Evening Star Newspaper, May 10, 1931, Page 61

News of Markets Pages 1 to 5 FINANCIAL AND CLASSIFIED he Sunday Star Clussitiog: A Pages 5 to 12 Part 6—12 Pages WASHINGTON, i SUNDAY MORNING, MAY X ), 1981 s BANKERS SUGGEST WAYS T0 PREVENT BUSINESS SLUMP Commission’s Report Intend- ed to Place Curb on Bank Failures in Future. DRASTIC LEGISLATION CALLED UNNECESSARY Saturday Prices Firm on Local Ex- change—Other Comment in Financial District. BY EDWARD C. STONE. Pive major banking subjects ar> dealt with in_the report of the Economic Policy Commissicn of the American Bankers' Associa‘ion, copies of which reached Washington yesterday, problers being the 1930-31 bank fail- ure episode, meeting the bank failure situation, developments in branch, group and chain banking, revolutionary Pproposals aimed &t banking, and spc- | cific recommendations. The repsort was resented at the recent council meet- in Augusta, Ga., and aroused tre- meendous interest. Chairman R. S. Hecht says that the Nation is now in the bottom of what we hope may be the first stages of a new business cycle. Sooner or later a new perlod of expansion and prosperity will develop. “We have before us,” he says, “the fresh lessons of the mistakes and .mismanagement that brought the 1ast period of prosperity to an end in one of the greatest economic disasiers in the country's history. “Banking cannot adopt a pharisaical attitude and say we did not sin, as other lines of business did, against sound economic principles. Bagking also made its mistakes. Although we are thus willing to confess the error of banking, we do not believe that their correction calls for drastic. leaislative or for any revolutionary measures, ‘The re- changes in banking practice.” port then presents these eight spe- eific suggeftions for practical reforms through better bank management: ° Eight Vital Suggestions. (1) Liquidation or consolidation of banks where changed local economic conditions render this desirable; (2) Wider affiliation among State banks with the Federal Reserve Sys- tem; (3) Development of limited branch banking where economic conditions and legal authority make this expedient; (4) A more general practice, espe- cially lacking among country banks, to analyze the cost of carrying accounts and other operating details and the es- tablishment of proper service charges to make all classes of functions prof- itable; (5) A more . general application of the theory and practice of secondary Teserves; (8) Avoidance by banks of undue ‘borrowing merely to increase their own profits by relending at higher rates, or 1o overexpand credit to local business in order to increase their own business; (7) Co-operation among bankers in Jocal communities through city, county orrmflulcluflnlhnululonm promote mutually beneficial ccnditions and practices; (8) ‘The insistence upon higher edu- cational effort and qualifications among em&loys. especially those to be trusied with executive duties. Legislative Measures Urged. Some external measures, along mod- | erate and supervisory lines, are urg:d by the commitice to help strengthen ! banking. Among these are: « i (1) The broadening in the States of | branch banking laws where conditions warrant an_extension of this type of banking service to the public; (2) The establishment of sound mini- mum capital funds under which banks will be allowed to operate, which should | be materially higher than now prevalls in most States; specifically, we believe that the minimum capital with which any new bank shall be chartered, ‘whether State or National, should be at least $50,000; (3) The provision of funds and regu- Jations to keep the official staffs of all supervisory departments up to a level of ability and integrity that will univers- ally inspire confidence among bankers ‘whose activities they are empowered to review, and will supply real added de- fenses to the public interests they are #ppointed to protect. (4) In connection with the policies of bank chartering departments, we would recommend that, even to a greater extent than is now the practice, the greatest care and moderation should be exercised in granting new charters, 80 as to guard against overbanking or the launching of new banks by unquali- fied persons, which have doubtless been serious factors in the bank faflure sit- uation in the past. | (5) Also, referring to Federal Reserve ractice not requiring legislation, we b-- ieve that the Federal Reserve banks | should exercise more freely their rights to examine banks and use their discre- tionary power to refuse rediscount facil- ities to banks indulging in objectionable banking methods. Trading on Local Exchange. Pour bank stocks were traded in on th: Washington Sfock Exchange ves- terday. One of these was Federal- American National Bank & Trust Co., ‘which figured in an unusual turnover in 10-share lots during the week. Dur- ing one session there were 15 such sales and yesterday there were six. all at 50. Washington Railway & Electric 4s Jed the bond division yesterday. Prices in both bonds and stocks ch2nged but little. Yesterday's sales follow: Capital Tracticn 5:—$300 a* 801, District National Bank—10 at 202 Federal-American National Bank & Trust—10 at 50. 10 at 50, 10 at 50, 10 at 50, 10 at 50, 10 at 50. ‘Washington Loan & Trust Co. 420,10 at 420, 5 at 425. People's Drug Stores preferred—5 at 101, 5 at 101, Washington Railway & Electric pre- ferred—50 at 9875, 20 a! 98% Capital Traction 5s—81,000 at 81. Potomac Electric Consolidated 55— $1,000 at 104. Wuh\n(wnf Gas 6s “A'—$200 at 102%. Washington Gas 6s “B"—$200 at 1043, 04, M National Metropolitan Bank—2 at —10 at 275. Washington Railway & Electric 4s- $3,000 at 89%, $1,08) at £9%. Bank Presidents Pay Tribute. Séven Washington bank presidents ‘were among those w¥ho paid a last tribute to I. A. Fleming at the funeral services hejd here Friday before the n to Chicago for inter- these! of the country he wi Will Return BANKER TO ADDRESS D. C. | | ROME C. STEPHENSO | Who left Washington yesterday after | several cays' visit here, attending the | Cham3er ‘of Commerce _convention. | Atter an extended trip ‘o vatious parts il be bak the! latter part of the mcath to speak be- | | fore the Nat'onal Association cf Mutual Savings' Banks. 1 LOW-PRICED CARS - | INGREASE OUTPUT Ford‘ and Chevrolet Produce 223,987 Units of Total of 348,908. BY EDWARD W. MORRISON. Special Disratch to The Star. DETROIT, May 9.—If Spring pro- duction records, as revealed particularly by April figures, have shown any sur- prises, it has been in the sharp gains registered by Ford and Chevrolet. In turning out 117,891 cars and trucks in April, Ford registered the largest output since last July. By in- creasing the April total more than 18,- 000 over March, Ford pushed its record for the year past the 350,000 mark. ‘The Chevrolet figure of 106,096 re- vealed the progressive increases in schedules that the company made dur- ing April. Original plans called for production of between 80,000 and 90,- 000. In surpassing the preliminary schedules, the company came close to May production of last year. Indicates Competition. ‘The intensive c¢ompetition that Is being waged in the low-priced field is ' well indicated by these figures. Two years 2go automobile manufacturers were saying that the trend in motor cars was toward multi-cylinders. They began to talk in terms of eight-cylinder cars. On every side it was being said that the days of the fours and the sixes were numbered. Some of those ideas have been well exploded. The motorist is more in- terested right now in economy of operation than he is in telling his| neighbor that he is buying & new eight. Out of a total April production for the industry of 348,908, Ford and Chevrolet alone accounted for 223,987 units. Add | to this the production of other cars in the low-priced field, such as the Ply- month and the Whippet, and somz idea is gained of the trend of automobiie buying. The new Prosperity Six, which is to be introcuced to the market within the | next few days, is addressed to the buyer of the low-priced car. Graham- Paige is revealed as the builder of this new model. It will be one of the vehicles which C. W. Matheson, the new sales manager, formerly of Gen- eral Motors and Chrysler, will use to push Graham-Paige into the middle of the automotive picture. Fewer New Models. ‘The Summer of 1931 will not see, of course, the usual number of new models. The new rule of the National Automo- bile Chamber of Commerce, approving only of yearly models to be placed on th: market in November and Decem- ber, will be widely observed. The rule does not mean that there will not be ad- ditions to the dealer displays here and there. On the other hand, it has been interpreted to mean that manufacturers may add to previously established lines, but not create new ones. A manufac- turer, for instance, might introducs a | landau in his line of sixes. He cannot, however, replace his entire line of sixes with new models. Manufacturers feel that this arrange- ment will have done its work il it does nothing more than eliminate price cuts in the midst of the Summer buying sea- son 1o enable dealers ;o clear away old lines. Of course, it 1s expected also to spread some of the sales and manufac- « turing-activity of the Summer months into the Fall 2nd early Winter. The question that is occupying the at- tention of the statisticians right now is whether the industry can turn out 400,- 000 cars in May. Sixty-four thousand more cars were produced in April than | in March. If that many more were added o the April figure in the current month the incustry would be able o {boast of an approximate output of 412,000. Production for May, 1930, wa: 1444.699. A number of manufacturer: like Studebaker and Auburn, report an unabated demand for their cars. | Auburn had on May 1 the largest num- | ber of unfilled orders in its history. (Copyright, 1931.) FINANCIAL COMEBACK IN 1922 VERY RAPID | Special Dispstch to The Star. come-back as | NEW YORK, May 8 {of corporatons stage | they aid following the depression of {19222 william J. Healy will ask in the May 13 issue of the Pinancial World. “A recent study of the reversal as wit- nessed in 1922 showed that net incomes of our large corporations gained $4,000.- 000,000 on & $7,000,000,000 increase in ( gross business. The comparisons to be made with the 5 and 6 cents a share now being earned by large corporations will at least be mentally stimulating in reading the reports of 100 to 1,000 B cent. improvement from this very low ge.” “While it is necessary to differen- tiate betwe=n the conditions prevailing in 1922 and those of the present time. it is worthy of note that a complete recovery of earning power was accom- lished in one year by the following industries—agriculture, soft drinks, chemicals, tobacco, textiles, rubber, food, transportation, leather and public utilities. Those who Kefllfl a sharp and Tecovery business an markets have an abundance of torical evidence in which, 0 base doetrine,” > -Will earnings his- their . d | 9.65 per (CHANGES IN STOCKS: HELD SMALL PART OF BUSINESS WEEK Absence of Professional Sell- ing Encouraged Bullish Trend of Trading. (NEW DISCOUNT RATE CUT GIVEN TWOFOLD PURPOSE Declines in Earnings and Dividend Reductions Offset Good of Cheaper Money. BY CHARLES F. SPEARE. Special Dispatch to The Star. NEW YORK, May 9.—The lcast im- portant of this week's developments were those occurring in stocks. While | the market for shares was steadier in the first half of the weck and fairly puoyant at the end, it again witnessed declines in important shares to prices unfamiliar «since the years 1924 and 1926. There has been an absence of professional selling, which has given encouragement for trading operations on the bull side of the account. All this is normal following two months of severe reaction, during which a‘new low average for the depression was reached before the market stiffened up under support, and following the clearing away of unhealthy conditions which had been menacing Wall Street for_some time. Outside of the market many notable events have occurred since last Satu day. some directly influencing indi- vidual stocks and others creating a sen- timent for or against speculative and investment issues which may be among the controlling factors governing prices later in the year. The unfavorable in- cidenis had ‘a more positive effect in stocks than did those of a constructive nature, suggesting that the most power- ful speculative forces are still com- mitted to a campaign for lower market values. Ninth Discount Rate Cut. The spectacular episode of the week was the reduction for the ninth time since August, 1929, in the Federal Re- serve rediscount rate in New York. The cut to 114 per cent here was preceded by a lowering of the rates in the re-| serve districts of Boston, Philadelphia and Dallas. This action had been fore cast in the successive downward move- ments in bill rates, thereby increasing the spread between the bank rate an the open money market quotation. Two purposes underlie the policy of the Federal Reserve authorities cf agi- tating a rate lower than that ever be- fare quoted in the banking experience of this or any other country. The primary one was to assist foreign m:ney markets to recover their equilib- rium by preventing a flow of gold to the United States, where it is an em- barrassment rather than an asset. The immediate effect of the 1l r cent rate has been to advance sterling and to bring down discount rates in Lon- don and, fcr the time bewng, stop further exports of gold from France to_this country. The secondary object of the 1'; per | cent rediscount rate was the stimula- ticn of the bond market and espe- clally the promotion of long-term is- sues in the place of short-term securi- tes. It is doubtful whether this will meet with much permanent success. Those who have any inclination to purchase investment issues have shown the same eagerness for Government muriicipal _obligations maturing nd r:vl!hin a comparatively brief period as they did prior t> the promulgation of the new rediscount rate. Iofluences on Investors. It is the effect of statements of earnings that question the ability of corporations to earn their bond inter- est, the succession of dividend reduc- tions and the defaults and threatened fallures. to meet the debt service of foreign obligations that scare away the public from formerly good securities and many times counteract benefits from declining interest rates. A later development will be a reduction in the rates paid by commercial banks on their checking accounts and possibly on thrift or saving deposits. This may incline some depositors to purchase bonds in order to maintain the previ- ous rate of income on their capital. We still hold to the opinion that a business situation that would permit of & 3 per cent rediscount rate would promote bond market activity far more than one which compels the admission in a rate of 11, per cent that the in- dustrial status is not yet satisfactory. This latter fact is emphasized in the declines this week in commodity prices in addition to thoce which took place in April, when the Bradstreet index breke to the lowest figure since Novem- ber 1914. Crprer has been at 9 cents a pound, or below any price since the end of the last century. The same is true of other metals. Scrap steel is quoted at the equivalent of 1915 and finished steel at a figure similer to that when industry was beginning to show its first revival after 1921 and the United States Steel Corporation and some of the independent manufacturers were not covering the dividends on their stock. Instead of flattening out, as has been indicated in March, commodity prices have taken another sharp dip down- ward which, with the unsettlement in the stock market, increased the circles. has _unquestionably timidity in business Lack of Leadership. The me-ting this week of the Inter- natioral Chamber of Commerce in Washington has given occasion for re- marks on what to do and what not to do in order to g=t the world out of its present mees. Naturally the foreign view, as reflected in the speeches of European delegates, is contrary to that of most of the American representa- tives, who seem to b> influenced more by political expediency than by a de- sire to deal with economic questions frankly. In all probability the direct effects of the convention on stabiliza- tion of world trade will be as negative as those issuing from the convention the week previous of the United States Chamber of Commerce. One of the manifest signs of the lack of leadership from which the country is suffering is the inability to focus a group of men on one or two constructive policies, deal with them dispassionately and with- out political bias and start something moving. (Copyright, 1931, APRIL SALES OFF. NEW YORK, May 9 (Special).—Na- tional Shirt Shops, Inc. for April re- ports gross sales of $302,992, against $335,371 for April, 1930, a decrease of cent. For the year 1931 to A{rfl 30 sales totaled $1,162,800, against $1,280,107 {or the same last represent a decrease d | | i | | | | i | Speaker Signed BANKER SECURED FOR CONVENTION. EDMUND S. WOLFE, President First National Bank & Trus Bricgeport, Conn.. who will ad: the District of Columbia Bank- Association_June parley at Hot Springs, Va. He is president of the National Bank Section of the A. B. A., a director in the Washington Mechanics Savings Bank and frmer cashier of { the District National Bank. STOCK MARKET HAS NET GAIN FOR WEEK: But Wall Street’s Skies Re- main Too Overcast for Any Celebrations. By the Associated Press. NEW YORK, May saw a rift or two in the clouds this week, although financial skies remained | sufficintly overcast to prevent any pre- mature celebrations. Stocks worked hesitantly higher, and the bond market, under the stimulus of cheapening money rates, gave th> best performance since late December and early January. The paring of short term money rates cu'minated in the expected reduction of the New York Federal Reserve redis- count rate from 2 to 1 per cent, the lowest ever. This was explained in banking circles as part of a d-liberate program to in- ject vitality into the lagging market for bonds. Bonds Disappointing. Failure of the bond maket to develop the sustained strength that has usually appeared around the bottom levzls of eccnomic depression has been & con- stant source of disappointment. After the climax in the financial markets in Dacember, the bond market turned em- phatically upward, and_was help2d |along by the December 24 cut in the rediscount rate from 2!5 to 2 per cent. That upturn_in bonds, however, was short lived. Financing had been’ held up 50 long that underwriters rushed into the market with more new offerings than were easily absorbed. Extensive short term financing by the United States Treasury to make loans on veterans certificates had to be floated, and investors were at the" same time chilled by the shrinkage in_ corporate earnings, and d-faults on a few of the more specu'ative foreign bonds. Investment funds generally have grown timid. Reduction in the redis- count rate, along with the cuts in bank- | ers’ accep'ance end commercial paper rates, is resulting in smaller yields on Treasury bills and certificates. 5o the most popular havens for timid funds are becoming extremely unprofitable. Net Gain for Week. It is hoped that funds will be vir- tually forced into long-term invest- ments, or bonds. This should prepare the investment market for the flotation of a large Government bond issue to re- tire much of the Treasury short-term indebtedngss with which it has been meeting the growing deficit, as well as prepare the way for a renewal of cor- porate financing. In the meantime, the stock market has made further substantial recovery, despite considerable concentrated liqui- dation and bear selling in individual issues. Bearishly inclined traders feel that with the seasonal trend of general business downward until July, and nu- merous dividend reductions slated to appear in the interim, bulls cannot look for more than an occasional rebound. The market has acted pretty well sold out, however, although a run-in of shorts late Friday was followed by a substantial setback at the end of the week. Nevertheless, the market recorded a net gain for the week. as measured by the price index of 90 issues, of about 3 points, and finished about 6; points above the four-year low touched in the preceding week. TWO CURES OFFERED FOR OIL INDUSTRY Separation of Production and Re- fining or Price Fixing Suggested By the Associated Pres: NEW YORK, May 9—Two paths lead to r-covery and stabilization of the | ofl industry in the opinion of J. Edward Jones, oil royalty owner, and the proper one to follow can be chosen oniy after an investigation of existing conditions, with particuiar attention to the study of prices. Mr, Jones’ views were expressed in a letter to Gov. Harry Woodring of Kansas, in answer to a request made by the Governor on & recent visit to New York. One of the paths he pointed out is tha disintegrating of the large com- panies to a point where their opera- tions are restricted either to the pro- duction of crude oil, or its refining, two undertakings which he said are en- tirely out of harmony with each other. The alternative, Mr. Jones said, is public regulation of both “price” and the allowable rate of production of bota crude and refined oils. - ——————— The New York city bank stock market during the past week registered the first recovery in 10 weeks, as in- dicated by the dollar index figures com- piled by Hoit, Rose & Troster. Based on May 9 prices, 16 leading bank and trust company shares were quoted at 17.5 times known earnings, against 167 times at the close of the gnvlaus week. The yield now stands at 4,402 per cent, against 4.571.per’ cenp & 880, 9.—Wall Street| THEUNIS SURPRISED ATLINKING OF WAR DEBTS WITH ARNS Declares Military Expendi- tures Political Rather Than Economic Question. RETIRING CHAMBER HEAD CITES LARGE U. S. FUNDS Former Belgian Prime Minister Declares Security Is Major Issue in Europe. BY JOHN F. SI) { Georges Theunis, retiring president of | the International Chamber of Com- merce and for many years after the war prime minister of Belgium, docs not see how military disarmament can | be tied up with war debts and repara- tions. He expresses surprise that any one in a responsible position should at- tempt to tie them together. “That's a political rather than an economic question,” he said in reply to a question. “For at the bottom of it all is the question of security. Why is Belgium spending several million d lars for fortifications right now? It because the people of Belgium insist on security. The same holds true of every country in Europe that is spending more money for military purposes than it did before the Great War.” Cites U. S. Expenditures. Turning around in his chair in his office in the National Chamber of Com- merce Building, Mr. Theunis said: “Take the United Stat How much is it spending for miliiary purposes these days? 1Is it not twice as much as it was befors the Great War? And yet the United States has no one to fear. Canada is not a threatening power, nor 1s Mexico. Nor is the prob lem of security foremost here, as it i in_Europe. expenditures and their reduction is a most_difficult one to meet. It is not s0 simple as the average American be- lieves. Nor is it one that can very well be tied up to war debts and repara- tions.” But President Hoover, at the opening of the session of business leaders, re- ferred to the close connection between world depression. When it was pointed out to Mr. Theunis that the total an- nual payments of war debts to the United States are about 5 per cent of the total being spent in Europe an- | nually for war preparation, the Belgian leader still insisted that the problem was a political and not an economic one, and as such the two could not, |'and should not, be related or tied to- | gether in the manner the American delegates suggested. Surprised at Headlines. Mr. Theunis cxpressed surprise at the way the newspaper headline writers drew conclusions so often at variance with the articles themselves. He could not understand why the man who writes the article should not also be the person who writes the headline on the article. “Secretary Mellon in the headlines opposed war debts modification. + But his speech said not a word about it. Why is that? Please tell me? Such a thing would not have cccurred in Europe, And that is one of the factors that makes it very difficult for for- eigners to understand the American psychology. S> long as every man in he Uniled States, in your conception of government, is equal to every other man, the opinion cf the non-expert is just ‘as important as that of the ex- ‘hat, also means that the newspa- pers must be the informers as well as molders of public opinion. It is all very difficult, for what seems im- pertant to one writer does mnot seem so important to another. In the same way, what we in Europe consider very vital does not strike American writers as such. But conferences such as this one, at' least, bring cut those differ- ences and make us have more sym- pathy with the other person’s point of view.” “What is the most important con- tribution which the International Chamber of Commerce gathering has made this year?” Mr. Theunis was asked. Facts Are Impressive. “To me the encouraging thing about it all,” he replied, “is the growing in- sistence upon securing facts on which conclusicns can be built. The sig- nificance of facts often appears months and years after the basic data has been secured. What is needed is not a lot of half-digested opinions based on limited facts, but well th-ught out conclusions based upon facts which are indisputable. “I think this conference has compiled more important data on the vital issues facing the world—such as tariff walls, agriculture, gdld and silver, credit, war debts and reparations, etc.—than’ ever before. We cannot expect that the rep- resentative of every country will agree on what ought to be done with these facts, but in time the very force of circumstances will compel the right action. “Do you look for an early recovery in world trade?” he was asked. “The severity of the crisis which has devastated the world for the past 18 months precludes_the possibility of an early recovery. Yet, I think we are getting along because we are all willing now to face the essentials and to co- operate in such a conference as this in an effort to bring around as speedily as possible a better situation. I think there was more serious attention on the part of the delegates to this year's con- ference than ever before. Each man was seriously intercsted in finding out what is fundamentally wrong. Staterpent Unchallenged. y “Por example, when the convention heard me in my opening speech say that ‘the fundamental cause of the un- equal distribution of gold lies in the uncertain political situation and in the protectionist _policies which prevent goods from taking the place of gold,” no one_seriously challenged that position. “Now the implicatigns of this, if my conclusion is correct, dre very far reach- ing. Countries like France and the United States, having within their pos- sesion more than two-thirds of all the monetary gold of the world, must se- riously study the effect of their tariff policies in order that this’ problem— and it is one of the most serious con- fronting _the worldi—may be satisfac- torlly adjusted.” ¥ (Copyright, 1931, by the North American Newspaper Alllance.) Ptk ot o A The necessary funds to meet the June 1 interest payment on St. Louis Gas & Coke Co., $9.429,000 of 6s of 1947 have been deposited With the pay- The problem of military | military expenditures and the present Bankers Declares Reforms Are Needed. |Would Eliminate Floor Trad- ing and Dealing in Small Margin Accounts. “I expected a large body of opinion lin Wall street would object to my sug- | gestions for limiting the speculative !mania there,” said Melvin Traylor, “but {I have read nothing to change my views. “I suggested in my address Tuesday 'before the International Chamber of |Commerce the elimination of floor |trading, the elimination of brokers® margin trading in accounts under $10. 000 and the changing of the settle- ment date from a daily operation to bi- monthly. I am convinced each of these reforms must be brought about.” Mr. Traylor is president of the Pirst | National Bank, Chicago, and a member of the Organizing Committee for the Bank of International Settlements. | “One of my critics,” he said, “sug- Igested in an editorial that I, too, was a part of the crowd that had believed the golden era had arrived and that |the business cycle was a thing of the past. I was quoted as having said this |when T was president of the American { Bankers' Association, in 1927. Will Answer Critics. “At the proper time I will reply in full to this criticism, but it is suffi- |clent_to say now that the critic quoted only half of my statement. What I did ay was that new forces had come into ! being and that if business and banking | leadership were able to control them wisely the world would see fewer hard | times and less depression than ever be- ore “But T said further that if these ) forces were not wisely handled, we would be faced with greater business troubles and disaster than eve | “Do you believe it w-uld have been | better to have allowed the depression of 1921 to run its course, rather than | to have arrested it when we did?” Mr. | Traylor was asked. “Cerainly. We should have allowed | the war inflation t) be squeezed out 10 years zgo. Had w= done so, we would not be going through a severe 2nd disastrous doflation now. But the movement ward was arrested by banking and business policy, so for another 10 years we continued to live | on borrowed money. Of course this conditions had to end, and when it did, in 1929, the inflation was much more proncunced and had gone much fur- ther than in 1921. So the resultant | depression has been much more severe than it would have been ctherwise.” “Do you believe we are pretty well through now with the depression pe- riod?” Must Maintain Standard. “There are still scme elements that | must_be cleared up. No one can say | exactly when the revival will come. | What we can say, however, is that a | revival cannct be brought about until lall of the economic elements are brought into balance.” “Are you referring to wages? Do you be'ieve they must come down, with commodity and security prices?” “I think one must be very clear and | definite about this matter. I am strong- |1y in favor of maintaining the American | standard of living. By that I mean the [ daily wage must buy the same amount a year from now as today. “If prices come down 20 per cent and wages remain stationary, the worker is receiving 20 per cent more real wages than he did before the price drop. If | wages are reduced 15 per cent, the recip- | isnt would still be better off. I think we ought to keep very clearly in mind that what every one wants in the wage | situation is meintaining real wages in | terms of what those wages will buy.” “If floor trading on the Stock Ex- | change were | duce very considerably the volume of business on the market?” Mr. Traylor was asked. It probably would. However, from the viewpoint of the investor rather than of the broker, I believe prices on the exchange would be much higher in such times as these if foor trading were entirely eliminated.” Short Selling Legitimate. “Do you believe in the principle of short selling?” “Yes, I think there is a legitimate place for short selling if the mechanics of trading are set up right. But today what have you in Wall Strect? The cards are stacked in favor of the floor trader and against the stock purchaser. “When a customer buys 5,000 shares of United States Steel he signs a slip agreeing to allow that broker to lend, at any time, the owner’s stock for ‘short selling’ without obtaining permission from the ow Now suppose this stock is lent for ‘short selling.’ This very transaction may cause a drop in the price of the stock of from one to ten points. “Think of the owner ‘assisting’ in this kind of a deal! Does any one outside of Wall Street believe such an arrange- ment is legitimate and for the best in- terests of the man who owns the stock? Not if he is in_his right mind!” “What you have in mind, then, is a market where every order is a bona fide buy or sell, under specific instructions from the people who own stock. You want a market of quotations such’ as exists tday in the case of listed bonds?” “Yes, that is correct. I think we ought to have more legitimate trading, fewer wash les, more stability and less gambling. Would Suspend Payments. The discusslon shifted to world trade. “What is your suggestion for meeting the world depression?” Mr. Traylor was asked. “I believe the situation is sufficiently serious to demand that the world grant a delay in the payment of all interest and principal on political debts, includ- ing_reparations and war debts, for a period of. say, five years. This would be a gesture of good will and -at the same time it would be of immense bene- fit to all nations. “In addition, so far s the United States goes, I believe payments on the principal debt of the Federal Govern- ment should be postponed five years, as we are already seven years ahead of schedule. Also, I would insist that all new expeditures by future Congresses be met by increased taxation and not by new Treasury loans. That would climinate borrowing, which must, "be made good eventually by somebody. “Such policles, it seems to me, would have the backing of all thoughtful Americans.” (Copyright, 1931, by North American News- Diiper Alliance.) NEW Y{)i{K CLEARiNG HOUSE. NEW YORK, May 9 (#).