Assorted historical stuff:
Editorial defending World War veteran's relief bill. Expected Hoover veto may be overriden by Congress, but the bill has already been much improved to reduce unfairness and waste. Defends admittedly large spending soon to approach $1B, considering promises to recruits made in 1917 and number of disabled veterans not yet cared for. While some waste remains it's not the worst example considering the $500M spent on wheat and cotton support, etc. Hoover remains unconvinced; sympathetic, but claims the government already takes care of most disability cases from the war and the new bill mainly would apply to men who were not disabled in the war but in civilian life afterward: “It is a sad thing for our government to set standards of subterfuge to our people.” Bill passes 66-6 in Senate.
Australia facing large deficits; blamed on past expenditures on “non-reproductive public works” including unprofitable railroads, and on declining commodity prices. Anticipates painful adjustment to the situation.
Simon Commission recommends eventual autonomy for India under British safeguards; for the time being, British Governors will retain sweeping powers.
Oregon voters in November will decide on a Constitutional amendment outlawing manufacture, sale, or possession of cigarettes.
Electric eye system installed to detect dangerous gases in the Holland Tunnel under the Hudson. Triggers an electric circuit in supervisors office half a mile away, whereupon supervisor can turn a switch and speed up suction fans.
Bears were in action again, this time concentrating on the rails. Encouraged by the Monday Dow Rails close of 128.88, very close to the Nov. panic low of 128.07, and also by bad earnings reports and freight traffic, bears attacked important rails and got a Dow Rails close of 126, lowest since March 1927. Commodities also under pressure; wheat at new postwar low. Industrials attempted morning rally, but gradually lost ground as the fall in rails intensified. Good news from US Steel (production at 71%, higher than expected) failed to rally market. Banks and insurance stocks down sharply in afternoon.
Some current stock prices as percentage of their 1929 highs: Krueger 17%, Chrysler 18%, Montgomery Ward 21%, IT&T 27%, GM 42%, Woolworth 49%, US Steel 58%.
Market observers becoming reluctant to give opinions, even the usually outspoken ones. Caution urged. Trying to pick a bottom can be disastrous.
Banks have a disturbingly high proportion of deposits tied up in securities and loans on stock or bond collateral. Proportion is 65% for all member banks of Federal Reserve system vs. 56% a year ago, and 80% for New York banks.
Congress will adjourn in about a week - this might help market sentiment.
One broker's opinion: “When this economic and market readjustment has been completed, it will merely be represented by a small curve downward in our steadily mounting curve of prosperity, consumption, production and efficiency ...”
Economic news and individual company reports:
Index of economic production down 2% in May, roughly equal to April increase.
Income tax and customs receipts higher than expected so far in June, raising prospects of an increased surplus; income tax receipts through June 21 are $497M vs. Treasury estimate of $500M for all of June.
RCA-Victor adding 7,000 workers for total of 20,000; to produce 9,000 radios/day.
Howard Heinz, president H.J. Heinz Co., reports worldwide business ahead of last year, attributed to strategy of increasing advertising during depressions.
“Mrs. Hoskinson - 'I have found out one thing about that Mrs. Newcome. Whoever she is, she has certainly never moved in good society.' Mr. Hoskinson - 'How do you know that?' Mrs. Hoskinson - 'She shakes hands as if she meant it.'”
+ The Boring Stuff: