Evening Star Newspaper, September 13, 1931, Page 59

News of Markets Pages 1 to 4 FINANCIAL AND CLASSIFIED he Sunday Star Part 6—14 Pages S FCOND QUARTER EARNINGS REVEAL 2 P ADVANCE Incomes of 260 Corporations Are Better Than in 1929, Special Survey Shows. D. C. BANKER CONVENTION : REPORT IS PUBLISHED Yocal Insurance Men Off to Confer~i ence—Other Notes in Finan- I cial District. BY EDWARD C. STONE. Aggregate earnings of 260 representa- tive industrial corporations in the sec- ond quarter of 1931 were 28.70 per cent higher than in the first quarter, accord- ing to compilations of published reports announced by the Washington office of Ernst & Ernst, accountants. This com- pares with an increase of 9.86 per cent for the same companies as between the first and sscond quarters of 1930, and -an increase of 25.72 per cent between the same two quarters of 1929. In re- cent years the increase of second quar- ter over first quarter earnings has aver- | aged around 20 per cent. Included in this study are all indus- trial corporations whose first and sec- ond quarter earnings are available for this year and for the two preceding years—260 in all. That this list fairly portrays the general trend of industrial earnings is suggested by the fact that the six months’ comparison of 1931 with 1930 for the 260 is approximately the same as for a list of twice as many in- dustrials, not all of which report earn- ings by quarters. 928 Firms Report Decrease. Another compilation by Ernst & Ernst shows six months' earnings of 928 _corporations, including 526 indus- trials, 171 railroads, 103 telephone com- panies, 90 other public utilities and 38 finance companies other than banks. Aggregate earnings of all of these were $1,029,998,912, as compared with $1.- 625.890.327 for the first six months of 1930, a decrease of 36.65 per cent this year under last year. Of the 526 industrials whose six!| months’ earnings have been reported, one fourth, or 131, made more profit this year than last year, while three- fourths, or 395, made less. The aggre- gate profits of the 526 industrials were $364,190,944 in the first six months of this year, a decrease of 54.50 per cent from the aggregate of $800.493,606 re- ported by the same companies in the first six months of last year. Merchandising Tops List. By classified groups of industrials, rchandising made the best record, with profits 19.23 per cent higher in the first half of this year than in the first half of last year. Telephone com- Pantes showed a 2.66 per cent increase. Merchandising and telephones were the only groups reporting increases. Bev- erages and confections showed approx- imately the same this year as last year. Among the groups showing relatively minor decreases this year under last year were: Drugs, 5.13 per cent; pub- lic utilities. other than telephone com- panies, 5.6 per cent: bakeries, 12.33 per cent; restaurant chains, 12.96 per cent; food products, miscellaneous, 12.97 per cent; paper products, 16.34 per_cent. ‘Textiles made a notable reccrd by reducing the aggregate deficit to $1.- 884,386 this year from $2.882.497 last year. Aeronautics also made good progress by reducing the aggregate deficit to $467,072 this year from $7.- 320.288 last year. | Net operating income of 171 railroads | showed a decline of 36.79 per cent this year under last year, approximately the same as the 36.65 per cent decline for| the entire group of corporations, and | less than the 54.50 per cent decline of | industrials only. Bank Convention Report Out. ‘The book giving the complete pro- ceedings of the thirteenth annual con- vention of the District Bankers' Asso- ciation, at Hot Springs, Va. appeared during the week. It contains every word said at the business sessions and is highly interesting reading. The re- port of the retiring president, Lanier P, McLachlen, is included in full, as| are the three chief addresses, made by W. Espey Albig, Albert W. Atwood and ©O. Howard Wolfe. ‘The publication includes a list of all, the presidents since the bankers' asso- ciation was founded back in 1901. For its unusual historical value the list is reprinted here with the dates when the local financiers held office: | 1901, Thomas Hyde; 1902. F. C./ Stevens: 1903, Charles J. Bell: 1904, John H. Moore and Albion K. Parris; 1905, John Joy Edeson; 1906, C. F. Norment: 1907, W. V. Cox; 1908 and 1909, Edward J. Stellwagen: 1910 and 1911, W. A. Mearns; 1912, George W. White; 1913, H. H. McKee; 1914, B. F. Saul; 1915, George E. Fleming: 1916, W. ‘T. Galliher; 1917, John Poole; 1918, Corcoran Thom; 1919, M. D. Rosenberg; 1921, John B. Larner; 1922, Joshua Evans, jr.; 1923, Harry V. Haynes: 1924, Victor B. Deyber; 1925, Francis G. Ad- dison, jr.; 1926, Howard Moran: 1927, W. W. Spaid; 1928, Robert V. Fleming; 1929, William J. Waller; 1930, L. P.