—The weekly statement of the New York Clearing House shows: Total surplus and undivided profits, $1,247,148,000, unchanged. ‘Total net demand deposits (average), $45,354,000, decrease. Time deposits (average), $7,348,000, increase. Clearing week ending today, $5,711,~ 727,005, |Former Head of American| inated, would that re- |s |TRAYLOR REITERATES CRITICISM __MESVIN TRAYLOR. _ TRAYLOR COMMERT So Far, However, Have Remained Silent. By the Associated Press. NEW YORK, May 9—It was re- ported in unusually well informed | New York Stock Exchange is prepar- ing to comment on the sweeping | changes in stock trading practices rec- | ommended this week by Melvin A. | Traylor, president of the First Na- | tional Bank of Chicago. | Offictals of the exchange have as yet declined to comment on Mr. Traylor's remarks before the International Chamber of Commerce in Washington | on Tuesday, in which he suggested that | marginal transactions be limited to | transactions of $10,000 or larger; floor traders be forbidden to trade for their | own accounts, and that the practice of daily settlements be abandoned. Form Not Learned. ‘Whether comment will be made in a public address by the president of the exchange, or whether it will ap- pear in another form, could not be learned. Brokers who have discussed the sug- gestions privately pointed out that a largs bulk of the present trading is in the form of marginal transactions of less than $10,000. Some. bslieve that limitations which will prevent persons of small means from overextending themselves would bs desirable, if a workable method of restriction could be evolved. Some Are Perplexed. Some perplexity was expressed as to the suggestion that floor trading be forbidden. It was pointed out that a means of preventing professional trad- ers from dealing through members who act only on commission would also be necessary to prevent professional trad- ing and pool operations. In circles close to the exchange, professional day- to-day traders have been indicated as essential to a continuous market. The opinion has been expressed that a ready market for the vast number of listed securities could not be maintained but for the profsssional trader. That pro- | fessional trading, despite all presont feguards, is subject to abuse, however, is acknowledged in many quarters in Wall Street. The daily settlements of accounts, together with the daily call loan rate, has been a distinctive feature of the New York stock market. In London, the periodic settlement has long been in use, and some observers have felt that it works more smoothly. STEEL ORDERS DROP 97,601 TONS IN APRIL Unfilled Demand of U. S. Corpora- tion Shows Total Tonnage of 3,897,729, By the Associated Press. . NEW YORK, May 9.—Unfilled orders | of the United States Steel Corporation | decreased 97,601 tons in April to a total | of 3,897,729 tons April 30. In March an | increase of 30,136 tons was reported. | The backlog as of March 31 was 3, 995,330 tons. On February 28 unfilled orders aggregated 3,965,194 tons, against 4.132,351 tons on January 31. On April 30, 1930, unfilled orders amounted to 4,354,220 tons. Most, early estimates of the April 30 backlog had mentioned a probable de- cline of 75,000 to 100,000 tons, although some forecasters felt there was a pos- sbility of a small increase because of the low rate of steel production. Activity at the corporation’s plants tapered off steadily during April from the March peak. Early in the month United States Steel was operating at about 56 per cent of capacity, but the rate had dropped under 50 per cent by the 30th, reflecting the cautious atti- tude of consumers influenced by price uncertainties. Buying in March, when the backlog gained 30,136 tons, was much better than in April. It was believed in trade circles that the corporation would include some of the substantial construction contracts placed during March only as specifica- tions against these orders were received, and much of this steel, notably that for New York's “Radio City,” will not be required for some time. INTERNATION.AL BANKERS BUY BERLIN’S POWER By the Associated Press. NEW YORK, May 9.—The authorities of Berlin, Germany, have signed the contract for the sale of the city's mu- nicipal electric light and power prop- erties international banking syndicate. Harris, Forbes & Co. and the J. Henry Schroder Banking Cor- poration are the American members of the group. The plan under the contract con- templates the formation of a new cor- poration with 240,000,000 reichmarks capital, which will own the electric works, The city is to receive the pro- the s of the new ' cor- poration which will assume a mately 320,000,000 reichmarks term non-interest bell;n&dzht of the MAY BRING REPLY Officials of Stock Exchange| circles in Wall Street today that the | preciably in many countries. | CONDITIONS ABROAD NOT 30 GOOD AFTER- RALLY THIS SPRING Definite Trend Has Not Yet Developed, but Letdown Is Being Felt. SNOWDEN BUDGET FAILED TO PROVE TURNING POINT Unemployment in France Shows Improvement, Declining 1 Per Cent in Week. Special Dispatch to The Star. NEW YORK, May 9.