Friday, August 28, 1931: Dow 138.66 -1.27 (0.9%)

Assorted historical stuff:

Washington report: Observers are growing less confident that the Administration will oppose any tax increases in the coming session of Congress. Treasury faces a deficit of $1B or more for this fiscal year. Officials haven't made a definite decision yet, and would prefer to avoid a tax hike if possible, but are likely prepared to act if necessary. The British budget crisis will make many in Washington think twice before advocating that the US continue to run deficits; while a loss of confidence in the US due to the deficit seems farfetched, many would have thought the same of Britain. Improbably, the trend is now “quite unmistakably” for Gov. Roosevelt to win the Democratic Presidential nomination almost unopposed. Although Democrats believe they have a better-than-even chance of winning the 1932 Presidential election, apparently none seems willing to contest the nomination. Plans are now being finalized for “the greatest drive for funds since the World War,” aimed at unemployment relief. Effort will be directed by W. Gifford, coordinating Federal, state and local govts. and private charities. While “belief and information” in Washington is that voluntary efforts will be adequate for relief, “if that proves untrue and it is a choice of widespread suffering or federal appropriations, Washington will not long hesitate as to its course.”

Indications point to Gov. Roosevelt proposing taxes on the wealthy for relief of the unemployed this winter; taxes would be on income of $10,000 or more.

[Note: It pays to increase your word power dept.] Editorial decrying the obdurate stand of one Senator Johnson against the Hoover moratorium plan. Johnson delivered this memorably alliterative blast against the "international bankers" allegedly behind the plan: "Their political puppets poll parrot their Pecksniffian phrases of saving Germany and helping America." [Note 1: Pecksniffian - hypocritically and unctuously affecting benevolence or high moral principles, after the Dickens character Seth Pecksniff. Note 2: It's interesting that "international bankers" are now simultaneously being blasted by British politicians for being too hard on debtors and by US politicians for being too easy.] Almost all countries in the world are in distress; "all the economic and political troubles lead back to the World War and to the manner in which it was 'settled.'" The moratorium plan was an "eleventh hour" measure needed to prevent an imminent emergency.

Editorial by T. Woodlock responding to reader who proposes the Fed. Reserve increase prices by buying the colossal sum of $1B in govt. securities from banks, potentially increasing the credit banks can extend by $10B. While Woodlock agrees price rise is desirable, he's skeptical that in the current climate banks would find any use for the extra $10B. Problem is psychology and lack of confidence. Sooner or later it will become evident bottom has been hit, and price increase will follow; “it always has in the past. Meantime there is little that can be done beyond watching the pendulum; apparently there is little use in kicking it.”

Long task of reconstructing Northern regions of France devastated in the war is almost complete. Of 641,543 demolished buildings, less than 4,000 are still to be replaced; of 7.5M acres "injured by war, only 4,000 are still to be reclaimed." Total reconstruction payments $2.145B.

A reader proposes the Farm Board donate its wheat to a flood-ravaged China: "Attempts by nations to sell to pauperized and bankrupt nations for future payment only stir up international entanglements and difficulties later, about which we are now troubled enough in Europe."

Chevrolet turned out its 8 millionth car Tuesday. The company was organized in 1911, and spent 12 years building its first million cars; the second and third million took two years each; the fourth through seventh took less than a year each, while the last million took a year and 3 months.

Baird Television Co. says has perfected device making possible the sale of small television sets for about $100.

Doctors attending Thomas Edison recently decided that "excess heat and humidity were preventing the proper action of his skin in throwing off poisons." S. Scott of the Frigidaire co. realized the urgency of the situation and appealed to NY banker Otto Kahn, in whose home two electric room coolers were about to be installed; Mr. Kahn sacrificed his own summertime comfort for his friend Edison. The two coolers successfully reduced the temperature in Edison's room from 80 to 72 degrees within half an hour; on the second morning Edison was able to walk to one of the coolers and examine it closely.

Yuke Hamaguchi, former Premier of Japan known as "Peace Warrior", dead at 61. [Note: First "commoner" to become Premier of Japan, in 1929; in face of bitter opposition, obtained Japanese adherence to London Naval limitation treaty; shot by fanatic after treaty was ratified and died of complications 10 months later.]

Market commentary:

Market wrap: Leading stocks sold off in early dealings, but "declining tendencies were quickly checked" and trading settled into yet another inconclusive contest between bear and bull crowd for the rest of the session; at times one or the other gained the advantage, only to have it peter out; late trading saw prices drifting aimlessly. Bond prices irregular, but showed improvement in many departments; feature was rally in both second-grade and high-grade railroad bonds, which "showed signs of receiving banking support." Oil issues were also a strong feature. US govts. slightly lower. S. American bonds rallied, led by sharp upturn in Argentine bonds. British and German issues were firm. Grains fell in spite of reports of poor harvesting conditions in Russia and France, as the market instead noted abnormally large Russian wheat exports since Aug. 1.

Some grain observers believe heavy Russian wheat exports are temporary; repeal by Stalin of strict rationing plan seen causing sharp increase in domestic consumption in early 1932, curtailing exports

Sentiment has been improving on movie company shares; seasonal uptrend in attendance expected; companies believed to have gained "exceptional grasp" on expenses; slate of films in upcoming months seen having "much greater" appeal than those so far this year. Paramount is a particular favorite in this sector. Kreuger & Toll was under heavy pressure, attributed to "arbitraging operations between London and NY" and to selling by “London interests ... because of the uncertain situation in Europe.” Bendix Aviation was strong on reports it will introduce a $19.50 “free wheeling device that fits any car.”

Two companies that used to be thought depression-proof now seem to be encountering trouble. American Can is now a popular bear target, and many rumors have been circulated about it. Thatcher Mfg., the largest US maker of milk bottles, barely covered its preferred dividend in the first half.

Recent bear efforts have been unsuccessful at finding “air pockets,” or stocks in which pressure brought out forced liquidation. While there's been much talk of the market facing a test of the June lows, observers increasingly believe this would require some heavy new liquidation. So far there have been few recent signs of real selling, as “stocks have declined to such levels that those still holding them are well protected” (using little margin).

Most investment trusts [similar to mutual funds and ETF's] are selling much closer to their 1931 low than high. An interesting exception is Atlas Utilities, which is now up to $75M in assets from a starting point of $15M. Some financial circles believe Atlas is pursuing a strategy of buying control of other trusts at market value, which is now usually well below liquidating value of their holdings, and then proceeding to liquidate them.

J.H. Oliphant & Co. note severe decline in Dow 40-bond average of 3.30 points since July 20; 63% of the decline was due to second-grade rails, and many rails not included in the average have been even weaker. Unsure how much more liquidation remains ahead in bonds, but based on past pattern expects “sharp recoveries whenever pressure lifts.” Many lesser-known bonds now have “extraordinarily thin” markets, causing large sacrifices by those forced to sell.

A reader suggests that countries low on gold follow the lead of Mexico and return to a silver basis; "then powerful America, and acquisitive France will be left possessed of a large tonnage of metal, too valuable to be used for plumber's supplies and not needed by the jewelry trade, with a value perhaps of 10 bushels of wheat to the ounce. Then we can all of us get jobs and pay our debts."

