ends. Washington opinion is now general that a permanent scaling down and conversion of reparations into normal bonds is needed for "permanent German stability"; the report was interpreted as recommending this revision. Public opinion in the US and France is against such a move, but it's believed "the Hoover moratorium went a long way" to change US public opinion on the subject, and the bankers' report may be another step in this direction.

Market commentary:

Market wrap: Leading shares opened firmly, with oils again the outstanding strong spot. Irregularity developed in the morning, with selling in spots including NY Central and GM. However, setbacks didn't spread across the general list, and trading then turned sluggish and featureless. Rail bonds again suffered liquidation, with both high- and second-grade bonds hitting new yearly lows. Utility bonds were steady while industrials fell slightly. Corn and cotton fell to new season lows.

Bulls encouraged by lower volume on market reactions; “it was figured that the failure to bring out active selling while the market was consolidating its position was a technical indication of considerable significance.”

Incipient interest of the public in the stock market, as indicated by growing inquiries to brokers, was apparently discouraged by the Toledo banking troubles.

US govt. bonds have moved in a narrow range for several months, but maintained a firm tone in face of a generally “drooping” bond market; all issues offered this year are trading at a premium.

Freight car loadings report was disappointing. Anticipated August improvement has failed to materialize. Reports from NY Central and Pennsylvania (report freight loadings a week ahead of other rails) indicate further decline next week.

A “market interest” who has just returned from the Midwest reports little evidence of business improvement; believes any recovery in the fall will be seasonal and minor. While business has shown encouraging stability for the past three months, “the great working and consuming class has experienced such a depletion of financial reserves that the length of the depression lessens rather than increases the chances for a rapid recovery.”

Economic news and individual company reports:

Weekly steel reviews moderately optimistic: “There is nothing, yet, to indicate a genuinely virile recovery, and the improvement is spread rather thinly, but for two weeks now the steel markets have borne the earmarks of the usual fall upturn.” Production is up slightly, while inquiries from construction, pipeline and rail indicate prospect of increased demand; automotive demand holding up better than expected. Steel production for week ended Monday was 33% vs. a little under 32% previous week, a little under 31% two weeks ago, 54 1/2% in 1930, and 90% in 1929.

US foreign trade showed signs of stabilizing in July. Imports, at about $175M, increased $1.5M from June; exports, at $183M, decreased $4.2M. Exports were lowest since Sept. 1914, and imports lowest since Sept. 1916. Some observers believed “increasing stability ... indicates that the low point has likely been reached.” Editorial: With US tariffs higher than ever, exports are down to prewar levels. “Trade is not one-sided. We cannot sell unless we are willing to buy ... the days of extreme nationalism are gone and ... all countries are bound together by the ties of commerce.”

Canada will reportedly establish drastic new import duties on foreign radio sets, hats, hams, and bacon.

Nat'l Elec. Light Assoc. tells Pres. Hoover US utilities will spend about $600M on new construction in 1931, vs. $915M in 1930; much of the decline is due to lower material prices.

Number of US trucks registered in 1930 were 3.481M, up 101,085 from 1929, up 366,940 from 1928, and compared to a total of 20,000 in 1911. However, trucks still carry a relatively small percentage of US freight traffic, estimated at less than 2% for 1928.

Both Japan and Burma, the two largest rice exporters, have almost withdrawn from the export market due to short crops. This has sharply increased rice prices in Asian markets and is seen increasing chances for large Chinese wheat purchases from the Farm Board.

International zinc cartel declared effective Aug. 1; represents 97% of world production outside US.

World production of silver in the first half was 87.0M ounces, down 20.1% from 1930.

Companies reporting decent earnings: Davenport Hosiery Mills, Perfect Circle (automotive piston rings), Tung-Sol Lamp Works.

Jokes:

Mother - When that bad boy threw rocks at you, why didn't you come and tell me instead of throwing them back at him? Willie - Why, what good would that do? You couldn't hit the broad side of a barn!

Husband - When I came home last night a man tried to hold me up. Wife - Usually when you come home in that condition it takes two to hold you up.

Wednesday, August 19, 1931: Dow 141.26 +0.28 (0.2%)

Assorted historical stuff:

Medical leaders throughout the US, including Dr. Charles Mayo and Interior Sec. Wilbur, believe the cost of medical care is too high and are cooperating in a movement to reduce the fees charged by doctors and hospitals for care. "Rich people can pay high fees, ... and poor people resort to charity, but the great middle class are unable to afford efficient medical attention when ill." It's hoped that "encouraging people to submit to physical and dental examination at frequent and regular intervals" will prevent illness.

Toledo banks that remained open had a quieter day on Tuesday; arrival of $11M from the Fed. Reserve of Cleveland appeared to restore some confidence, although 300 additional safe deposit boxes had been rented on Monday. Toledo Mayor Jackson met with city officials to discuss plans for financing relief for the poor; delay in payment of taxes has left the city unable to issue bonds to finance relief, and the Mayor said the city might ask for aid from the state and Federal govts. A few stores are advertising that they "are continuing to grant credit to responsible persons."

"White House flatly denied that Pres. Hoover would call a special session of Congress to deal with the unemployment situation."

British financial crisis meetings continued; the govt. "economy committee is working practically day and night in an effort to achieve quick results"; the committee, headed by PM MacDonald, reportedly considered "voluminous documents prepared by various govt. departments" showing possible spending cuts and revenue increases. "French bankers continue to be nervous" about British finances even though sterling is holding above the gold export point against francs; proposals for taxing British bond interest are causing French liquidation of British bonds, and it's feared they could prompt a flight of British capital. Some gold exported to Holland. London brokers believe acceptance (short-term bill) houses there should join in a mutual guarantee for all liabilities to restore faith in sterling.