| McLachlen. ‘The book includes the present offi- cers, all the convention committees and memorials to the late Albion K. Parris, B. Francis Saul and George O. Walson 2nd elso the special resolutions passed on the death of I. A. Fleming, who was not a member of the association et took an intense interest in all its undertakings. Agents Win Convention Trips. Paul D. Sleeper, genera] agent for the Aetna Life Insurance Company for Washington and the State of Virginia, and a delegation of his field men will leave tonight in a special car for New London, Conn., to attend the company's international convention from Septem- ber 14 to 18. ‘The party will include C. C. Mason, who led all the Aetna’s fleld salesmen in the United States up to July; F. N. Stricklin, J. L. Richards, C. B. Myers, L. E. Harris, H. C. Fisher, L. G. Em- mons, H. B. McGuire and O. L. Jamison. ‘These men qualified to attend the con- ference by having attained a high sales quota during the last year. Their average for the regionaire period of 13 months was $467.0 0. ‘The occasion will be the fleld’s com- memoration of the completion and opening of th» company's handsome new home office in Hartford. On Wed- nesday the 600 delegates will visit the building, where a reception will be held and a special program carried out. Financial District Notes. ‘Eliot H. Thomson of the Washington Yoan & Trust Co., left here yesterday on s motor trip to New England and also to attend the national convention | | I i Austria, Among Speakers TREASURY OFFICIAL WILL ADDRESS BANKERS. IPERWOLD UNDERSECRETARY MILLS, One of the biggest attractions on the program for the American Bankers' As- sociation convention at Atlantic City. He will talk on the national and inter- i national situation so far as it concerns American banks. Recent problems in Germany and England will make his statements of great im- portance. PETROLEUM TRADE TAXES INCREASED Thirteen States Have Added to Levies on Gasoline, Survey Shows. BY JOHN F. MILLER. As the drive for increased taxes, di- rect and indirect, gains momentum throughout the country, it is apparent that a favorite sector on which to launch an attack is the petroleum industry. Information obtained today from a country-wide survey shows that 13 States already have increased the rate | WASHINGTON, D. C., SUNDAY MORNING, SEPTEMBER 13, 1931 STOCK LOSSES PUT | MARKET BACK NEAR LOW MARK OF JUNE | Reductions and Omissions-of Dividends Result in Heavy Selling Attack. PUBLIC IS SACRIFICING GOOD ISSUES FOR CASH Evidence of Increased Hoarding Seen ¢s Higher Tax Talk Is Heard. BY CHARLES F. SPEARE. NEW YORK, September 12.—After his experience with this week's de- moralized markets for stocks and bonds, the American investor is in a state of mental confusion, for he has lost his reckoning in the realm of values and does not know how to re- cover it. Neither he nor the most astute economist or banker can ex- plain why securities that were so high in 1929 should be so low in 1931. Perhaps as accurate an answer as any is that during the bull market which culminated just two years ago, mass opinion exploited stocks at the expense of cash, while today cash has a high premium over securities. The public was drawing out its money from the banks and from mort- gages in 1929 and putting 1t into Wall Street; now it is replacing “equities” and fixed obligations by cash. This is swelling the deposits of the savings banks and is reflected in the steady increase in banknote circulation. More hoarding is taking place than since 1907, which means that confidence in property values is lower than it has been in nearly a quarter of a century. Public’s Mood Changes. The psychology of the moment is as irrational as that of the period of market inflation. It is as impassible | | now to make people believe that val- ues, measured by earnings, dividends, prospects and management, are in | many instances low, as it would have | been to have won their support to a | policy of liquidation of common stocks in the Summer of 1920. Everyone is doing, saying and thinking the same | things. The sum of them all is that ! the situation is hopeless and prices | are too high. | of their gasoline tax in the year to date. | Three widely distributed stocks that | with Florida holding the distinction of | ha\'ec:hl.s week fallen to $30 or under | i ¢ er | 8Te General Motors, Electric Bond & ”‘§m3 the heaviest tax, 7 cents PET| grre and Northern Pacific. Each 1 gallon. | representative in its particular field. The States boosting their gasoline | The first sold in 1929 at about 92, the taxes are: Massachusetts, from 2 to 3 | second at 189 and the third at 119, Tho | cents; Wisconsin, from 2 to 4 cents; | average of the three is now 80 per cent | Utah, from 3'> to 4 cents; North Da- | lower than it was then, although earn- | kota and Washington. from 3 to 5 ings per common share on the group | cents; Alabama, Arizona, Maine and |are off less than