Index

"I believe that we have reached the turning point in the Depression," said General Charles Gates Dawes last week in Chicago. Because he was fresh from the presidency of Reconstruction Finance Corp. his statements commanded attention. "It is the smaller business enterprises with low overhead expense which seem to be showing improvement," he said. "But in time the larger ones must necessarily follow. ... I would attribute much more importance to the increase in electric power consumption in the country during the last two weeks than to stock or bond quotations." Only factors tending to discredit this Dawesian cheer last week were his past record and the still-sagging index of business conditions. In General Dawes's record are the following utterances: "People do not realize that conditions are gradually improving." June 5, 1930. "It [the moratorium] is an augury of improved financial conditions." June 20, 1931. In Chicago, General Dawes will again direct, as chairman. Central Republic Bank & Trust Co. which he founded 30 years ago after having served as Comptroller of the Currency under President McKinley. As a banker, he must have been most pleased last week by the sudden shrinkage of gold exports when the French balances were withdrawn, and by the rise of the dollar in world markets. The electric power figures which impressed Banker Dawes were those for the week ended June ii wherein output was down 11.5% from the same week in 1931 against a 12.2% drop in the previous two weeks. Released last week were National Electric Light Association's complete April figures. They showed a 2 1/2% decline from March which was entirely at the expense of large consumers. Sales to small commercial users jumped 2%, to domestic consumers 3%.

Another statistic which General Dawes must have pondered last week was bank clearings. After a brief spurt a fortnight ago they slumped badly last week. Twenty-one cities outside New York ran 46.3% below 1931 and including New York the average decline was 52.6%. Heaviest loser among the cities reported was Boston with a 58.7% drop for the week. During the first quarter the total decline averaged 35%.

Interested, as are all Chicagoans, in the Insull situation, General Dawes must have been perturbed last week at the price of Commonwealth Edison short-term notes which fall due July 30. Only 97 1/2 was bid for them, a price which would give the buyer a 27% return to maturity. And he must have noted with regret the passing of the Sears, Roebuck dividend. Commentators saw this omission as the company's opinion that the grain markets will not rally soon. Principal grains last week had lost their recent advances and were slumping to new lows on good weather reports. Cotton held its gains more tenaciously. Oil was firm but the bright spot in commodities last week was a 13-day advance in raw sugar futures which whipped the price from 57-c- to 90-c-.

General Dawes last week could have heard little but gloom from his steelmaking friends. The Chicago mills lost ground together with all others except those in the Youngstown district. Ingot production hovered around 18% of capacity. Detroit, which had been at 81%, fell to 75% and Pittsburgh was barely able to hold at 15%. Automobile production, with the exception of Ford, seemed about to slow up last week and Iron Age predicted many plants would be idle during the summer. The week's production was 52,560 units, a small gain over the previous week but 21% below last year. A report on general activity during May was made last week by statisticians operating under the auspices of National Industrial Conference Board. They found : "Altogether, the further decline of busi ness in May showed no slowing up in the rate of contraction. . . . Consumer purchasing continued to subside."

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