Editorial: George Bernard Shaw "has been quoted as saying that he was a Marxian before Lenin was born. With his usual candor he says, in effect, that the Bolshevik program is a 'noble experiment'"; he has "told the world how lovely everything is in Russia - especially the food served only to high-up Communists and favored visitors." Now, however, "G.B.S." and the Soviet rulers have come to a slight but significant divergence in views, as the Soviets seem to be adopting some capitalist ideas, including giving industry managers the power of discipline, and calling for the "liquidating of technical illiteracy." The latter is of particular interest, since "it is safe to say that when technical illiteracy has been liquidated in Russia, the Red Russian Menace will disappear. The real communists in Russia are insignificant in number though at present dominant in power. Liquidation of illiteracy ... should bring about a counter revolution of the real Russian peoples. When that revolution occurs the 160M Russians will require all the food they can raise and all the products of industry ... to support themselves in a new comfort they have never known. Evolution is a slow process ... When Russian illiteracy has been liquidated ... possibly a new era will dawn."

New tri-motor airplane route from NY to Los Angeles via Cleveland and Chicago now operating; total travel time 31 hours.

Hungary has come up with a novel way to dispose of a two-year accumulation of surplus wine: Ecseny, Hungary offers hot wine baths for 17 cents a dip.

Market commentary:

Market wrap: Stocks showed early rallying tendencies, with oils particularly strong. The rally petered out at mid-day as active selling broke out in auto shares and the Pennsylvania RR on earnings and dividend concerns; selling spread to leading industrials in afternoon, though oils continued strong. Corporate bonds continued falling; rails were particularly weak, with both the high- and second-grade rail averages hitting new lows for 1931. Corn hit new season lows. Rubber hit new record low of 4.90 cents/pound. Cotton sagged near season lows.

Conservative observers cautious; advise waiting for market to prove ability to move ahead before buying; also advise against going short.

"While a difference of opinion exists as to the advisability of the methods being used in Texas and Oklahoma to curtail crude production, the opinion is virtually unanimous in the oil trade that material benefits are likely to result." Substantial price increases are expected by next month. Editorial: Real problem in the oil industry is the antitrust laws, which must be amended for modern conditions.

Recent decline in rail bonds to new 1931 low causing some concern that bond market action may be foreshadowing stocks.

Current bank troubles seen as less dangerous for stocks than those last year which were accompanied by "extensive forced selling of stocks"; current troubles are largely caused by "frozen real estate loans. This means that security liquidation arising out of these difficulties will be negligible."

Lord Beaverbrook says hundreds of millions of dollars in short-term loans to Germany are crux of the world financial crisis; Britain "has so extensively committed herself to German financing that she is in the same position of the creditor being ordered around by the debtor," and the US is also in this position.

Economic news and individual company reports:

Crude oil production has been reduced about 1M barrels/day thanks to martial law-enforced shutdowns in Oklahoma and East Texas; refiners in those two regions face oil shortage. Violaters in East Texas ordered jailed until martial law is lifted; no evidence of resistance reported. Texas Gov. Sterling says intends to maintain martial law at least 30 days. East Texas proclamation of martial law and complete oil well shutdown was much more drastic than the expected action of cutting production to the allowed quota there (270,000 barrels/day). Gasoline in the Oklahoma wholesale market is up 1 1/4 cents to 5 cents/gallon in the week ending Aug. 17, but at least two major crude oil buyers feel the situation is still too unstable to raise buying prices. E. Reeser, Amer. Petroleum Inst. pres., praises Texas Gov. Sterling's "courageous action ... in placing East Texas oil field under martial law"; scores of congratulatory telegrams received from oil operators across the country.

Signing of agreement on extension of German short-term credits has been postponed; latest snag concerns 700M in marks held by foreign banks in Germany (a separate amount from the 5B in short term credits which it's agreed will be left intact for 6 months). The foreign banks want to withdraw those deposits, while the Reichsbank wants them frozen. Berlin stock exhange opening postponed to Sept. under govt. persuasion. German govt. has appointed committee to advise it on banking and is reportedly considering “establishing a type of Federal Reserve System with membership obligatory.”

Shanghai taels (silver-based currency) fell sharply in spite of slight rise in silver; decline attributed to heavy floods and prospects of famine, necessitating more buying of provisions from abroad. Observers are following proposal for China to buy 100M bushels of wheat from the Farm Board using long term credit, which could relieve the unfavorable effects of large cash purchases on silver and Chinese currency.

Farm Board losses based on current values estimated at $198.5M; the Board bought 235M bushels of wheat and 1.3M bales of cotton for about $322M, and has paid carrying charges of $42M since; it sold 35M bushels of wheat for $20M and retains wheat and cotton now valued at $165.5M.

Rail freight loadings for week ended Aug. 8 were 734,780, down 22,513 from prev. week, down 18.7% from 1930 week, and down 32.7% from 1929.

BLS reports the US, as of Apr. 1931, had 79 unemployment-benefit or employment-guarantee plans potentially covering about 226,000 employees, though "for various reasons the number actually eligible to benefit was considerably less."

Public utility revenues in the first half were off less than 1% from 1930; home consumption of electricity rose 8 1/2% but industrial consumption fell 15%.

Planned Manhattan building has slumped; July total of $1.0M was lowest in many years; first 7 months $83.4M vs. $116.4M in 1930 and $465.2M in 1930.

Pan American Airways reportedly is now operating profitably; expenses to develop and survey S. American routes mostly past; fare cuts of 8%-42% early this year have stimulated passenger traffic; 13,000 passengers carried in Q1.

Companies reporting decent earnings: McWilliams Dredging.

Report from Paris:

Tragedy has again touched the circus - Annie Ringen, the US aquatic star whose 100-foot "plunge of death" into "a canvas tank thrilled audiences from Madison Square Garden to Tokio, broke her back in the last turn she will ever do of a 'death defying' feat." She joins Lillian Leitzel, "the best known aerialist on two continents," who fell to her death from a trapeze in the spring, and Harvey Powers, the human cannonball, who a year ago was shot from a cannon on a plane flying over the ocean near Atlantic City; "he provided a thrill for 5,000 spectators, but he did not live to hear the applause." Movies have severely affected the daredevil industry; "death-defiers" of yesteryear were "much better insurance risks" than those of today, while today's pay is smaller. Audiences have grown more sophisticated and demanding, fed on a steady movie diet of "perilous rescues from the wheels of onrushing trains, racing autos careening around corners on one wheel, forest fires and parachute jumps."

Jokes:

Father - Doesn't that young man know how to say good night? Daughter - I'll say he does!

"Why do you never go fishing with anyone but Wisely?" "He's a better liar than I am."

Tuesday, August 18, 1931: Dow 140.98 -4.82 (3.3%)

[Administrative note: As warned a while ago, I am going to have to cut back to fewer stories a day for a while due to a heavy interval of work. Incidentally, if any of you are in the San Jose area be sure to check out the 2010 01SJ Biennial in a month or so - I'm working on one of the events there.]

[Note: I bet you thought they just picked Dow and Jones because they sounded good Dept.] "Some six and 40 years ago [1885] Charles H. Dow and Edward D. Jones started the financial news service of Dow & Jones at 24 Broad Street. ... During business hours Dow and Jones took turns collecting news in the financial district ... after hours Jones went to the Windsor Hotel and picked up such news and gossip as there was. He then went to Dow's apartment where it was talked over and put into shape for next day." The news was written up on a "flimsy" for circulation early the next morning. Some time later the service moved to 41 Broad; the Wall Street Journal was born there in 1889, necessitating an elaborate plant installation including a fuel-burning engine in the cellar which made good use of the waste wood from the construction of the Edison building across the street. On Oct. 12, 1892 the entire staff spent the first "Columbus Day" holiday helping to hang the piping necessary to provide steam heat, which, "as Dow informed everybody ... saved $150 in expense." The Journal moved to 44 Broad Street in 1893, where it has remained until the temporary move out now for reconstruction. At the time of the move in 1893, the entire editorial and reporting staff consisted of Dow, Jones, a stenographer, a "lady typist ... hired especially by Dow in the hope that her presence would check the profanity which in those days was usual in newspaper offices," a telegraph operator, a special Washington correspondent (John Boyle, still on the job), a special Philadelphia correspondent, and three or four part-time correspondents in other cities.

[Note: Holy Toledo! Dept., or, Just as things were looking up ... #37 Dept.] Four Toledo banks closed over the weekend; total deposits over $80M. The Ohio Banking Dept. put a force of 60 men, augmented by six Fed. Reserve examiners, to the task of liquidating the banks, and pledged to do so as quickly as possible: "we realize the importance of speed to the depositors, and nothing will be left undone." Over 100 bank examiners from other states are being brought to Toledo to help. Shops operating on a cash basis found business severely restricted. "Business men organized to obtain release of a small percentage of deposits in the closed banks to facilitate business transactions in the city," and may guarantee a percentage of small deposits. Building and loan associations in the city with deposits of $50M also decided to stop payments on deposits; similar action was taken in Akron by associations with over $13M in deposits. Heads of 100 country banks in Ohio and Michigan conferred with Ohio officials on how to cope with the crisis; almost all had funds at the four closed banks; withdrawals at the country banks were heavy, and some put into effect the 60 day withdrawal notice allowed by Ohio law. The bank trouble was not wholly unexpected. The four closed banks had invoked the 60-day clause preventing withdrawal of savings deposits after the June 17 failure of the Security-Home Trust. Since then the banks had suffered a drain of commercial accounts, which forced them to use up much of their liquid funds; efforts at a merger failed, and when the 60-day clause expired and savings withdrawals resumed, the closures followed. Bankers believe that since the situation was known, other banks and leading industries in Toledo were able to protect themselves.

[Note: Reassuring statements Dept.] L. Ayres of the Cleveland Trust: “It is trite to speak of a financial situation as fundamentally sound. The phrase itself is in disrepute, yet this is literally true of Toledo.” No dishonesty or “dissipation of assets”; “the worst one can say is that an undue amount” of bank funds were in slow assets that can't be converted to cash on demand. "Business men of this city are confident that the situation can be untangled without difficulty for they are of the opinion that the banks are solvent and that the closing was merely a precautionary measure." Fed. Reserve is keeping close track of the situation and is ready to assist banks, within legal bounds; however, “it is pointed out that eligible paper is needed before Reserve credit can be extended to those banks which will feel the pressure of the failures reported on Monday.”

Texas Gov. Sterling proclaimed martial law in East Texas area to cooperate with Oklahoma Gov. Murray's effort to raise oil prices to $1/barrel. 800 National Guard troops, all cavalry units, swarmed into the oil field area to enforce well shutdowns; over 1,600 wells affected and at least 10,000 workers estimated thrown out of jobs. "Drastic upward revision" of oil prices expected. Gov. Sterling's decision attributed to expected delay in funds for Texas Railroad Commission to enforce new conservation law.

France, despite starting to feel effects of the depression in the second half of 1930, has held up relatively well; the business downtrend apparently stabilized at the end of the winter and since then business has “gone along on a comparatively even keel, at approximately 10% below the prosperity levels of a year ago.”

Cuban rebellion reported crushed; rebels making last stand in Santa Clara province.

Market wrap: Bull operators met unexpected obstacle in the "serious banking difficulties at Toledo." News over the weekend of trouble there brought heavy selling into leading stocks at the open. Selling lightened after the initial orders were absorbed, and a sluggish rally set in toward noon, but renewed declines broke out in the afternoon after news of further Ohio banking trouble, and trading was unsettled in the last hour.

Decline in corporate bonds last week has caused some skepticism on the rally in stocks over that time. However, "many observers feel that the principal reason for the recent heaviness in bonds has been the difficulties experienced by banks in many sections of the country, who have been forced to liquidate bonds"; therefore, the downtrend in bonds may not have its usual "barometric significance with relation to business prospects."

Brokers report the public has shown little inclination to take part in the recent stock market rally.

Editorial by T. Macauley, Sun Life of Canada pres., repeating call for large-scale ($500M) govt. bond purchases by Fed. Reserve to increase credit base and alleviate depression; warns of danger of currency hoarding.

Declines of major commodities from their wartime or postwar highs have been drastic; corn is down 76.5%, copper 79.7%, steel 81.5%, cotton 84.4%, wheat 86.2%, rubber 95.8%, and petroleum 96.0%.

Pullman (passenger rail cars) stats: annual consumption 98.8M sanitary drinking cups; 9.1M paper bags for hats; 3.8M boxes of safety matches. The US, with a population about 122M, has over 8,000 sleeper cars, vs. Europe, with population about 480M and only 2,000 sleepers.

Cotton paper catching on in radio due to "crackleproof" properties.

Bureau of Industrial Alcohol authorizes production of 2.728M gallons of medicinal whiskey in 1932, of which 70% will be bourbon and 30% rye.

Mexicans incensed at seeing themselves habitually portrayed as "fiercely mustached villains" have barred such films from Mexico City. "Hollywood producers have taken notice, and are changing their methods in order to satisfy their many customers south of the Rio Grande."

Movie: [Note: Clark Gable upstaged by horse Dept.] Sporting Blood - MGM film, at the Capitol. "The hero ... is not Clark Gable, who is featured in the film, but a sleek thoroughbred race-horse, although Mr. Gable does win the hand of Tommy Boy's pretty owner in the end. The point is that the human characters in this story are less important than the equine ... " [Note: At least he didn't have to play a gangster this time ... ]

Joke: "So you use three pairs of glasses?" "Yes - one for long sight, one for short sight, and the third to look for the other two."

Monday, August 17, 1931: Dow 145.80 +1.65 (1.1%)

Assorted historical stuff:

Soviet dictator J. Stalin announces abolition of domestic rationing plan, which had kept the 160M population on a wartime basis; step seen sharply cutting that nation's wheat exports in the coming season. The Soviet grain crop is believed smaller this year due to unfavorable weather, though actual figures on output haven't yet been issued by the Soviet govt. [Note: the Soviet famine that killed millions, largely in the Ukraine, was under way about this time or possibly a little later - information is still in dispute on this.] Farmers in Iowa have organized "burn-a-bushel-of-corn-a-day-clubs." They argue that corn is $3 a ton cheaper than coal and has heating qualities that make it an economical fuel. In addition, low prices for wheat and oats are increasing use of those grains as animal feed, releasing "millions of bushels of corn for fuel purposes."

Editorial: Recent Russian news demonstrates “the economic fact that Russia, as a country without capital, constitutes no serious international challenge.” The depression, contrary to popular belief, has hit Russia harder since it depends on commodity exports to get money for industrialization. Large wheat crop last season was deceptive, caused by extraordinary yields. Russian industrialization is also reportedly running into trouble due to “shirking and inefficiency ... the amount of damaged machinery caused by inexperienced hands is said to be appalling. ... And now, where does that vivid red bogey flaunt?”

China has taken a drastic step to divorce politics and business, prohibiting public officials from all business activities.

Norway bans installment sales on many items including clothing, shoes, glass, crockery, kitchen utensils, and various luxury articles.

England is suffering a countrywide shortage of small silver coins, particularly shilling and two-shilling pieces. Cigarette machines are responsible for the shortage of shillings, while the "totalizator," England's new pari-mutuel betting machine, accounts for the missing two-shilling coins.

Chevrolet expects to produce its 8 millionth car late this month.

New 38-passenger Hercules airplane built for London-Paris service has successful test flight. Plane includes drawing room for 18 persons and saloon for 20, cocktail bar, chart room, and wireless cabin.

"The Supreme Court of the District of Columbia has recently ruled that only members of the National Association of Real Estate Boards have the right to use the name 'realtor.'"

Brooklyn Borough pres. Hesterberg says borough govt. will require $7.061M for next year, an increase of $770,931 over this year.

Dow, Jones activities, including production of the Wall St. Journal, have moved temporarily from 44 Broad St. The historic building at 44 Broad, built in 1890, "is one of the oldest still standing downtown and with its eight stories was one of the first skyscrapers in NY."

Week in review:

Stocks recoiled abruptly from recent pessimism, starting with a sharp rally Tuesday; attention appeared to shift from unfavorable economic factors to the possibility of a seasonal fall recovery, and "large-scale operators initiated an aggressive campaign for higher prices." However, "prominent banking interests" were more conservative, noting foreign credit complications and the looming problem of domestic wage adjustment, though granting that "drastic deflation" had put the market in good position to respond to even moderate economic improvement.

Steel production increase of 1% (to 32%) was modest cheer to those looking for a seasonal upturn, though "many still cling to the opinion" that a larger-scale increase will get under way in the next few weeks; a rise to 45%-50% in coming months would satisfy the steel trade.

Bonds irregular. Domestic list generally lower, led by a sharp decline in rails with both high- and low-grade rail issues hitting new 1931 lows. However, industrial issues showed rallying tendencies and many speculative bonds rose sharply. Amusement co. bonds were a strong feature, and oils rose late in the week. Public utilities characteristically steady. US govts. dull and firm. European list strong, led by German govts. Hungarian bonds rallied sensationally after agreement on $25M loan. Cuban bonds fell sharply due to "revolutionary activities."

Cotton broke sharply to 32-year lows after higher than expected govt. crop forecast; spot cotton fell to 6.75 cents/pound. Some recovery took place later in the week after Farm Board recommendation to plow up a third of the crop, though the plan was almost universally opposed as "weird and unworkable." Grains moved in a narrow range; record-high govt. forecast for winter wheat was offset by forecast of smallest spring wheat crop since 1910 due to widespread drought damage.

Foreign news featured continued improvement in German situation; Reichsbank was able to cut discount rate to 10% from 15%, the feared currency inflation has not appeared, and commercial banks are operating without trouble although some withdrawals continue from savings banks. Sterling rose quietly but steadily, and London bill rates fell slightly to 4 3/16%. However, "confidence in the exchange is not yet fully restored," and "conservative quarters" don't look for a cut in the Bank of England's 4 1/2% rate until progress is made on govt. spending cuts and balancing of the budget.

Banking week featured sharp and unseasonal rise in Fed. Reserve credit outstanding (up $138M to $1.105B). Rise was attributed to shifting of Bank of France balances out of bills and govts. ($50M), increase in circulation due a number of small bank failures ($42M), and to member banks increasing reserves by selling bills and govts. to the Fed. Reserve. Remarkably, the rise in credit outstanding caused almost no increase in money market rates; this was seen as "evidence of ... the determination of the monetary authorities to keep money at the present cheap levels."

Market commentary:

Market wrap: Stocks trading more active, with prices again advancing, in "pleasant contrast to the dull, sagging dealings recently familiar on Saturday." Brisk buying in evidence in leaders including Steel, GE, Can, Allied Chemical and GM; rails scored additional gains, turning in their best session in 10 days; merchandising shares strong under leadership of Woolworth; pool operations apparent in issues including Radio and United Aircraft; trading favorites including Kodak and J.I. Case set a fast pace. Bond trading dull, prices irregular. Foreign list rallied further; German govts. strong; Australian govts. gained after success of conversion plan. US govts. up slightly. Domestic list mixed; rails irregularly lower while convertibles and industrial issues rose. Wheat rallied to close somewhat higher on Soviet news; other grains mixed. Cotton moderately higher.

There was no business news to account for the recent rally. Many in the Street believed the advance followed the tradition of a rally in August anticipating improved fall business. In addition, drastic deflation in stocks over the past two years "unquestionably has largely discounted existing conditions" and also "placed stocks generally in strong hands. ... Recognizing that people who had clung to their stocks in face of the prevailing apprehension were obviously stout-hearted, large-scale operators have come to the conclusion that internal conditions in the market favored the inauguration of a campaign for higher prices at this time." Bull operators including the "Danforth, Meehan and Hiscoe groups have provided aggressive leadership on the upside over the last several sessions." Judging by the pickup in volume as prices rose, it was clear "substantial buying power had been awaiting the first indications of a better market."

Some observers encouraged by recent rise in security loans to non-brokers; these are believed to represent a better quality of investors than brokers' clients.

At the start of last week, "many reports of unsatisfactory conditions were in circulation, but after the market had rallied all the rumors were of bullish developments to come." In other words, stock market action itself appears to be prompting rumors. [Note: No way!]

Wall Street continues to discuss railroad dividend doubts; NY Central is subject of particular question after reporting drastically lower first-half earnings. The Pennsylvania RR is also unlikely to earn its dividend this year.

Editorial by T. Woodlock: Arguments of the opponents to the 15% rail rate increase are reminiscent of the young lawyer who defended a man accused of stealing his neighbor's pig. He informed the court that he would show, first, that his client had purchased the pig, second, that the pig was a gift, third, that the pig was an uninvited visitor, and, finally, that the pig in question did not exist. Similarly, opponents of the rate increase tell the ICC that there is no emergency, that the emergency is due to rail "propaganda" frightening investors, that the emergency exists but doesn't justify raising rates, and that increased rates will actually hurt revenues. Stepping back from the immediate rate question, rails are fundamentally like "a man who is slowly dying of tuberculosis, attacked by pneumonia." The current rail emergency is, of course, the pneumonia which must be brought under control, but the real trouble is the tuberculosis of excessive competition; to restore health of the rail industry it's essential to "bring inter-railroad competition under reasonable control." This will ultimately require legislation; in the meantime, cooperation from the ICC and action by the rails would be helpful. "This country can no longer afford ... inter-railroad competition as now carried on, and investors can not afford to furnish it."

J. Raskob (GM exec., Democratic Nat'l Committee chair.) says bottom of business depression has been reached; predicts improvement by Christmas and more pronounced upturn in Feb. when auto industry resumes heavy activity.

Removal of expected Soviet wheat exports of as much as 100M bushels is seen positively affecting wheat prices at a time when world supply is less than consumption requirements for the first time in five seasons; total world production is estimated at 250M - 350M bushels less than last season.