half. As for df¥id2nds, Oklahoma, from. 4 to 5 cents; Arkansas, | they are approximately as high as they North Carclina and Tennessee, from 5 Wwere in the boom period, for Northern to 6 cents, and Florida, from 6 to 7' Pacific still pays $5 a share, though cents, | it will probably reduce this month to | 184 a share; General Motors has con- | City and County Taxes. | tinued its regular rate while dropping | Only four States, cCnnecticut, Mis- | its extra, and Electric Bond & Share souri, New York and Rhode Island, now | has maintained its record for dividends have'a 2-cent rate. While Florida’s 7- | in scrip_ Both General Motors and | cent tax is the highest figure so far| Electric Bond & Share have materially | reached in this country, Alabama and | increased their surplus since 1929, with | Missouri have county and municipal | the former showing the strongest bal- taxes in addition to the State levy, and | 2nce sheet in its history at the end of in a few Alabama jurisdictions the total | the June quarter. At this week's price rate is even higher than in Florida., 8 controlling interest in the Northern Arkansas. Georgia, North Cerolina, { Pacific Railroad. with a capital of ap- | South Carclina and Tennessec are the | proximately ~ $360.000,000 and nearly States now having a 6-cent levy. | 6.800 miles of property in excellent con- The rate of the first gasoline tax was, dition, might have been purchased for ; c:nt n‘ gallon and was levied by !ho" $35,000,000. tates of Oregon. Coloredo and North Dakota in 1919. In 1920 Kentucky was | R added to the list, and New Mexico adopted a 2-cent tax. In 1921 Oregon lifted the rate to 2 cents, and 11 other States came in with a 1-cent tax. In 1925 all but four States were using this method of raising money for highway construction and maintenance. New York, which adopted the levy in 1929, ! was the last to enter the fold. The amount of revenue derived from the gasoline tax is enormous. In 1930 it amounted to nearly $500.000.000, the average consumption for each motor vehicle in the country being 556 gallons. Ohio with a 4-cent tax led all the other States in the amount collected from this source, with California, Pennsylva- nia and Texas following in order. New York, which led in the amount of fuel consumed, was fifth in collections due to its 2-cent rate. Bootlegging. ‘The high rates have resulted in one evil—gasoline bootlegging. During the last sessions of the State Legislatures a number of new laws tightening up the administrative features of the various acts were passed and in soma jurisdic- tions, it is claimed. the evil has been practically eliminated. In most States practically all of the money derived from the levy is used for road work. In a few of them, however, ? part goes to the schools and for cer- ain other purposes. Many bitter legis- lative battles have been fought over such diversions, and in view of the present shortage of funds in many of the States the 1932 sessions will un- doubtedly witness a continuation of the controversy. California is now the scene of a hot fight over the proposed diversion of gasoline tax funds to proj- ects other than road building, notably to irrigation work. <Copyright, 1331) Youngstown Suits Continue. YOUNGSTOWN, O. September 12. —{(/P—Twenty-one suits against the Youngstown Sheet & Tube Co., brought by di:senting stockholders to fix a fair cash value on their stock after the company's proposed merger with Bethlehem Steel Corporation had been enjoined, were continued today by Judge J. H. C. Lyon until October 12. Today's continuance was the seventh since the cases were flled. in Boston of the Financial Advertisers’ Assocfation. John R. Waller, president of ths In- ternational Bank, Jackson plac returned from a_short vacation at Pocano Hills, Pa. Miss Mary J. Winfree, Commercial National Bank, hes returncd from her vacation, which she passed on an ex- tended trip north both by land and sea, Robert K. Carpenter, manager of the local office of Goodbody & Co., stock brokers, has returned from a vacation spent in Maine. The North American Co. has applied to the New York Stock Exchange to list 165,934 additional shares of common stock. Loews, Inc., which has many local stockholders, has declared the regular quarterly dividend of 75 cents, payable September 30, to stock of record September 19. Washington Clearing House figures for Saturday, $4,315,352.52. , has spent. Such conditions as these, and they might be many times duplicated. sup- port the Babson statement that “we are standing up to our knees in the | greatest list of values since 1892." But {as always happens in similar circum- stances, it is what investors have that, they want to get rid of. They will not risk buying before prices have reached absolute bottom. ‘The narrowness of the market and the unwillingness of thusz who have been identified with different issues