Salmon O. Levinson, well-known Chicago attorney and "international authority," proposes 8-point plan to relieve depression, including: "moderate" wage cuts for 6 months; assurance by employers of continuous employment for one year; assurance by corps. with adequate surplus of continued dividends for 6 months; "reasonable" rail freight rate increase; Eastern rail consolidation; conference for readjustment of int'l debts; agreement on "drastic" disarmament; stabilization of silver. [Note: Is that all?]

Economic news and individual company reports:

British officials worked through the day on details of budget proposals; final draft to be presented to Cabinet Monday; “well informed circles” dismissed “alarmist reports in the evening papers” that the new govt. would lack enough support to push austerity measures through. British Labor Party declared open warfare on Premier MacDonald's new coalition govt., saying it was planning to attack the standard of living to meet a situation “caused by ... private banking interests, in the control of which the public has no part.” Bankers in NY and Paris have reportedly been discussing furnishing more credit to the British govt.; a group of NY bankers also met with Treasury Sec. Mellon and Fed. Reserve Gov. Meyer at the White House, though officials refused to confirm a British credit was discussed. Definite announcement expected today. “Bankers have urged that a credit be of such considerable proportions as to remove any doubt as to the soundness of British finances.” It's believed “readiness of American bankers to make the loan ... rests to some extent on informal assurances that the new ... govt. will enter a regime of retrenchment.” Washington reportedly feels “support for Britain and her exchange is one of the requisites to world stabilization, and that this support can be given without risk now that the British have taken vigorous steps to correct their political and budgetary troubles.” Bank of England statement shows gold holdings practically unchanged at 134.6M pounds vs. 134.9M prev. week; reserves up 3.6M to 59.3M, best level since recent heavy gold drain, due to decline in currency circulation; reserve ratio only up 0.3% due to increase in deposit liabilities. Sterling has been strengthening against francs and guilders, in an indication the new British govt. is improving confidence in Europe.

Mexican embassy issues yet another somewhat confusing clarification of the new monetary law. “The gold standard is continued under the law on the basis of gold as a commodity and not as a circulating medium, with a resulting withdrawal of all gold pesos from circulation and the establishment of the silver peso as the unit of the monetary system ...”

Group of Chicago business men form Federation of American Business Men to "influence Congressional elections" in order to dissolve the Farm Board and 79 other govt. agencies that, it's argued, compete with private business. Will also fight Communism.

Agriculture Sec. Hyde says loans for buying feed will be made available to farmers in drought-stricken areas of Montana, Wyoming, N. Dakota, Utah, Idaho, Washington, and Nebraska; loans will mature in Oct. 1932. The Dept. will support legislation authorizing loans for spring planting, but it will be impossible to help in financing fall-planted crops. No funds available for grasshopper poison. Crop failures reported in Southwest Germany due to persistent rains. Int'l. Inst. of Agriculture estimates world wheat production outside Russia at 2.304B bushels, down 7% from 1930. Prof. W. Grimes of the Kansas Agric. College, testifying before the ICC against the rail rate increase, estimates grain farmers' buying power is now 44% of the 1909-1914 average; points out increase would make cost of transporting wheat from Kansas to W. Va. 38.4 cents/bushel, vs. wheat price in Kansas of 29.2 cents.

Presidents of Standard Oil of NJ and Standard of Calif. say merger would be "logical and advantageous"; working toward a plan. Editorial: Attitude of the Justice Dept. on possible oil merger will be of "much interest"; although the combination would only have 10% of US crude oil production and 18% of gasoline output, it would create an "assemblage of assets ... not far short of $2.5B, which even in these days is a shining mark to serve as a target for politicians. Crude oil and gasoline prices continued to increase in various locations across the US. With shutdowns of Oklahoma and East Texas production effective, US oil production is now about 1.8M barrels/day, 700,000 below current demand. Texas Railroad Commission hearings on establishing allowed production for East Texas continued; some difference of opinion apparent.

Money in circulation Aug. 26 was up $42M to $4.994B, total Reserve Bank credit outstanding up $58M to $1.199B. Member banks in NY City report brokers' loans up $6M to $1.349B; loans on securities to non-brokers rebounded from the low made last week, and were up $23M to $1.695B.

With Colorado coal prices already lowest in 20 years, non-union operators were reported ready to meet challenge from the United Mine Workers and the Rocky Mountain Fuel Co.; price war seen likely.

Companies reporting decent earnings: Public Service Electric & Gas.

Report from London:

Interesting history of British attempts at "opera-for-the-masses." Several apostles of popular-priced opera have "raised quixotic lance against Covent Garden - London's operatic fortress." Sir Joseph Beecham lost over $500,000 in the short-lived Beecham Opera Enterprises. He was followed by Oscar Hammerstein, who declared near-insolvency after losing $850,000 in 17 weeks, not including the $1M cost of building the opera house. Undaunted, Sir Thomas Beecham (Joseph's son) founded the Imperial League of Opera but declared bankruptcy a little over a month ago.

Joke:

Old Lady on First Airplane Flight - You'll bring me back, won't you? Pilot - Ma'am, I've never left anybody up there yet.

Thursday, August 27, 1931: Dow 139.93 +3.28 (2.4%)

Assorted historical stuff:

New British govt. headed by Ramsay MacDonald sworn in; to meet immediately. MacDonald broadcast an appeal for popular support; asked help of "rich and poor alike"; announced dole reduction; strongly refuted charges Labor govt. fall was due to "conspiracy of bankers" or that "foreign countries are trying to harm us."

Washington officials, "while not desiring to be quoted," reportedly feel British coalition cabinet "is one of the most constructive and helpful events since the war" and "an inspiring spectacle." Ramsay MacDonald's "courageous" speech "entitles him to be ranged alongside of the greatest of his predecessors in British statesmanship." Foreign exchange disturbances believed "about over." Sterling up strongly over past two days. Restored confidence produced by new govt. expected to make high Bank of England rate effective in attracting capital from European money markets now glutted with funds. It's believed Britain could raise large amounts of credit in Europe and the US if necessary.

Observers in Paris sympathetic to British political efforts but noted disturbing weakness in sterling futures; some surprise also expressed that sterling is not being supported against guilders or Swiss francs. Bank of England credit from Bank of France believed almost exhausted, but "no doubt" that Bank of France would join the US Fed. Reserve in any further needed credit.

New long-term loan for Bank of England is reportedly "under tentative discussion in NY and Paris."

Pres. Hoover's new unemployment relief organization has designated Oct. 19 - Nov. 25 as period for concerted nationwide campaign to raise relief funds for agencies throughout the country; will organize local drives into "great national appeal for millions of dollars to aid the jobless." Target of $20M set for NY City relief funds; aid will be given only to residents who prove they have voted here twice in order to avoid "rush of unemployed to this city to take advantage of the charity planned." Gov. Roosevelt reportedly completes $25M emergency unemployment relief program; will “insure definite relief methods” but avoid introduction of “cash dole.” Cook County may have trouble selling $2M poor relief bonds at sufficiently low rate (under 5%), after defaulting on some bond payments last June 1.

Tammany leaders in NY [Democratic] are "having grave difficulty holding their forces in line against" immunity bills being considered in the NY State legislature that would aid investigation of NY City corruption. The bills are favored by Republicans but Gov. Roosevelt and several Democratic assemblymen are also supporting them. Democratic Leader Dunnigan, in a long prepared statement, denounced the investigation as "outside meddling with the affairs of NY City" and violation of home rule amendment in the state Constitution. Tammany legislative leaders were "collecting sworn charges of Republican wrongdoing in upstate counties" with aim of forcing Gov. Roosevelt to permit legislative investigation of Republican officials.

Cost of producing helium at the govt.'s plant in Amarillo, Texas has been reduced to $5.95 per 1000 cubic feet from average cost of $11.47 since the plant started a little over 2 years ago. About 16 years ago, small amounts of extremely rare helium were sold for $2,500 per cubic foot.

“Foreign-born white” population of NY City was 2.293M on Apr. 1, 1930; of the total, 442,431 were born in Russia, 440,250 in Italy, 238,339 in Poland, and 237,588 in Germany. National total was 13.366M, or 10.9% of population.

The old Waldorf-Astoria (demolished in 1929 to make way for the Empire State Building) has presented its guest registers to the NY Public Library. There are over 300 volumes and 10M guest signatures, including McKinley, Cleveland, Roosevelt, Taft, Wilson, Harding, Coolidge, Hoover, Buffalo Bill, Alexander Graham Bell, John L. Sullivan, Mary Pickford, etc. [Note: Hoover lived out his last years in the new Waldorf-Astoria, dying in 1964; I believe he still holds the longevity record for ex-US presidents at over 31 years, though Carter is now nearing it.]

Market commentary:

Market wrap: Stocks opened weakly, with US Steel pressured on disappointment over lower steel output and failure to take action on wage cuts. However, early afternoon report of American Can 1931 earnings estimate of $6/share caused short-covering in that stock, which spread to other issues and brought a good rally from the day's lows; improvement in grain markets also was encouraging. Rally continued through the afternoon, though over the counter stocks including banks and trusts reacted after the NYSE close. Bond trading featured reversal of recent trends; second-grade rail bonds rallied for the first time in two weeks while high-grade rails fell. US govts. were firm, while the foreign list was mixed; British and European bonds were generally steady though Hungarian fell sharply; Australian and Brazilian issues rallied while Argentine fell. All grains moved sharply higher; cotton up substantially.

Conservative observers remain cautious, believe rally due to technical conditions, temporarily oversold market.

Traders in various bull pools are complaining of inability to attract a public following to recent operations.

Rather obscure discussion of whether the range-bound trading since early July represents “accumulation” or “distribution.” Many observers feel “persistent refusal of the market to break through on the downside, with the rails so close” to their bear market low indicates accumulation [note: that's the good one] in preparation for extension of the mid-August rally. However, this theory would “obviously” be destroyed if “rails penetrate their June 2 lows, and the industrials follow.”

Considerable discussion now heard about railroad wages; many authorities believe rails will make “strenuous attempts” to cut wages through agreements with workers if the ICC fails to grant them a rate increase. Rail car loadings report disappointing; increase of 7,956 was about half as large as expected.

“Most formidable obstacle” to recovery in grain markets seen as lack of speculative interest due to Farm Board liquidation and virtual paralysis of US-Europe export business. However, fundamentals should improve thanks to lower acreage and production worldwide.

Editorial by T. Woodlock clarifying earlier editorial in which he dismissed a reader's suggestion that bankers should stand behind bonds they issue. Notes letter from another "experienced and wise" correspondent who says "our bankers must be laughing up their sleeves at some of the things they have put across on the American investor, especially in the way of foreign loans." Concedes some issuing houses may not have exercised "proper care with respect to bonds" but maintains best way to improve standards is "sharper vigilance and longer memories" on the part of buyers. Letter from Frederick Pierce placing even more blame on the bond buyers, who, it is alleged, “constantly insist on a larger return on their money” and follow “fashions in securities the same as in clothes.”

Labor Sec. Doak notes definite improvement in shoe and textile industries; shoe industry believed operating at over 90% of capacity; number of cotton industry employees in July up substantially over 1930; wool makers helped by tariff. "One of the most successfull cotton mill managers of New England" sees "tremendous business in cotton goods ... just as soon as raw cotton values are stabilized"; inventories very low; "ample evidence of a heavy demand waiting to be released."

Nat'l Foreign Trade Council emphasizes need to “stop profitless merchandising” as first prerequisite for recovery. Notes recent slowing of commodity price decline from 1.25% a month over past two years to 0.5% now.

Editorial listing main causes of the depression as: “bankruptcy of world statesmanship” and European political tensions; drop in commodity and property values at time when “world is enmeshed in an unprecedented network of debt, private, public and international”; and govt. spending for “so-called 'social' purposes” at a time of sharply reduced revenues. England and Germany are now making a good start at tackling the last item, but action is needed on the first two; repeats call for postponement of reparations and war debts. Editorial on the parallel NY unemployment relief efforts by Gov. Roosevelt and by the committee of financial leaders mobilizing private resources. While Gov. Roosevelt's program has drawn support from Republicans, and is careful to avoid “any semblance of a dole,” there's still the danger of taking “an unsound step ... from which there may be no turning back later.” Unemployment relief is best handled by private initiative, since in govt.-run charities, “it is usually seen that political expediency finally develops a system whereby the loafer is 'taken care of.'” This has become a curse to England and Germany. If unemployment relief “is thrown upon the state the problem may never be solved.”

Economic news and individual company reports:

Berlin stock exchange, to reopen Sept. 3 after 7 week suspension, will impose restrictions on trading for some time. Stock price changes during the day will be prohibited; "for every security only one quotation will be fixed each day by the official brokers, and even calling out of other quotations will be forbidden." Transactions will only be allowed for cash and immediate delivery. Berlin money rates rose due to approach of end of month; call money at 9%-10%.

Weekly steel reviews rather disappointing; with Aug. drawing to close, still little sign of seasonal rise in production; improvement to date “little more than ripples on a sea which remains at ebb tide.” Auto industry not showing expected gains; other lines show mixture of gains and losses as backlogs are low and demand intermittent; construction offers best prospects. Finished steel prices steady but scrap prices are back to June lows after showing strength for several weeks. Steel production for week ended Monday was a little under 32% vs. 33% previous week, a little under 32% two weeks ago, 58% in 1930, and 89% in 1929.

Increases in gasoline and crude oil prices continued around the US. Eastern gasoline distributors reportedly have resumed buying gasoline in the California market for shipment to Atlantic ports. Oil production limit for East Texas expected to be 250,000 - 270,000 barrels/day (vs. over 650,000 recently). Progress reported in Standard Oil of NJ - Standard Oil of Calif. merger negotiations.

First 35 rails to report July earnings show net operating income down 38.7% from 1930 and 58.5% from 1929; revenue was down 17.7%. The same rails in June reported year-over-year declines of 15.4% in income and 12.8% in revenue.