Comment of M. Wolfe, Farmers Marketing Assoc. GM: "Regarding the Farm Board proposal to plow up one-third of the cotton crop, I would suggest that it would be better to plow up the Farm Board."

Economic news and individual company reports:

Editorial: June 30 report on national banks reflects lower use of bank credit in business and reduction in number of banks (6,805, down 447) and total resources ($27.643B, down $1.474B). “But the system is sound, and its technical position is stronger and more liquid.” Loans and discounts of $13.177B are down $1.710B and are now 59.36% of deposits vs. 63.98% a year earlier; banks are holding $528M more in cash and govt. securities and have borrowed $76M less.

At least 8 car makers will be competing in the low-priced ($500) car field early next year, doubling the current list of Ford, Chevrolet, Plymouth, and Willys. One established producer is said to be planning a $395 car made possible by buying parts, bodies and accessories in volume from leading parts companies. Ford's response to the new competition is a subject of speculation. it has already suffered a loss of competitive position this year attributed to overproduction last winter in an attempt to maintain employment. However, Ford's balance sheet is impregnable, with $350M in cash, and few believe he has exhausted his resourcefulness. New automotive innovations include the Gabriel automatically adjusted shock absorber and the Hudson “Startix” which automatically starts the motor when the ignition key is turned - no more starter pedals. About the only development in driving comfort that has yet to appear is the air-conditioned car; some expect this in 1933.

US Chamber of Commerce is reportedly considering “guarantee of uninterrupted work during greater part of the year for a specified number of employees in all major industries ... Proposal said to be receiving close attention of Pres. Hoover.” The state of Oklahoma and the city of Youngstown, Ohio plan programs to relieve unemployment this winter, supported by special taxes. Oklahoma Gov. Murray will also ask Federal aid. Youngstown's city and charitable funds for relief are almost exhausted.

US gold holdings continue to rise and are now at a record high of $4.977M; total expected to exceed $5B by Oct.

Sterling steadiness is raising belief of a “peg of some sort,” though London financial circles don't believe the Bank of England is using its $250M credit. The Bank's gold holdings are rising, and it's believed this increase may continue for some time. London bill rates have declined, but a return of full confidence isn't expected until “the govt. has set its house in order by drastic budgetary economies.” Bank of England Gov. Montagu Norman embarked for Quebec on the liner Duchess of York; told reporters he was travelling for health reasons.

Hungarian decree ending bank suspension takes effect Monday; new currency created, the gold pengoe (3,840 pengoes = 1 kilogram gold).

After failure of the Berkowitz Bank, the Rumanian Nat'l Bank and govt. have been forced to aid other banks in the country.

Colombian Pres. Herrera says movement for debt moratorium “never attained importance”; govt. “feels certain” of ability to meet obligations and “reaffirms its unchangeable policy in this respect.”

French industries employing 100 men or more and subject to labor inspection report 2.624M employees on July 1, down 7.2% from a year earlier; this percentage decline has steadily increased from 4.2% in Jan. However, the official count of unemployed has declined to about 36,000 from a peak of 51,804 in April. The explanation is apparently that much foreign labor has left, and many workers have gone into seasonal farm labor.

Yugoslavia is the lone holdout against the Hoover moratorium plan; it is to get $19M in reparations but pay only $3M on war debts.

N.B.C. is negotiating for transatlantic radio exchanges, particularly of music programs. Only four European countries are attempting to work out commercial arrangements for radio - France, Belgium, Spain and Holland; in most European countries the airwaves are govt.-controlled if not operated, with revenues provided by license fees charged the user. France has private radio stations in addition to govt.-run ones, but advertising revenue is tiny compared to the US, where radio advertisers pay $160,000 - $500,000 for a year's programming of one hour a week.

Labor Dept. reports for July shows 4.492M people employed by 46,058 establishments in 15 major industrial groups, down 2% from June; payrolls fell 4.8%.

Road building for the year to July 18 was 100.1M sq. yards vs. 91.5M a year ago; decline of 7.5M in street and alley construction was offset by gain of about 15M in highways, stimulated by extra $80M Federal fund to relieve unemployment that was advanced from future Federal aid.

Total value of building permits issued in 38 West Coast cities in July was $11.234M in July, down 1.9% from June and down 26.9% from a year ago.

Oklahoma refineries have purchased several million barrels of East Texas oil at prices ranging from 14.5 cents/barrel and up.

Youngstown district steel operations will rise to 43% this week from 42% starting last week, recovering from a dip of several points in the last few days.

Fisher's wholesale commodity index unchanged at 69.5 vs. the postwar low of 69.3 reached two weeks ago.

Companies reporting decent earnings: Detroit Edison, Jewel Tea, Armstrong Cork, Mortgage Guarantee Co.

Movie:

The Miracle Woman - Columbia film, directed by Frank Capra, at the Mayfair. The miracle woman of the title is "an evangelist who works with a gang of crooks who subsist on the money contributed to a tabernacle they run." She is eventually reformed by the love of a blind ex-aviator [note: as usual]. Barbara Stanwyck works hard to "lift the picture out of the stereotyped category in which it rightly falls," but has to contend with "highly improbable" plot.

Joke:

"What's all the shouting about?" "Mr. Blank is talking to London." "Well, why on earth doesn't he use the telephone?"

The Irregular Blather August 16, 1931

No Journal was published Sunday, August 16, 1931. See you tomorrow back in 1931!