and promoted them on a huge scale two vears ago to recognize them today when they need support, gives occaston for the abrupt declines that occur and increases the alarm among security holders. There is nc banking leader- ship worth the name in the present crisis. There mav be the power of concentrated wealth and prestige, but not the initiative or the constructive program that has set things right when an older generation—one that had been through other panics and had a per- | spective—was »t the helm. We are | handicapped now by the fact that those who in 1923 and 1929 chonld have | I been bankers were then speculators. { The confidence which they now need is lacking. In fairness it should be said that { none of the older men had problems to| | deal with as grave as those which now face the yvounger generation, even though the latter should have by their experience in foreign financing gained a better idea of conditions abroad than they seem to have obtained. There has never been a foreign situation of such iscone and seriousness imposed upon a similar crisis in domestic affairs. The United States and France are the only two important countries in the West- ern world whose credit is unassailed.; This makes the panic much more seri- ous than those of 1921, 1907 or 1893. Security Holdings Widespread. If prices of securities are not so low as they were during the former depres- | sions, it is because of th> improvement tin capital structures and the reserves that were created during the seven years between 1922 and 1929. On the other hand, because such a large per- centage of the people own securities, (both domestic and foreign, pessimism spreads over a greater area and influ- ences the daily mood and habits of a larger portion of the population than ever before. It is also sensitive, as it has never been at other times, to polit- ical and credit conditions abroad be- cause of the $15,000,000,000 investment overseas, of which between 75 and 80 i 15 years. the rest of the world might sink into the seven seas” and the affairs of the could have been made with some degree of truth prior to the war. Today it is nonsense. It is not the bankers alone or the statesmen in the have been reading with tense interest this week the story of how the British per cent has been made in the last The recent statement “that | M. 3 United States be very little disturbed o United States who ™ MORE LOTUS EATERS BEAR TRADERS MORE CAUTIOUS | (Copyright. 1931.) AS THEIR FOLLOWING GROWS Special Dispatch to The Star. NEW YORK, September 12.—With- out chan either the market or the busipess situ- | ation, the bearish professionals who| dcminate trading on the Stock Ex- change just now have become decidedly cautious. . | For one thing they realize they have accumulated too large a following. This week one of the best known ope- | rators has been advertised as selling | leading industrials in large lots, and | the result has been that a host cf small | traders put out odd lots. The market has invited that sort of thing. Up to the afternoon of Friday it appeared to b- easy money to sell short almost | anything, railroads, industrials cr utili- ties. The stage is all sct for a violent re- covery once this weak short interest becomés alarmed. The chances are that the larger traders would not be averse to seeing a_good-sized rally, partly for the sake of ridding themseives of this undesired company and partly for the opportunity it would afford for putting out short lines at more advantageous prices. Another reason for caution at this g thelr attitude toward | stage from the bear point of view, is| the indication, plain to those who would heed it, that banking support is in the market. How much stock these banking interests would be willing to take they alone know, but it is regarded significant that the support appeared as right at the point where the June lows | were about to be violated. Then there is always the possibility of some unexpected good news, or what the market would regard as good news. Along this line is the ever-recurrent story about some modification of the | Volstead act. There is also the cer- tainty that sooner or later there will be improvement in the steel trade. The | Street heard this week that export busi- | ness to the Far East had picked up. which may or may not be a straw showing which way the wind blows. Then it is & maxim of speculation that | when a bear market has run as long as this one has and there is an over- whelming majority of bearish traders, a turn is near. (Copyright. 1(31.) WHEAT PRICES LOWER AS STOCKS DECLINE Grain Market Unfavorably Af- fected by Action of Securities. Corn Sharply Depressed. By the Assoclated Press. CHICAGO, September 12.— Grains pursued a general downward course to- day, reflecting the action of securities, especially in the late dealings. A lead- ing professional trader was a conspicu- ous seller of corn and that cereal gave way faster than wheat. Meagerness of new export business in wheat from North America had a bearish influence. Wheat closed heavy, %alc Icwer; corn, 1%4al3gc off; oats, lsalze down, end provisions varying from 5c decline to 10c advence. Downward momentum of wheat prices increased sharply as a result of stock market weakness. Bears laid stress also on advices that weather in Western Europe had improved, tending to facili- tate threshing and to help dry out wheat still lying in the fields through- out many parts of France and Ger- many. Talk was current that with no artificially high prices to bring domes- tic wheat out from the farms it was likely the farm storage cf wheat the coming season would be the greatest ears. mPS;t traders took to the selling side of corn, and soon demonstrated thag the market was almost bare of de- mand, Comment that heavy use cf wheat for live stock feeding was prob- able tended to pull corn prices down, although Chicago receipts of corn were only 44 cars, compared with 170 a year 0. ‘gPrmrl.ulcns were upheld by steadiness of hog values. Close. “48% 50, 52% 84% A% RYE— September December - Will Decrease Common Stock. people are pulling themselves together and making sacrifices or who followed the daily reports of the July crisis in Ge! These events and similar ones in Bouth America have been de- termining the policies of importers and exporters, manufacturers and the tens of thousands of those who are actively employed when there is a normal (Continued on Fourth Page.) NEW_YORK, September 12 (#).— Alpha Portland Cement Co. has notified the New York Stock Exchange of its intention to decrease its common stock to $18,486,000 from $24,134,500. The stated value of the no-par common will be reduced to $26 a share from $33.94, as at present, to have a r part of the book value of the repre- sented in surplus. » COTTON VALUES DROP ON SMALL SELLING | Market Turns Easier After Over- night Buying Orders Are Executed. By the Associated Press. | NEW YORK, September 12 —After | a steady opening on some overnight buying orders, cotton turned easfer today. December contracts sold off from 6.94 to 6.81, and closed at that figure, with the general market barely steady at net declines of 7 to 11 points. The opening was steady unchanged to an advince of 4 points on the over- night buying which may have reflected |some nervousness over the further | course of the tropical storm. October sold up to 6.75 and March to 7.22 on | no encouragement in the Liverpool cables, while it was reported that the tropical disturbance was diminishing in violence. Offerings increased after the initial demand had been supplied, and the market worked gradually lower during the balance of the session, reach- the lowest levels of the day in the late trading. October declined to 6.60 |and March to 7.10, and closing quota- | tions were at practically the lowest. A good part of the day’s trading was attributed to the usual week end eve- ning up and business was generally quiet with the market sensitive to com- paratively small orders. The weak- ness in the stock market seemed largely responsible for the decline which fol- lowed the opening advance, while there also appeared to be a little more South- ‘1 The hope that the tropical storm would | pass over without any damage to the | cotton crop no doubt contributed to the decline and some of the selling was sup- \poud to come from people who have either bought or covered short con- ts on. the storm news of yesterday. Liverpool cables reported that cover- ing, and trade calling in the market there had been supplied by hedging i3 | and prices were just about as due to 8 shade lower than expected on the New York close of Friday. The weather reported in the South was considered generally favorable. The amount of cotton on shipboard at the close of business awaiting clearance yesterday was_estimated at 68,000 bales against 104,000 last yea: October .. Dacember January March May July Crude Oil Price Raised. PITTSBURGH, September 12 (#)— An increase of 15 cents in the price of Pennsylvania crude oil was announced ?‘::‘e today by leading purchasing agen- the initial demand, but buyers found | | ern selling at times during the morning. | INVESTMENT BOND MARKET IS LOWER !Prices Drop During Week to Smallest Figure Since 1921 Depression. | Special Dispatch to The Star. NEW YORK, September 12.—In two respects the investment market this week lived up to the expectations enter- tained for it once Labor day was passed. Trading was more active and the new capital market showed more signs of life than it has done in months. In all other respects the week was, disappointing. Bond prices Aropped to their lowest levels since the 1920-1921 depression. Even United States Gov- crnment bonds were severely shaken by the disclosure that Secretary Mellon's $800,000,000 offering of 24-year 3s had | been oversubscribed by a mere 15 per | cent, against the 750 per cent oyer- | subscription of the last long-term | Treasury offering. In the foreign de- partment the drastic nature of Chan- cellor Snowden's new tax proposals in |England left a complex mixture of anxiety, fear and pessimism over the | British outlook. German bonds broke | sharply to fresh lows. Other sections |of the foreign list were unsettled. Index Drops. As the week ended, however, there | were signs that the heavy pressure on stocks had been lifted and that the bond market was absorbing heavy offerings with less difficulty than it had in midweek. Meanwhile, Standard | Statistics’ index of 60 bonds had drop- ped under 91 on Friday. This was nearly 7 points under the year's high, | made in January, and more than 10 points under the 1930 high, and it recorded a loss of a full point in the | week. In other words, in the market sessions since Labor day fully $1,000,- 1000,000 in bond market values has been wiped out. The volume of trading in bonds on | the New York Stock Exchange aver- aged about $11,000,000 a day for the week, against less than $8,000,000 | daily in recent weeks. Domestic railroad bonds were swept downward again, losing all the im- provement of the week before, more. Conservative issues, such as Northern Pacific 3s and 6s, Atchison general 4s, West Shore guaranteed 4s and Union Pacific first 4s bowed to the pressure. Junior descriptions were thrown on the market for what they would bring. The index of 20 railroad bonds dropped 2 whole points in the week. Industrials dropped with the rafls. Sharp dips characterized the oil | group, amusement company obliga- tions, Steel Corporation bonds and | those of motor car companies. Seek Lonk-term Paper At the same time there was a rush | of - investors to the refuge of high- grade municipal and, after the market had duly recognized the disappointing subscriptions to the new Treasury 3's, to long-term United States Govern- ments. Treasury 3%s, which had lost about a point on Thursday, re- covered virtually the whole ground on Friday. The new 3s, which were quoted as low as 99 16-32 bid, moved up close to par. Even so, it was the issue in years to sell New York State was ised, in current quotations for outstanding bonds, a record price for the $40,000,000 issue to be sold this week. In the foreign department, the weakest group was the Germans. Young Plan 5%s and Dawes tions 7s were both pushed down to 3| new lows, off 6 and 8 points, respec- tively, in a single market session. The only apparent factors in the selling were a sharp dip in reichsmarks and rumors of banking difficulties in the Scandinavian countries and Holland, where German descriptions constitute an important 'rn of investment port- folios. Near the week-end both issues firmed to prices 3 and 4 points above the lows, (Copyrisht. 1931) and | g Classified Ads Pages 5 to 13 NEW SOVIET AGENT 10 PLAN INCREASE INTRADE WITH U.S. Russian Organization Will Act as Intermediary in Promoting Business. EXTENSION OF CREDITS ON WIDER SCALE IS AIM Money Will Be Used in Pushing Five-Year Development Project. BY DR. MAX WINKLER. Special Dispatch to The Star. NEW YORK, September 12.— Two million dollars of Russian trade bills, maturing in 18 months, were recently offered to a New York bank at an an- nual rate of 36 per cent. Of the total, 2 or 3 per cent would have to be paid to an intermediary, which would still | leave a handscme return to the bank, had it chosen to do the business. How is it possible, many will ask, for any serious borrower to pay 36 per cent for the use of money, especially when the latter is obtained in a mar- ket where 18-month Government ma- turities return abcut 1 per cent or one thirty-sixth the yield on which Russia is willing to borrow? Does perhaps the reason for this re- side in the statement made recently by cne famillar with Russian effairs to | the effect that if one buys on credit but sells for cash there is always a| profit, irrespective of tke low price at which a sale is registeredf? Soviet Has Paid Debts. Within recent wecks, the rate has come down somewhat as a result of the increase in the demand for busi- | ness of the character referred to in the foregoing paragraph. A member of a | | Frominent investment firm which has | been handling Russian business on a restricted scale, but with great satis- faction, remarked that his firm would be in an enviable position today if it had hzndled Russian deals exclusivel Thus far, the Soviets have met all | their engagements promptly and faith- | | fully. A “cynic remarked that their | debts have not as yet reached ani amount where repudiztion would be | profitable. | H-wever, plans are being worked cut to increase Russian business in the United States to such a point, by means of a financial- institution to be