Fed. Reserve Board's seasonally adjusted index of industrial production fell 1% in July to 83% of the 1923-25 average; this compares with the low point of 82% in Dec. and the recent high of 90% in April.

J. O'Connell, “customers' man” in broker Burley & Co., indicted on charges of circulating false reports about condition of Chatham Phenix Nat'l. Bank.

Sharp decline in July cigarette production (10.700B, down 9.78% from 1930) attributed to buying ahead by the trade due to price increase imposed June 24; change to new cellophane wrapping also a factor. Another factor may be taxes now levied by 12 states of up to 5 cents on cigarette sales.

Commerce Dept. reports July wholesale candy sales down 21.8% from 1930; first 7 months down 12.4%.

American Can net income for 1931 likely to be about $6/share, down substantially from record high of $8.08 in 1930 due to drastic curtailment in many important food packs. However, usual annual dividends of $5 should still be covered by good margin.

Union labor came to aid of the Rocky Mountain Fuel Co., which had backed their fight against 25% wage cuts in Rockefeller-controlled Colorado coal mines. 600 miners volunteered to postpone half their wages and act as “voluntary salesmen for the company”; miners charged non-union operators were attempting to “reduce coal miners to a condition of economic slavery” and pledged to “mine and put coal in every market at prices” matching any price made by non-union operators.

Movie:

Die Blonde Nachtigall (The Blond Nightingale) - UFA film, at the Cosmopolitan. Attempt to film a German "type of popular entertainment known ... as the Volkssteuck" that combines "comedy, tragedy, burlesque and vaudeville." Unfortunately, result is "a routine hack-work picture with an absurd continuity, stock characters and pusillanimous direction." Story of a "simple peasant beauty whose voice takes her and her Hanswurst of a father from a barnyard ... to the Hirschfeld Follies ... would make a quite complete satire on melodrama and sleazy sentimentality, if it were deliberate."

Jokes:

"If all the actors in Hollywood were laid end to end ..." "Why? Are they making a ganster picture?"

Electric Company President - Perhaps we should call ourselves the Light Brigade. Customer - Yes ... because of your tremendous charges!

Wednesday, August 26, 1931: Dow 136.65 -0.97 (0.7%)

Assorted historical stuff:

British Premier MacDonald announces new coalition govt. including 4 Laborites, 4 Conservatives, and 2 Liberals; appeals by radio for sacrifice to tide the nation through its crisis. Confirms govt. decision to cut unemployment benefits by 10%. London stocks showed improved tone; sterling was higher. Most current Labor members of Parliament expected to move to the opposition in protest at cuts in social spending. Trade unions organizing "virulent campaign of opposition" to cuts, accusing "MacDonald ... of accepting dictation from the Federal Reserve Bank of NY" that further credits to the Bank of England depend on cuts in the dole. Life of current govt. and future realignment of parties difficult to predict. Editorial: Split within Labor party seen likely to end its prospects of returning to power for “some time to come”; fate of Right wing uncertain, but Left wing is likely to become more radical; it has increasingly been challenging traditional British “tacit acceptance of ... 'economic inequality.'”

"Paris is of the opinion that PM MacDonald's resignation emphasizes the seriousness of British finances and invites further flight of capital." The London Times report that the $250M US-French loan to the Bank of England is nearly exhausted has been widely quoted, with predictions of a new loan. Paris newspapers urge England to quickly institute economic reforms, "for each day of delay is bringing a new sterling break nearer." By contrast, reports from the US are more reassuring. NY bankers say they haven't been approached on any new British loan; while "there is no question ... the British govt. ... could obtain all the credit that was needed" from NY, existing credit is believed adequate for now, particularly after formation of the new govt. which "practically assures" balancing of this year's budget. NY bankers generally optimistic on the new govt., believing it will, “voluntarily or not,” tackle the economic crisis by cutting spending; this will increase confidence and allow the govt. to easily obtain any additional credit needed in the future. Washington officials denied any communication with the British govt. over the crisis, and further denied the Fed. Reserve had put any "stipulations bearing on the British change of govt."

S. Untermeyer, on return from Europe, ridicules "naive Hoover discovery" that predictions can bring back prosperity and says "false alarms" of recovery from Washington officials have made us "laughing-stock of the well-informed men of Europe."

W. Gifford, AT&T pres. and director of Pres. Hoover's unemployment relief organization, will meet with officials of charities and public welfare officials to organize a nationwide appeal for relief funds in order to help local organizations build up adequate resources for relief this winter. H. Gibson, Manufacturers Trust chair., elected chairman of committee for relief of NY City unemployment.

Official Italian Fascist bulletin says public works will be started this winter at cost of 900M lire, employing 100,000 workers.

25,000 - 30,000 television sets now in use; television programs are on the air daily. While several cos. are selling television equipment, the largest such as RCA are “secretly experimenting” in order to put out best possible quality sets when large-scale sales begin; this is expected in 1932. The Columbia Broadcasting Co. estimates 11M sets will be in use in the US by 1943.

The largest and most powerful lighthouse in the world, the Lindbergh Beacon, revolves slowly (2 RPM) at the top of a Chicago skyscraper, guiding flyers to the Chicago city airport. The 2B candle power lamp needs to have the "carbons" changed every hour and 20 minutes.

Three of the most important units in the Radio City development will start construction in the fall: the International Music Hall, the world's largest theatre, between 50th and 51st Streets; a movie theatre between 48th and 49th Streets; and a 66-story office building. Contracts will probably be awarded in the next week; construction should be complete by May 1933. American Radiator to supply 20,000 cast-iron radiators for the Radio City development.

"The most prosperous and most extravagant race in the world at the present era of depression is the fur-clad denizen of the Arctic, who is generally pictured as living on blubber and inhabiting an igloo. Eskimos within range of civilization" have gone in for commerce in a big way; the fur trade in particular supplies the more successful with income from $5,000 - $40,000 a year, and they're not shy about spending it. A typical spree after a big fur harvest starts by booking passage on an airplane to a city; purchases there may include a fast motor boat, new hunting and fishing equipment, and "clothes of the white man's mode, for use on ceremonial indoor occasions." Those who haven't already installed a radio will likely buy one, and probably some musical instruments to boot.

Market commentary:

Market wrap: Stocks opened firmly following report of formation of new British govt.; Steel and other leaders showed moderate gains. However, weakness in bond and grain markets appeared to disturb the rally as the morning progressed; early gains were quickly lost and reaction spread across the list; volume appeared to increase on setbacks; American Can drew particular pressure from the bears on rumors of lawsuits; some leading rail stocks sold off on dividend uncertainty. Bond trading featured continued disturbing decline in second-grade rail bonds, with some issues falling very sharply in a thin market. Highest-grade rails rose somewhat, while US govts., public utility and industrial bonds fell slightly. Foreign list featured rally in German and Brazilian issues; British bonds eased after an early rally but are still selling at substantial premiums. Grains also continued disturbing decline, with the entire grain list hitting new season lows; Sept. wheat again broke the all-time CBOT record low, hitting 46 1/8 cents; however, an "oversold condition" developed in corn, which rallied to close higher.