Saturday, August 15, 1931: Dow 144.15 +3.93 (2.8%)

Assorted historical stuff:

Editorial on political brouhaha now flaring up as Pres. Hoover is charged with deliberately blocking the St Lawrence hydropower project in order to take it out of the hands of Gov. Roosevelt, the anticipated Democratic Presidential candidate next year. In an important [and rather surprising by modern standards] qualification, however, the editorial makes it clear that "the Governor himself is wholly guiltless of any part in this midsummer madness of partisan politics. ... But he has supporters who are probably less well-informed, less meticulous as to the truth, and more willing to use any and all means to advance his political fortunes."

Palmer Pierce, assistant to the pres. of Standard Oil of NJ, meets with Pres. Hoover to discuss business conditions and "also a proposed movement on the part of industry to help meet the unemployment situation this winter." The President's Emergency Committee for Unemployment has initiated a program for canning of surplus food and vegetables to provide food for the unemployed during the coming winter.

Extensive review of circular distributed by Livingston & Co. titled "Legislation Cannot Alter Natural Law" (refers to economic law). Decries calls by politicians and labor leaders to depart from sound examples of the past and force govt. to assume new responsibilities, in spite of cautionary examples of failure of such ideas. Failures cited include the British dole, the ever-popular Farm Board, and the "new era" theory of high wages based on the idea that "the more people spent, the richer the country became.": Some fallacies can only be detected by experience, but there are some "of which scarcely experience itself can destroy the influence; ... and which, though every trial ends in disappointment, ... persuade us to try again what we have already tried ..."

Sen. Borah says French demand for security, if carried beyond that already assured through treaties and heavy military power, "can mean nothing less than the destruction of Germany, Austria and Hungary. And the world will not consent to see that brought about."

Editorial noting German celebration of 12th anniversary of founding of their republic. The past 12 years have been difficult; "they recall the struggles ... that confronted the early days of our own republic ... In addition to her internal difficulties Germany has had to live down foreign prejudice as to her war-like aims. Germany has held its own "against its Hitlers and Steel Helmets," but is still struggling with its credit crisis caused by reparations. However, even the recent emergency has created hope of a solution. Germany has demonstrated "desire to maintain her constitutional form of govt. ... It is a very different Germany today to that ... prior to 1919," and this makes revision of reparations more likely. "Fancy the French premier paying a courtesy visit to Berlin twelve years ago! The world is in a receptive mood" on debt reduction, "and Germany should know now on which side her bread is buttered." Visit of French Premier Laval and FM Briand to Berlin postponed due to ill health of Briand.

Largest world consumer of copper in 1930 was the US, with 1.618B pounds, or 47% of world consumption; second was Germany with 410M, or 12%.

Mexican Congress passes new Labor Law opposed by business.

"Sugar interests not alarmed over Cuban revolution." Holders of Cuban bonds should remember they "are in a stronger position than most Latin American issues, because they have protection under the Platt Amendment which gives the US unusual power and responsibility in the finances of the Cuban Republic."

Traveler's Insurance reports US auto accident deaths in the first 7 months of 1931 were about 17,800, up 5.7% from 1930.

In spite of repeated warnings by scientists, flour dust "explosions of great violence continue to cause death and destruction throughout the US." A chemist recently estimated that if the flour in an ordinary 100-pound sack were diffused through a 10x20x20 foot room and ignited, the resulting pressure could raise a weight of 2,500 pounds a distance of 100 feet. The US Bureau of Chemistry is working on ways to avoid dust explosions.

Construction of Hoover Dam will resume after strike; 1,200 men who walked off must re-apply for work.

AT&T will extend phone service to the Canary Islands Aug. 15; calls will pass through London and Madrid; a call from NY will be $40.50 for the first 3 minutes and $13.50 for each additional minute.

Julius Fleischmann, yeast manufacturer, leaves estate of $20.6M.

George Bernard Shaw is paid the highest royalty of any playwright - 15% of gross receipts, giving him about $80,000 annually on plays produced in the US. James Barrie gets 12%, and other "important playwrights" 10%.

Market commentary:

Market wrap: Stocks experienced the most vigorous session on the upside since end of the "moratorium rally" in late June. Spirited buying began early in many sections of the list; leading shares including Steel, Westinghouse, Allied Chemical strong; short covering heavy at times; bullish operations spread to an increasing number of individual issues including Radio and Ward; J.I. Case rose sensationally on a short squeeze attributed to Danforth interests. Notably, a number of leading rails that have recently been favorite short targets rose sharply, and the whole rail group showed relief from pressure. Bond trading more active, with rallying in many sections. Foreign list generally strong; Colombian bonds rallied sharply as did some other S. Americans, but Cubans declined on reports of revolution. US govts. steady. Sharp rallies in many industrial bonds. Rails hit new yearly lows but then rallied. Grains and cotton moderately lower.

Some observers changed their cautious stance due to ability of many stocks to top their highs of last Tuesday; they now recommend picking up stocks during any technical reaction, but still advise stop orders near the buying prices to protect accounts. If the market encounters resistance to further upturns, they recommend selling long positions and moving to the sidelines again.

Short position has reportedly been appreciably reduced; bears were discouraged by good support shown for industrials and utilities early in the week when the rails were under pressure; bullish demonstrations later in the week have prompted short covering that was active and, at times, urgent.

Almost all high-quality bank stocks "appear attractive at present levels, the important institutions, including City and Chase, having written off the losses incurred in the stock market and set up generous reserves for contingencies. Earnings records for the first half of this year were surprisingly good despite heavy write-offs.

A number of brokers have turned bullish, including the memorably named Hornblower & Weeks: "We are more than halfway through the normal seasonal period of summer dullness, and with the normal fall period of increased activity only a few weeks ahead, we believe a broader bullish position is warranted. ... Both technical and seasonal considerations favor a more extended rally, and the market during recent sessions would seem to forecast such a development."

Promotion of new fixed investment trusts [similar to ETF's] joined managed investment trusts [similar to mutual funds] in the doldrums; only 3 fixed trusts and no managed trusts were started in the second quarter.

Howard Heinz, H.J. Heinz pres., says expects biggest year's business in company history; introducing new products; "we are very optimistic about the future."

E. Beatty, Canadian Pacific Rwy. pres., believes depression has passed bottom, but sees no tangible evidence yet of return to normal conditions. Praises extensive and carefully worked out Canadian plans to relieve unemployment in upcoming winter.

Economic news and individual company reports:

British govt. decision to balance budget drew some favorable early reaction in the London stock market, though financial circles were skeptical due to lack of specifics on cutting spending; the only specific govt. proposals so far were war loan conversion (lowering interest paid on those bonds) and an extra tax on bond interest. Bank of England Gov. Montagu Norman "reported to be on verge of breakdown and is ordered to take complete rest." Committee set up by British Chancellor Snowden in Nov. 1929 to investigate banking and credit delivered its report. Committee was diverse, including bankers, industrialists, economists, a "trade unionist," and "an ex-Communist." The report, running 300 pages, is mainly the work of economists Keynes and Gregory. Emphasis is on inflationary policies including reducing gold backing required for currency. However, there's no recommendation for radical changes such as the nationalization of banks demanded by the Labor party.

Discussions continue in Basel on prolongation of short-term credits to Germany; agreement expected soon.

Hungarian govt. will "release" bank accounts starting Aug. 17; govt. will guarantee gold value of deposits not withdrawn.

Oklahoma Gov. Murray proposes plan to install meters on all oil wells to keep closer track of production; will discuss several other "drastic changes which he will recommend for control of the Oklahoma oil industry." Texas will continue old controls on oil output pending Aug. 25 hearing on new law. While gasoline in the Chicago wholesale market has firmed to 4 1/8 - 4 1/4 cents/gallon, retail consumers are benefitting from a price war among the majors that has produced record low retail gasoline prices in Chicago and St. Louis.

Bradstreet's weekly review reports clearance sales once more the main feature of retail trade; general volume at least as great as last year, but achieved mainly though bargain prices; retailers cautious in buying and stocking up less than usual for fall, but some improvement seen in wholesale. "Customers ... are fast acquiring the habit of expecting low prices on all goods."

[Note: Strangely Unfamiliar.] John G. Jenkins of Mineola, L.I., after 24 years, finally repays over $1M owed to depositors of his father's banks (failed in 1907).

Sharp and unseasonal rise in Fed. Reserve credit outstanding in last weekly bank reports attributed to shortage of funds at local banks due to failure of several small banks in the city and withdrawal of Bank of France funds from the bill market. However, Fed. Reserve was able to handle the sharp rise in credit without causing higher money rates, indicating "both the extreme liquidity of member banks and the determination of the monetary authorities to allow no factors ... to destroy the cheapness of credit." Decline in "all other" loans attributed to bank sales of bills rather than fall in commercial loans.

A check with officials of leading car makers in the Detroit area fails to confirm suggestion of higher-than-expected retail demand; business is said to be following the expected seasonal trend accurately. There are no cases where previous production schedules have been increased; the industry is focused on “a thorough 'clean-up' of present cars in anticipation of 1932.”

Last week saw the first significant railroad bond offering since March, a $10M issue of one-year 5% notes by the Minneapolis, St. Paul RR marketed at 100.

Shippers appearing before the ICC repeatedly testify that granting the 15% freight rate increase would drive traffic away from railroads.

Lower grain transport rates that took effect Aug. 1 have largely failed to help farmers due to declining grain prices. Current wheat prices in many cases leave Southwestern farmers with less than 25 cents paid per bushel at country locations. Farmers, "having shipped as much as necessary of their bumper crop at the disastrous prices during July in order to pay their immediate debts and mortgages, ... are storing and withholding their wheat from the market."

Combined sales of 40 leading chain store and mail order houses in July were $306.6M, down 2.6% from 1930. Sales by unit and tonnage were likely well ahead of 1930. Groups with best sales performance were novelty and drug chains, which both showed increases. Largest chain store in sales is A.&P., with $627M in the first 7 months of 1931; nearest competitor is Sears Roebuck with $185M.

Company reports since July 1: 151 companies reported higher earnings vs. 1930 and 444 lower; 464 dividends unchanged, 12 increased, 92 cut.

Companies reporting decent earnings: Drug Inc., Western Auto Supply.

Jokes:

Pilot, After Daring Nosedive - I bet half the people down there thought we were going to crash. Copilot - Half the people up here did too.

"How do you make a balloon rise?" "You remove the ballast." "Correct. And when you want to descend?" "You put it back."

The best after-dinner speech in history - "Waiter, how much for everyone?"

Movie (Birth of a Tradition Dept.):

Men Are Like That - Columbia film, at the Strand. Adaptation of an outmoded melodramatic play (Arizona) involving love quadrangle between West Point college hero, his NY mistress, her sister, and his future commanding officer in Arizona. Before the film "had got far advanced, it was apparent to the majority ... that its sentimental plot was not to be taken seriously. They therefore began to greet the most serious points in the story with unrestrained laughter. Some persons even ventured to volunteer audible answers to various questions asked by the actors on screen. In short, they decided to turn what had begun for them as a search for genuine entertainment into a sort of Roman holiday."