organ- ized in New York for the purpose of engaging in the business of discount- ing and rediscounting acceptances of the Amtorg Trading Ccrporation in the United States and those of similar So- viet trading organizations in Europe. ._The sponsor of this plan points to the increase in Amtorg purchases in the United States, adding that the gain “results from the carrying out of the five-year plan cf economic develop- ment of the Soviet Union.” A document prepared toward the end of the past year outlining the rea- | sons for the immediate formation of a| company of the above character con- tains the following information: “The construction carried on under this (the five-vear) plan is proceeding | {at an accelerated pace. information received during the current | | year, construction work will be contin- | ued on the many machine-building. power and other plants for which American industry has supplied equip- ment, and the building of many new plants will be started. Expansion of Farms. “The great expansion of state farms and the further development of col- lectivization in agriculture have created an ever-increasing demand for modern agricultural machinery which the So- viet Union is not able to satisfy through its domestic production. It will be seen, therefore, that the Soviet market for foreign machinery and equipment is greater than ever, and the greater the improvement in credit conditions, the more favorable are the prospects of American manufacturers obtaining a large share of this market. “Germany, Great Britain and Italy have extended to the Soviet Union sub- stantial government-guaranteed credits. Certain improvements in the financing of Soviet purchases in the United States may also be noted. Not only has the number of American firms granting credits to Soviet purchasing organiza- tions increased, but the terris have be- come more favorable. Credits of three Yyears or over were received by Amtorg Trading Corporation from a number of leading firms during 1929 and 1930, in- cluding such firms as Ford Motor Co., T, Newport News Shipl g S ock Co., General Electric Co., etc. Credits for one year or more were ex- tended by nearly 350 companies. These facts are the best exhibits, that the credits granted to Amtorg in the United 05:‘:. gl e‘;:mnec:tlcnt ‘o"‘lth h.the gmw!!lh irchasing operation, have greal increased.” " s According to the above informant. all financial transactions of Amtorg are conducted by two or three local banks which generally demand and ob- tain security for whatever credits they may grant. American firms doing busi- ness with Russia receive, as a rule, from Amtorg a cash payment of 25 per cent. The balance is represented by Amtorg acceptances running from 6 to 18 months. Corporations holding According to ; those FOREIGN ECONOMIC SITUATION CLOUDED BY STOCK SLUMPS Freezing of Alien Credits in Germany Affects Many Banks. SELLING OF SECURITIES ON BROAD SCALE NOTED Increase in European Unemploy- ment Is Disturbing Factor in Business Outlook. Special Dispatch to The Star. NEW YORK, September 12.—Cable and radio dispatches to The Business Week give the following survey of busi- ness zbroad for the week ending Sep- tember 12: Europe.—Business in Europe, as in the United States, still fails to show any seasonal improvement except in industries manufacturing con- sumables, and even in these improve- ments is limited. The weck bas been characterized by stock market slumps, especizlly in the secondary markets such as Zurich, Stockholm, Amsterdam, and Milzn. This is attributable to two primary causes. Local values in these centers have been supported at disproporticn- at<ly high levels by the presence of refugee foreign capital. In the sec- ond place, and more fundamental, the freezing of foreign credits in Germany has set up throughout Europe an el- fort by affected foreign banks to re- ccver their original liquidity by security szles whose proceeds should offset the absence of funds imprisoned in Ger- many. To this have been added sales by German bz2nks of their foreign hold- ings in order to mobilize foreign ex- change. Banks' Condition. ‘The condition of banks in secondary centers, however, appear to be rela- tively strong end no runs are expected. Sweden, to forestall any run on her currency comparable to the run in Grest Britain, is expected shortly *o launch a $50,000,000 foreign loan to offset the reparation of foreign deposits occasioned by the reasons given above. Repatriaticns now are virtually completed. Also notable in Eusope this week is the widespread renewed increase in unemployment, with attendant compli- cations. A whole series of countries are proposing public works programs to alleviate unemployment but the prevalence of budgetary deficits fails to allow the necessary funds., and verywhere the approaching Winter is viewed with grave concern. London.—The tension pending the announcement of the gcvernment's economy rlans has kept business in a state of worry and inactivity. The general outlook is not encouraging. In- evitably buying activity will be cur- tailed as a natural reaction to the new economy prcgram, and lingering hopes thst business might recover this Fall are waning. ‘The relief which came to business with the appointment of a coalition government has been shortlived be- cause of the mounting opposition cf labor acting through the Trade Unions Congress. and of the growing insistence on an election at tho earllest possible date. Though neither may delay sericusly moves by the coalition to leg- islate and carry out extensive econo- mies, there is little prospsct of busi- ness revival till elections, whene they may be fought, assure the defeat of socialism 2nd afford some concrete defi- nition of tariff’s prospects. Business Reported Slow. All lines are slack. Business in cotton goods at Manchester has been slow, with buying very cautiously approached, owing to uncertainty with regard Yo the future course of values. Bids from In- dia have been too lo wfor acceptance. Fair quantities of dyeing materials have been taken by South America. Berlin.—The relative, though artifi- cial, equilibrium of the financial struc- ture which was establiched in recent months is being maintained with in- creasing difficulty because business is apprehensive that there will be a new setback in the near future. Though momentarily stabilized, the lack of liquidity of the banks makes it unlikely that they can withstand many new blows from outside or from within with the foreign exchange situation particu- larly strained. Although the momentous events since the outbreak of the financial crisis have devitalized the custoins union issue, in- dependently of the adverse Hague Court ruling and formal surrender 2t Geneva, nevertheless it is acknowledged by pub- lic opinion as a national humiliation and a symbol of the esiablishment of French financial predominance in Aus- tria and Hungary, thus indefimitely adjourning German plans for ecgnomic aggression in Southeastern Europe. The resignation of Dr. Curtius, foreign miaister, is claimed by all shades of political opinion, though it is unlixely to become effective before the visit of French government officials at the end of September. Paris.—Business conditions slowly are developing a more pessimistic trand. July iron and steel production figures confirm previous reports that the metallurgical industry chiefly is af- ected by the depression. July figures. which usually show a decided seasonal increase over the previous month, this vear are reversed. Pig iron totaled 860,000 tons: steel, 650,000 tons, are. respectively, 18 per cent and 21 per cent below last year's record. Profits Smaller. Annual returns of large companies ' these acceptances offer them for sale through brokers specializing in this type of business, and obtain from 73 t0 83 per cent of their face value. Business Method. From one familiar with the business the following has been learned: Amtorg places an order with corporation “A,” agreeing to pay 25 per cent cash and the remainder on credit. This is the first deal with the Soviet, and the cor- poration arranges its prices in such manner that If nothing is paid in ad- dition to the cash payment, the loss would be rather nominal, In order to execute the order, the company is obliged to make certain extensions end additions to its exist- ing facilities. It disposes of the ac- ceptances at the discount intimated above. The Soviet proceeds to place a second order, but is prepared to pay all cash. ki into account the enormous discount at which the cor- poration had profited, the Soviet main- tains that by paying cash it is entitled to the corresponding reduction in the cost of the 5 In this way the second deal is ef- (Continued on Page.), showed a great diminution of profits. Alsthom, the largest electrical equin- ment manufacturer, showed profits 23 per cent below last year, passed iis dividend; Lille Bonnieres, leading inde- pendent petroleum company, reports a 50 per cent loss of profits. Various metal-working " industries also ‘report difficult conditions, particularly ma- chinery and automobiles. International competition in the latter apparently is unabated by the depression, instanced by Italian Fiat's plans to open an as- sembly plant near Paris, and Citroen's decision to do likewise in Italy. Revorts are current that leading automobile in- terests are now advocating international ententes with the view of eliminating such uneconomic develooments in the future by limiting various markets to industries best placed to insure supply. POTAT CHICAGO, September 12 (#) (United States Department of Agriculture).— Potatoes, 29; on track, 166. total U. 8. shipments, 653; dull, trading slow: sacked, per cwt, Wisconsin cobbls 80890; car g a0ty e