Rails are again meeting resistance as they approach the lows of early June (Monday's close was 67.75 vs. bear market low of 66.85). Market observers are sharply divided over whether the June lows will be broken in the near future; if this does happen, increased selling is expected due to a large number of stop-loss orders just below those levels. Stop-loss orders are more popular "than in some time"; "bear traders have been gunning for them, and their efforts have been successful in certain issues."

Interesting article on Dow theory and its prediction of market movements. Claims that Dow theory successfully predicted that a bear market was underway on Oct. 21, 1929 (the market at that point had declined from its peak of 381 to about 325); also claims no bullish signals in the ensuing 21 months and successful prediction of secondary downward moves, though rules for interpreting signals appear somewhat complex and possibly subjective (ex. “a primary bull market is established when during the course of a bear market a secondary upward swing reacts a little after what would ordinarily be its culmination but does not decline below the old low figure, and subsequently recovers ...”) Elegant description of major bear markets as series of progressively smaller secondary swings, like a pendulum gradually reducing its momentum as the market adjusts to new conditions.

"A tendency to emphasize unfavorable influences appears to be growing," probably due to inability of the market to follow through on rallies in the past week. However, many still insist most stocks are acting satisfactorily "in view of all that has been said and done." Q3 earnings seen as difficult to forecast based on Q2 results; July and August were "hot and difficult months in many lines."

Banking figures have “yet to show that the process of deflation has come to an end or that increased gold holdings and Fed. Reserve credit are being used for anything except to provide currency for hoarding and some credit ... to distressed foreign banks.” Banks in rural districts have shown a declining trend in deposits since mid-1930, which has accelerated in recent weeks.

Treasury Sec. Mellon, at first news conference after return from Europe, “declined to discuss European affairs” but “appeared optimistic over the steps being taken by European countries to restore confidence.”

Some of the brighter minds on the NYSE floor, with little to do these days, have started devising economic remedies; in imitation of the Farm Board's recent cotton proposal, one suggestion is that the motion picture industry cure its depression by plowing under every third theatre.

Economic news and individual company reports:

Ohio Gov. White denies pleas of officials to call special session of Legislature to meet tax problems resulting from closing of 5 Toledo banks; $7.5M of $10.5M in taxes due for first half year remain uncollected. City council has approved $750,000 bond to feed needy but it must be voted on in the Nov. election. C. Stillman, special rep. of Pres. Hoover, has arrived to take charge of relief work. Grocers who have been feeding 4,000 families haven't been paid since Apr. 1. NY Gov. Roosevelt considers $25M plan for unemployment relief, to be paid for through temporary taxes on items including cigarettes and cosmetics. NY City Board of Estimate appropriates $2M for direct relief of jobless, bringing total spending for that purpose to $8.2M. Wisconsin will spend $12.5M - $13.5M for unemployment relief this year, vs. $5M last year. With employment down 20% and individual pay down 40%, increase in relief is only about 2% of loss in wages.

Retail gasoline prices are rising throughout the US and Canada, following the sharp rise in wholesale prices since Aug. 10; the wholesale price in Oklahoma rose from 3 3/4 cents/gallon to about 5 1/2 cents in that time. Many small refiners have had to stop operating due to lack of oil supplies, eliminating the surplus of gasoline previously available to "cut price dealers." Texas Gov. Sterling sent telegram to Standard Oil of NJ relaying charges from independent oil producers that imports of foreign crude oil rose sharply in the past week and warning this would interfere with Texas conservation efforts. W. Teagle, Standard of NJ pres., denied substantial increase in imports. Gov. Sterling denied independent Texas refiners were suffering from his shutdown of oil wells; reiterated that his action in placing East Texas fields under martial law “had nothing to do with the price of crude and its products.” Oklahoma Gov. Murray expects more offers of $1/barrel from major oil buyers, but warns operators won't be allowed to flood the markets when fields reopen. Sinclair Oil pres. E. Sinclair says believes current efforts by Oklahoma and Texas to set $1 price for oil won't hold up due to large amount of oil available from outside US. Oil & Gas Journal estimates crude oil production at 2.279M barrels/day in week ended Aug. 22 vs. 2.490M prev. week and 2.475M in 1930.

Rail freight loadings for week ended Aug. 15 were 742,736, up 7,956 from prev. week, down 19.5% from 1930 week, and down 32.6% from 1929.

Austria is reportedly negotiating with French banks for a loan to replace the 150M schilling loan on which the Bank of England is asking repayment.

China appeals for more liberal terms on Farm Board wheat sale, asking for 10-year credit rather than the 2 1/2 - 4 years offered by the Board at 4 1/2%. General Mills pres. J. Bell protests Board sale of wheat to Brazil and China, saying US jobs should be preserved by grinding the wheat in domestic mills and exporting the flour. Shipping Board keenly disappointed US ships weren't used to transport wheat to Brazil; asks Farm Board to look out for interests of US merchant marine in future commodity exchanges.

Assoc. General Contractors of Amer. estimates US construction spending in the first 7 months was down about 30% from 1930.

June revenue of 103 telephone cos. was $97.5M vs.$99.5M in 1930; operating income $23.6M vs. $22.8M.

Berlin stock market to reopen Sept. 3; trading will be on spot basis only, without futures. German call money is at 8% - 9%; Reichsbank seen unlikely to lower its 10% discount rate this week due to expected "money squeeze" over end of the month.

Contrary to rumors of action on wage cuts, only routine business was transacted at the US Steel monthly directors' meeting.

Movie:

Pardon Us - MGM film, at the Capitol. First feature-length film by the well-known team of Laurel and Hardy is "fairly entertaining." One memorable sequence lampoons MGM's "tragic prison film, The Big House." However, "merits of the featured comedians consist chiefly in their shrewd use of pantomime ... their use of dialogue is not nearly so effective"; the most hilarious sequence in the film is an entirely silent one in which the comedians, thrown into a crowded prison cell, try to sleep together on a narrow top bunk, eventually collapsing themselves and "their villainous-looking prisonmates" to the floor.

Jokes:

"An elderly widower laid his heart at the feet of a modern girl at a nightclub recently. The poor fellow was trembling with passion, for the girl was as beautiful as Greta Garbo. 'Oh,' he sighed, 'oh, I'd go through anything for you, darling.' The girl gave him a keen look. 'Just how much,' she asked, 'have you got to go through?'"

New Lodger - By the way, I have a few idiosyncrasies. Landlady - That's all right, sir, I'll see that they are carefully dusted.

Tuesday, August 25, 1931: Dow 137.62 -0.14 (0.1%)

Rest of the quote dept.:

[Note: I was familiar with the first line, but never knew it was part of a delightful rhyming couplet.]
A foolish consistency is the hobgoblin of little minds,
adored by little statesmen and philosophers and divines. - Emerson

Assorted historical stuff:

British Labor govt. resigned but MacDonald remained as Premier to attempt formation of coalition govt. as during the war; the new govt. "will go to work at once to bolster Britain's credit, impose rigid national economies, and balance a $600M budget deficit." Announcement of plan followed conference between MacDonald, King George, and opposition members; Conservative and Liberal parties expected to join govt. MacDonald expected to address the nation to explain the crisis and appeal for support for budget-balancing proposals. Coalition seen necessary to overcome strong opposition within different parties to controversial proposals including social spending cuts, tax increases, and a tariff. Trade Union Congress says support for govt. ended with resignation. Govt. resignation “eased the anxiety of the nobility and the upper middle classes” while increasing “worry of the insured workers ... and the unemployed.” Some observers “felt that the King made a wise move in retaining the Labor leader as head of the govt. on the theory that the people will accept from a Laborite measures which would never be accepted were they backed solely by a Conservative or Liberal.”

Well-informed NY banking circles don't believe the $250M US-French credit to the Bank of England has been “practically exhausted” as recently reported from London; best authorities believe the French half of the credit has been used heavily and “some recourse is now being made” to the US half. London stocks turned "distinctly firmer" later in the day; bonds declined but later recovered some losses.

[Note: Both Strangely Familiar and Unfamiliar Dept.] Editorial: Britain's financial difficulty is simple; govt. spending for "social" purposes has outrun capacity of the taxpayer. Situation clearly shows "the direct relation of a budget to the exchange rate, and the indispensable requirement of balance in one for stability in the other." Crisis shows the British rift between organized labor and "the rest of the people," most of whom are middle class. Outcome is in "little doubt"; whatever govt. is formed will substantially cut social spending to balance the budget. "It is when Great Britain's 'back is to the wall' that she appears at her best ..."

Pres. Hoover and W. Gifford confer at Rapidan on "nation-wide unemployment relief plan for coming winter." NY Gov. Roosevelt prepares measures for state unemployment aid to present to special session of the Legislature. E. Ryerson, chair. of Cook County Joint Emergency Relief Fund, says won't appeal for Federal aid unless local private and tax-supported relief agencies are inadequate; support of the Fund's campaign is “Chicago's best insurance against Federal relief with its attendant danger of a dole which would result in permanently increased taxes and a vicious undermining of ... American desire to work for a livelihood.” Arkansas Chamber of Commerce recalls last winter when about 800,000 Arkansans depended on rest of the US for their food; calls on the state to use its current abundance of food to aid the unemployed in rest of the country, particularly the “great cities of the North and East.”

Total immigration to Canada in the second quarter was 10,188 vs. 49,890 in 1930.

Lee Shubert, returning from several weeks in Europe searching for plays for the coming season, reports the London theatre is having its best season in 20 years, with 22 theatres open and doing good business.

Paris next year will celebrate the 100th anniversary of the invention of the corset. Jean Werly started the first corset factory in his native town of Bar Le Duc in 1832; the fashion caught on and he made a great fortune. Parissiennes were early adopters, "and compressed themselves as much as they could."

Bids received on three of the main buildings to be erected in Radio City, and contracts will probably be let within a week; gardens alone to cost almost $18M.

Market commentary:

Market wrap: Stocks reflected continued stalemate between "strong technical position" that makes bearish operations difficult, and disturbing foreign and domestic news that is inhibiting buyers. Shares underwent some pressure early, starting in the rails and spreading to leading industrials. However, selling petered out by end of morning and trading turned extremely dull as public continued to abstain; "professionals who tried to make markets made them at one another's expense." Limited recovery set in during afternoon, attributed to short covering. British govt. bonds declined after resignation of cabinet. S. American issues weak. US govts firm. Domestic corp. list generally lower with second-grade rails under continued liquidation; Dow average of 40 corp. bonds and average of 10 second-grade rail bonds both hit new yearly lows. Grains slumped to new season lows; Sept. wheat hit 46 7/8 cents/bushel, a record low for CBOT futures trading, while corn fell to post-1901 lows, oats to post-1899 lows, and rye to post-1897 lows.

AT&T is experiencing continued investment buying; almost 35,000 new shareholders have been added this year, bringing the total to about 635,000. Radio Corp. is subject of a bull pool operation, based on likelihood of improved earnings in the second half. Westinghouse shorts "restive" on reports of improved earnings over the past few weeks.

Newburger, Loeb comments on inconclusive market of the past week. "There were days when it seemed as if prices could not be constrained from breaking through the resistance levels of early June ... nevertheless it was found that there was a line of defense that could not be pierced ... such an exhibition could have only one meaning ... as indisputable evidence that the market has been liquidated to an extent where prices had discounted, if not over-discounted a protracted period of poor trade ... It further emphasizes the fact that the psychological hazard of unfavorable trade conditions, earnings comparisons and dividend adjustments is largely behind us." Those who now take the "one-sided viewpoint" of overemphasizing bad news "are simply missing opportunities to buy well-intrenched cheap stocks."

Editorial: While cotton situation is "tragic," proposed Long Plan to ban cotton planting altogether in 1932 would likely only make a bad situation worse. "A better way would be to leave it to the individual to plant what he can do best and" undertake a general overhaul of the Southern system of agriculture through education.

Harvard Economic Society says European situation “has taken a turn for the better” since Aug. 1, and US data available for the first half of Aug. indicates some seasonal improvement in business while commodity prices “have again shown signs of stabilization.” However,

[Note: Strangely Familiar Dept.] Letter to the editor: Smaller industries are important for US prosperity; there are 193,562 plants in the US that normally employ 500 or less workers vs. 2,747 that employ more. "We find that it is becoming extremely difficult to sell bonds or stocks of these smaller corporations ... If the present attitude is continued, how are the smaller companies to remain in business?"

"Current low prices for all but the highest grade bonds" are a disturbing factor in several directions, causing many asset write-downs for institutions and individuals. Bonds on which interest is being earned with a margin to spare are going begging for bids, leaving savings banks in particular "glutted" with the securities. "As one industrial leader put it, 'the public won't buy a gold dollar for 50 cents these days.'" [Note: at this point highest-grade status seems largely restricted to US govts., municipals and public utilities.]

Economic news and individual company reports:

Phillips Petroleum becomes first major to offer $1/barrel in Oklahoma as sought by Gov. Murray, who responded that Oklahoma oil fields will remain closed under martial law until all companies in Oklahoma, Texas and Kansas “agree to pay $1 a barrel and ... agree not to let the price go below that ...” Texas Gov. Sterling was pleased at news of the $1 price posted in Oklahoma but declined to say when martial law will be withdrawn in East Texas. Texas Railroad Commission will meet today to consider allowable production in East Texas field; difficult deliberations seen as new conservation law is unclear. Majors raised crude oil buying prices in areas including Texas, Louisiana, Arkansas, Kentucky etc.

Preliminary July car sales figures show Chrysler with higher sales than in 1930 and a sharp gain in market share (15.3% vs. 9.8%) thanks to success of the new Plymouth models; GM unit sales were slightly ahead of last year and also showed a sharp gain in market share (42.1% vs. 31.4%); Ford showed a sharp decline in market share (25.2% vs. 42%); independents showed slight gains in market share. GM net profit margin in Q2 was 18.1% of sales, the highest since 1928, in spite of lowest dollar volume of sales for the quarter in the past 5 years and production running at under 60% of capacity.

Bank auditors worked all day Sunday to speed work of checking affairs of the four large banks that closed a week ago. Some stores advertised credit for responsible buyers; the Tiedtke's store had one of its busiest days ever when it started a plan accepting 35% of deposits in closed banks as security for purchases. Record attendance reported at two local R.K.O. theatres. Peoples Nat'l Bank of Latrobe, Pa. "failed to open"; deposits $2.450M.

China will reportedly ask the Farm Board for more favorable terms on its offer to sell wheat on credit; the Chinese desire a longer term and lower interest rate.

German trade surplus for July was a record high of 266M marks vs. 41M in 1930; imports of manufactured goods hit record low of 106M. Surplus for first seven months 1.357B vs. 704M. French trade deficit for first seven months $327M vs. $190M; imports fell 13.3% while exports fell 29%. Canadian trade surplus in July was $2.3M vs. a deficit of $6.6M in 1930; total trade (imports and exports) was $99.0M vs. $162.5M.

British trade unions demanded increase in wholesale prices, worldwide or at least in Britain, through action of central banks.

BLS reports wholesale index of 550 commodities in July was 70.0, unchanged from June and vs. 84.0 in July 1930.

Monday, August 24, 1931: Dow 137.76 -0.84 (0.6%)

Assorted historical stuff:

Emigrant Industrial Savings Bank tells its 249,000 depositors to start buying stuff. Notes that in 1928 they "made every effort ... to encourage people to save and to resist the temptation to spend recklessly." Now, however, economic conditions have changed drastically. The dollar is worth 16% more than in 1928; to "keep faith with our depositors' best interests," the advice must change. While you should keep a reserve of at least 6 months' salary for emergencies, "if you have a surplus above all likely needs, make careful purchases of things you want for permanent use while prices remain.low."

Pres. Hoover pleased at splendid response to his invitations to join the Employment Advisory Committee, which will work in cooperation with the President's Emergency Committee for Employment; 52 of 60 invited have already accepted. Pres. Hoover was advised that Federal construction work has directly and indirectly employed 730,000 as of Aug. 1, vs. 180,000 at start of the depression; further increase of 80,000 - 100,000 expected by year-end.

NY Gov. Roosevelt will ask state legislature to take action on "relief of distress and alleviation of unemployment" at extraordinary session convening Tuesday. Editorial: Gov. Roosevelt's decision will be "commended by all. If there is one thing clear, it is that the resources of NY State must be opened this winter to the degree necessary to ensure all its needy citizens of food, clothing and shelter." Regarding unemployment, all are agreed that ":so far as is humanly possible jobs shall be found for our unemployed. However, this shouldn't imply "hasty and ill-considered" legislation such as a move toward unemployment insurance. In any case, Gov. Roosevelt's "course is in refreshing contrast" to Gov. Pinchot who is calling for Federal aid; this should be "the last recourse."

Morris Harvey College in Barboursville, W. Va., will accept farm produce as tuition this school year; produce will be used in the college dining hall.

[Note: I was wondering what happened to that old Eastern rail consolidation plan, which a few of you may recall was announced with great fanfare back in January and has been repeatedly reported as all but settled since.] Eastern rail consolidation plan apparently "side-tracked" indefinitely over unwillingness of NY Central to agree to "granting trackage rights to the Pennsylvania over the Nickel Plate along the south shore of Lake Erie between Brocton, NY and Ashtabula, Ohio."

British Cabinet held its first Saturday meeting since the war; Labor govt. and "the Trade Union element" seriously deadlocked over how to balance the budget; imminent resignation of govt. rumored. Bank of England announced it will extend period of higher currency circulation for 3 weeks; action seen reflecting domestic political uncertainty. Spot sterling was steady, but futures were sharply lower. British military branches ordered suspension of all contracts for military works until further instructions, in line with recent economy (austerity) campaign.

Lord Beaverbrook, British newspaper owner, calls League of Nations "branch of French Foreign Office" and says England should withdraw.

Franco-Soviet nonaggression pact reportedly signed in Paris.

Chrysler Motors dealers (including Dodge, De Soto, and Plymouth) are offering buyers of new cars "a new service plan known as the Owner's Service Policy" that "provides for the replacement of parts that are defective in materials or workmanship without charge ... during a period of 90 days from date of purchase or until 4,000 miles have been recorded on the speedometer, whichever occurs first." The policy also contains four coupons "which entitle the owner to free inspection and to a comprehensive list of service operations at the conclusion of 500 miles, 1,500 miles, 2,500 miles, and 4,000 miles."

Rubsam Corp. of Delaware wins suit against GM in Detroit Federal Court charging infringement of their patents on "demountable rims" for car wheels.

New giant Cunard liner being built will prevent pitch and roll using 300-ton, $1M device "utilizing gyroscopic principle."

Commercial sailing ships have completely disappeared from the Upper Great Lakes with the sinking of the ship Our Son in the severe storms of Oct. 1930. Cargoes are now carried in modern steel vessels, many over 600 feet long and with capacity of 16,000 tons or more.

Labor Sec. Doak asked the "commissioner of conciliation of Los Angeles" to go to Las Vegas "to straighten out complaints relative to employment and working conditions on Boulder Dam" (later Hoover Dam).

A generation ago, advanced US students went abroad for postgraduate studies. Now, leading US universities are “equal in efficiency to any in Europe, and some are world leaders in special lines.” One consequence is that “much to the joy of students, French and German are no longer required ... Few ... American students ever mastered these languages through study, ... and they were always regarded as difficult and despised subjects.”

Gardner F. Wells, pres. of the Boston, Revere Beach & Lynn RR, found dead in the company office; “had been shot through the mouth.” [Note: There are occasional items like this in the Journal, where it's not clear if a suicide had occurred.”

Market commentary:

Market wrap: Major stocks under pressure early; considerable selling reported from abroad on concern over British govt. crisis; majors including Steel, Can and AT&T fell; NY Central hit a post-1921 low. However, selling showed no momentum after initial accumulation of orders was absorbed; trading turned sluggish and the “market ... displayed indifference to attempts to impart impetus to the downward movement.” Bonds more active, featuring rally in highest-grade rail issues and in oils while rest of corporate list generally fell; foreign list featured sharp rally in Argentine govts. while British eased slightly. Corn fell sharply to new season lows close to 40 cents/bushel. Wheat was lower in spite of Farm Board's large Brazilian coffee swap deal and prospect of sale to China.

The more optimistic traders point to relative resilience of the stock market over the past ten days in spite of "domestic banking difficulties, foreign political and financial troubles, discouraging unemployment figures, disappointing earnings and China's flood catastrophe." While few expect an immediate business recovery, "as one leading trader put it, 'he must be a pessimist indeed who does not believe that this great country is not going to recover its prosperity. The slower this recovery is the more sure it will be, and the more lasting and substantial it will prove."

Attitude of the most active bullish traders in recent weeks is that the market as a whole might work somewhat lower, but “the halcyon days for bearish operations have been seen,” and selected companies that have completed adjustment to the changed business cycle are now ready to increase profits and reward bulls. A prominent example is W. Danforth, who was operating on the short side before the 1929 crash, but has been actively buying since May. After their recent success in Safeway, Danforth interests have switched to Lambert, which earned $4.77 in the first half (down only 25 cents from 1930), reported July sales ahead of 1930, and, at the current price of about 70, yields over 11%.

