In the 1920s, musicians were ordinarily paid a flat fee, $20 to $50 seemed usual. There was one notable exception, the Rhythm Jugglers session of Jan 1925. Fred Wiggins of Gennett Records wrote to Bix in early Jan 1925, " This work will have to be done on a straight royalty basis of one cent per record of the initial trial. You are to stand your own expenses to and from laboratory." At one cent per record, royalties from sales of "DavenportBlues/Toddlin' Blues" obviously did not amount to much in 1931.
When I said royalties, I meant from sales of sheet music. By the time he wrote the letter in question, Bix had copyrighted Davenport Blues, In A Mist and Candlelights.
Regarding dividends, although the market had crashed, not all stocks were worthless and paid no dividends in 1931. In 1931, the Dow was about half of what it had been in 1929, before the crash. It was not until 1932 that the market hit a low about 8 times lower than it had been at its peak in 1929. Look at the following graph. Caution: the ordinate (y) scale is logarithmic.
Dividends grew through the 1920s, but not as fast as the Dow, and, in fact, dividends remained constant in 1928-1930. If Bix had stock in early 1931, the dividends had not yet diminished much.
I realize that I am speculating about the meaning of "also the income money" in Bix's letter. Maybe, Bix was sending money from royalties and dividends to his parents so they would save that income for him. I believe Iowa was not hit as hard as the Northeast by the crash, banks in Davenport being more reliable and secure.