Assorted historical stuff:
Editorial: Some have called for extension of branch banking by pointing to the 5,000 bank failures in the past 10 years, many of which were small independent banks in rural areas. In fairness, many of these failures were due to “extraordinary economic changes ... not likely to be witnessed again for a long time,” including deflation in agricultural prices and collapse of real estate boom. “When a bank fails it is the bank officials that must bear the blame ... but in the end the local community, carried away by the speculative fever, is not without ... responsibility.” Change in banking system should come naturally, not by scrapping old system.
Navy Dept. considers closing all but two navy yards on Atlantic Coast and selling expensive properties acquired during world war; would save millions annually.
Canada has largest amount of hydroelectric construction underway in its history, including 9 large projects.
Federal grand jury in Brooklyn proposes plan for reducing pollution in New York harbor by using modern incinerators for sewage disposal, inspecting ships thoroughly, and removing all sunken vessels.
Loose-Wiles Co. cashing in on aviation craze by producing biscuits in shape of airships.
Market commentary:
Market opened vigorously, with major industrials including US Steel, GE, Westinghouse, advancing to new rally highs. Irregularity developed toward noon as profit-taking came in; some nervousness also caused by another break in Vanadium on Peru revolution (main vanadium deposits located there). Volume was active early but dried up on the setback. Declines were moderate except for individual stocks including IT&T and Gillette. Banks and trusts strong, particularly City. Bond market strong on active trading; many new highs in high-grade utility and rail bonds; preferreds and convertibles rally; govts. firm.
There's a large amount of money on sidelines waiting for investment opportunities; this should be felt in market when “cheerful sentiment is more firmly intrenched.” Economists point out that banks and insurance companies “never before had so much money lying idle.”
Fed. Reserve seen continuing easy credit policy pursued since start of year. Some concern that increased reserve credit “will flow into speculative channels,” but this doesn't seem to have happened much yet.
Recent market strength seen in strong response to good news, resistance to weakness in isolated spots, and declining volume on setbacks.
A large broker reports signs of important bank buying of leading stocks, notably American Can.
Intl. Nickel Co. of Canada reports survey of leading US and Canadian industrialists finds growing optimism that worst of the depression has passed and gradual upturn will start in the fall.
Economic news and individual company reports:
F.W. Dodge reports construction undertaken in 37 states east of Rockies was $3.285B in year up to Aug. 23, vs. $4.035B in 1929. Labor Dept. reports building permits in first half for 85 cities were $736.6M, vs $1.570B in 1929.
Govt. reports weather helps crops in past week; recent rains over much of US benefit corn, though drought conditions remain in substantial areas.
Weekly steel reviews said cautious but somewhat more hopeful; ingot production slowly increasing; scrap prices showing strength although finished products prices still weak; good demand from tinplate, structural steel, oil and gas industries.
National Park Service reports visitors through week ended Aug. 9 were 1,942,541, up 121,095 over 1929. Most of increase was automotive.
Companies reporting decent earnings: Coca Cola, Columbia Gramophone, Warren Bros. (pavement).
Company reports since July 1: 167 companies reported increased earnings vs. 1929 and 401 decreased; 770 dividends unchanged, 12 new, 5 increased, 50 cut.
First 54 rails report July earnings $57.7M, down 32.3% from 1929 but up 19.2% from June.
Atchison, Topeka & Santa Fe Railway reports July income up over 1929 in spite of decline in revenue; achieved by cutbacks in expenses including capital improvement and maintenance; considered hopeful sign that other rails can do the same.
Rudolph Guenther-Russell Law, Inc. (advertising agency) reports distinct revival of interest in advertising by financial corporations, utilities, and industrials.
Joke:
“A blonde flapper called at the hospital the day after the accident.
'I want to see the young man who was injured in the auto wreck last night.'
'Are you the girl who was with him?' asked the nurse.
'Yes,' was the reply, 'and I thought it was only right to come and give him the kiss he was trying for.'”
+ The Boring Stuff:
Editorial: The “buy-a-bale-of-cotton” movement now promoted in Georgia would be another failed attempt to artificially support a commodity by taking it off the market, as previously tried unsuccessfully with coffee, cotton, and wheat. The “success” of the earlier buy-a-bale movement in 1914 is mythical; cotton prices didn't peak until 1917 due to heavy wartime demand and short crops.
New South Wales (Australian state) Labor party and affiliated unions repudiate Niemeyer austerity plan accepted by govt., demand repudiation of Australian war debt and moratorium on [payment of] loans from overseas.
City of Buffalo, NY is second largest in state with population of 572,913; has excellent credit position; is important railway and flour milling center and has major lake trade in iron ore, grain, and manufactured goods.
In spite of generally improved market sentiment, conservative observers still advise buying gradually on reactions, and discriminating toward “standard dividend paying stocks which are likely to show some betterment in trade conditions soon.”
Street veterans say it's first time they can recall that market isn't trying to anticipate business conditions but instead watching closely and reacting sharply to each incoming item of trade news, good or bad. Attempts to anticipate business improvement earlier in the year were disastrous. Current sentiment is improving; reports of slight business improvement in some industries in past few days are being followed closely.
US Steel considered technically strong since it has broken through July resistance level though the Dow is still a few points below July high.
Commodities weak. Grains down. Cotton practically unchanged. Copper markets in near-deadlock as producers are asking 11 cents but buyers are unwilling to even pay 10 3/4.
Farm Board Chair Legge says wheat sent to drought areas for emergency feed won't come from surplus held by Stabilization Corp. but will be bought on open market; policy is not to sell surplus until it can be sold at least at the price it was bought for.
Iron Age reports steel trade slightly improved, sentiment cautiously hopeful for at least some seasonal improvement. Hopeful factors include relief of drought, some increased interest by steel buyers, and stronger scrap prices, although finished steel prices still weak. Average ingot production 54% vs. 53% last week (American Metal Market reports production at 56.35%).
Heavy melting steel scrap sells at Pittsburgh for $16/ton, up $0.25.
World production of nitrogenous fertilizers year ended June 30, 1931 estimated at record 3.6M tons; unsold stocks on June 30, 1930 were 860,000 tons, expected to go up to 1.4M tons on June 30, 1931.
Agriculture Dept. summarizes world beef situation: smaller supplies in producing countries; lower prices; weaker demand in US and Europe.
Natl. Elec. Light Assoc. reports 68,532 farms were newly electrified in first half vs. about 48,000 in 1929.
Iron Age reports slightly better machine tool orders in most districts.
Goodyear cuts all sales,office employees, and executive salaries by 10% as of Sept. 1. Company is employing 20% fewer salaried workers than last year's peak.
Technicolor has recently been rallying after a long fall from 86 1/2 to 24 1/8 due to concerns about lasting popularity of color movies, competitive color processes, and poor prospects for early dividend action.
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