Recent bond market weakness may be a factor restraining public interest in the stock market. Decline in the Dow 40-bond average since July 11 has been more severe than the one late last year; last Dec. bonds and stocks hit lows simultaneously but recently bonds have "been outstanding leaders in seeking lower levels."

Considerable speculation is in the air on possible New Haven RR and Pennsylvania RR dividend cuts. US Steel monthly directors' meeting tomorrow will be watched closely for signs of the rumored action on wage cuts.

Earnings of publishing companies generally held up well in the first half of 1930, despite the general business trend, but "gave belated recognition to the depressed conditions" in the first half this year. Six NYSE-listed cos. earned $15.9M in the first half of 1929; this rose to $16.3M in 1930 but fell to $10.4M this year.

Yet another editorial on how Europe is key to the depression: "When will the depression end is a question often asked but never satisfactorily answered. "The Wiggin report (of the bankers committee in Basel) "answers the question by saying that 'until the situation improves in Germany there can be no general recovery ...'" In this "great world emergency would it not be becoming in the US to throw politics to the winds and take the leadership ... to win the peace and remove the great obstacle to ending the depression?"

Week in review:

Stocks were unsettled following the previous week's recovery. While some indications of seasonal business improvement developed including a continued rise in steel output, there was also some disturbing news. “Banking difficulties” broke out in Toledo and other locations; these lead to a steady decline in bonds caused by forced liquidation at the banks. The bond selloff showed no signs of ending and “finally forced large traders sponsoring the campaign for higher prices to take to the sidelines until the banking disturbances had subsided.” The looming question of wage cuts also caused concern. A British govt. crisis broke out as efforts to close the deficit ran into complications. Some indications also appeared of a relapse in the German situation, including continued withdrawals at savings banks.

Bond prices were irregular on dull trading. Feature of the week was severe decline in all grades of railroad bonds, as they suffered heavy liquidation by banks and corporations. Public utilities showed good resistance but eased slightly. Oil company issues rallied. NY City tractions [mass transit] issues weakened in absence of the long-awaited Transit Commission report on modified unification plan. Foreign list was weak, featuring sharp decline in German govts. on reports of continued withdrawals from savings banks; S. American issues also showed some sharp declines after Chilean announcement of debt moratorium.

Cotton sagged to new lows, with spot quoted at a post-1899 low of 6.50 cents. Louisiana Gov. Long proposed a plan for the Federal govt. to sponsor a worldwide one-year holiday for cotton fields. Wheat showed little response to bullish crop news, with most months selling under 50 cents, close to the year's lows.

Fed. Reserve statements showed sharp rise in circulation due to banking difficulties. Holdings of govt. securities showed no change, indicating increase last week was a one-time occurrence not presaging a renewed policy of credit expansion. Money markets very quiet. Foreign currency markets dull; sterling was firm, reportedly on Bank of England support.

Economic news and individual company reports:

Automotive output is falling significantly; August production is now estimated at 147,000, and Sept. will "do well to equal the August figure." Outlook based on current forward orders from dealers is indifferent, but some industry people hope "for a brisk pickup in sales after Labor Day" as "hundreds of people returning from vacations in worn-out machines will, with the first touch of fall weather, begin to think about the hazards of winter driving." One eagerly awaited development - resumption of large-scale output by Ford - now seems unlikely for another 60 days as Ford officials are still working out details of the motor suspension system to match the impressive smoothness of the new Plymouth. Occasional bursts of steel buying give the impression business is picking up, but "result chiefly from the fact that the industry is operating on a hand-to-mouth basis."

In spite of higher offers of 70 - 77 cents/barrel by Texas Co., which was matched by other majors, Oklahoma fields remained shut down by martial law as Gov. Murray held out for $1 a barrel. Wholesale gasoline prices climbed toward 6 cents/gallon. Texas Brig. Gen. J. Wolters and 1,200 cavalrymen barred a group of refiners from holding a protest meeting as "an affront to the Governor's orders."

Justice Dept., as usual in large mergers, will investigate the two large proposed oil combinations for antitrust violations. E. Suebert, Standard Oil of Indiana pres., denies rumors of merger negotiations with Union Oil of California.

Texas seen as key to adoption of Louisiana Gov. Long's plan for all Southern cotton states to prohibit "the planting of a single cotton seed in 1932." Conference of cotton men called by Long in New Orleans unanimously endorsed the plan, along with Sen. Caraway's supplemental proposal for the Farm Board to buy 8M bales from farmers at above-market prices and then allocate them back to farmers, conditional on their agreeing not to grow any cotton in 1932.

Fisher's wholesale commodity index fell 0.1 to 69.4 , within 0.1 of the postwar low of 69.3 reached 3 weeks ago. However, the index has shown signs of stabilizing, varying only 0.2 over the past 5 weeks.

Bradstreet's weekly reports both retail and wholesale trade "spotted"; fall showings starting and summer clearance sales still going on; low inventories indicate success of sales at clearing out stocks, even if at low profit. Dun's reports sales in dollars below a year ago, but physical volume slightly higher.

Midland Bank estimates total US long-term investments abroad at $14.8B - 15.4B, with over 35% of US direct investment in England.

Nordwolle (large German wool co. whose failure helped precipitate the recent crisis) losses estimated at 255M marks; all capital lost and creditors will lose about 83% of their claims; largest creditor is the Darmstatder bank, 76M marks.

German budget deficit for four months ending in July is at annual rate of $252M.

With harvesting under way, Bank of Montreal estimates total grain crops in Canadian prairie provinces will be about 50% of normal; damage concentrated in Southern districts.

Brazilian coffee bartered for surplus US wheat by the Farm Board will be withheld from consumption for a year, after which it will be sold in monthly installments of 62,500 bags to avoid disturbing the coffee trade.

Commerce Dept. reports formation of international pencil cartel.

Labor Dept. denies it's investigating reports of wage cuts at Wright Aeronautical. Ralston Purina cuts wages of 1,000 officers and employees up to 15%.

Theatre report:

The 1931-32 theatre season officially gets under way tomorrow evening. Earl Carroll will bring the 9th edition of his Vanities into the new Earl Carroll Theatre, just completed at a cost of $4.5M including $125,000 for a cooling plant that works both for the audience and backstage. The top ticket price will be only $3; low price made possible by 3,000 seat capacity. Production is, according to the producer, "the most costly, lavish and massive ever prepared." The scientifically equipped stage allows effects previously impossible; a 5-ton chromium set is lifted with ease, and the 46-foot dinosaur featured in the show can be taken away in a 40-foot elevator in a few minutes. Cast will include 50 performers. Other new productions include The Improper Duchess, starring Irene Bordoni; Grand Opera Blues, a comedy; After Hours, which "looks like a typical John Golden comedy"; and Cloudy With Showers, also a comedy.

Joke:

Vegetarian - Yes, ever since I have given up meat I have had the desire to climb to greater heights ... Friend - And look for nuts?