-Cable dis- patches to the Business Week give the following survey of business abroad for the week ending May 9: Europe—Conditions reflect a let- down after the Spring rally and are unsettied. No definite trend has yet developed. Certain commodities show further weakness, notably copper, vhich has broken recent lows, but this i is largely due to overemphasis of sta- tistical positions of visitle supplies, which do not reflect the l-w Ic“pcll:ls t’o which consumers’ reserves have fallen. Heavy industries are slow to show improvement, but activity gradually is Increasing in a broad fringe of miscel- laneous enterprises. Construction is reviving. ~Foreign trade volumes are larger. Unemployment is shrinking ap- In Ger- many “dolers” alone are d>wn 400,000 for April. Crop prospects are good. Money continues easy. Slowly but steadily capital is moving from centers of congestion into anaemic areas, miti- gating stringencies. The gold flow frcm Paris to New York apparent) has been stemmed; London steadily is ab- sorbing South Africarr new gold. It is expected the gold reflux from Paris now will be smaller, probably due in part to the beginning of the tourist movement. Exchanges are quiet; for the first time this year no single cur- rency, even the peseta, is under pres- sure. Locally, England is having difficulty in digesting Snowden's budget, which at first was swallowed readily. Ger- many, likewise, is faced with new fiscal troubles, while the rise in bread prices has weakened confidence in Bruening’s ability to reconcile a policy of co- orfl‘l{“fihfln‘ w-g‘e"l;nd pumce r(educf.lnn.l wi e conflicting policy of ul- tural protection. = Spain Making Progress. France also faces a collision between tariff-inflated prices and the necessity of deflating industrial operating costs. Spain, however, is making progress un- der the new republic. - Italy finally has announced a 200,000,000 5-year 5 per cent domestic premium loan, to-be is- sued at 95, to refund the nine-year treasury bonds maturing in November, with & 5 per cent bonus to holders who convert. The bulk is said already to be placed with banks and insurance companies. This has lessened the prob- ability of a further foreign loan. It is possible new tensions in inter- European political relations will develop when the League meets the second half of May. Among other things, it will consider the legality of the proposed Austro-German consolidation scheme. Czechoslovakia, at this week's meeting of the little entente, was able to line up Rumania and Jugoslavia, which have been wavering toward the preferential Austro-German trade agreements, to se~ cure their adherence and joint indorse= ment of Briand's still somewhat nebu- lous absiract plan for general European consolidation. Budget No Turning Point. London.—The budget announcement, long awaited and far from radical, has proved no turning point for business. Stock markets are off, with the share index for industrials touching a succes- sion of new lows. Metals—copper, tin, zinc—are down. Lead and silver are a bit more steady. Rubber is slightly up. So is coffee. But sugar, cocoa and cot- ton are down. Exchange is slightly better. More gold is coming to the Bank of England. Money is easier. The British Match mlunn, lns?rnnce companies and using corporations are showing good results. . Encouraged by the trading results of Unilever, Sofina and Kreuger & Toll, investment specialists in Britain are ad- vising their clients to turn to interna- tional combines as safer investments than domestic enterprises. It is pointed out that a world-wide horizontal com- bine has interests so widespread that it must escape the worst effects of any slump, even a world slump. What it loses on the swings, it stands to gain on the roundabouts. . Unemployment Declines. Paris.—For the second successive week registered unemployment has de- clined 1 per cent, but the indicated im- provement is only superficial. Funda- mental conditions are unchanged and prospects of protracted local depression remain, with probable serious difficul- ties arising from extreme agrarian pro- tectionism and budget inflation later in the year. Unemployment is only moderate. Wage cuts are spreading quietly. Tex- tile workers in the Rubaix-Tourcoing district may cause some trouble when their cuts become effective May 11. Industrial antagonism to the govern- ment's policy of extreme agricultural protectionism is mounting. With wage cuts, industry is seeking to win the sup- port of labor in demanding a reduction on foodstuffs duties. This week's verti- cal increase of 115 per cent in the rye import duty and new farmer demands to double the duty on butter have brought a fresh outburst. Living costs still are mounting—are destined to con- tinue to rise unless foods can enter the country more cheaply. Berlin Pessimistic. Berlin.—A pessimistic wave has suc- ceeded the spell of Spring optimism. Apart from the international problem, the main local factor is the general g tioning whether or not Herr Dietrich’s budget equilibrium will be able to With- stand another depression year. The alarming falling off of public revenue calls for drastic new economy meas- ures—may include a fresh reduction of pu(l;llc salaries by midsummer, ermany st struggling to agricultural tariffs to :‘dlsgurbln‘xdjulnaf crease in the cost of living. The price of bread has increased 3 per cent of late. Purse-pinched laborers have raised a cry that Bruening’s economy plan is failing. If the price holds the govern- ment must lower the prohibitive grain duties. Farmers then will cry out. Even now they are provoked that but- ter duties were not doubled on their request. Increase in the duty on lard, live pigs and oats may satisfy for a AASER IE sattindy=T "L,