Prince & Whitely, a prominent Wall Street house with branches in many cities and member of the NYSE since 1878, suspended by NYSE for insolvency. Partners and attorneys expressed belief the firm is solvent and creditors will be paid in full. Firm's difficulties said due to “a frozen condition which resulted from attempts to support the market in securities in which the firm was interested.” Reaction to suspension was much greater than to the Sisto failure last week.
Assorted historical stuff:
Rep. Byrnes (D., Tenn.) charges Treas. Sec. Mellon is exaggerating budget surplus for political ends; Mellon defends record, says accusation is itself political.
Editorial: Some leading industrialists are calling for recognition of Russia for business reasons. While these reasons may be correct, they are superseded by Pres. Wilson's stand in 1919: “We cannot recognize ... a government which is determined and bound to conspire against our institutions.” Since Russian govt. is pledged to world-wide revolution, recognition would, as Elihu Root put it, be a “formal and solemn lie.”
Col. L. Smith of Better American Federation, tells Congress 20,000 firearms have been bought in US by Communists.
J. Barnes, US Chamber of Commerce Chair., says recent plunges in commodity prices are mainly caused by previous govt. efforts to support prices at artificially high levels; “the forces of economic law may apparently be temporarily elastic, but in the end will break under the strain.” Calls for stronger cooperation between government and business to tackle depression. Criticizes excessive tariff competition, says tariffs only justified to protect against cheap labor.
Agriculture Sec. Hyde defends spending billions on road construction as economically justified; “besides cheapening transportation ... they bring educational opportunities to many, relieve the tedium and isolation of the country, and develop national and state patriotism.”
V. Bello, Cuban Congress Pres., suggests taking care of sugar surplus by mandatory use of gasoline-alcohol mix as motor fuel.
France cracking down on US jazz musicians by requiring working permits; said due to increasing unemployment among French musicians.
Cure for pneumonia by electrically-induced fever of 116 degrees presented at Amer. Phys. Therapy Assoc. convention.
Market wrap: Market continued to drift down early, with several leading issues hitting new yearly lows. Bears focused particular attention on US Steel, targeting the final support level at 150 (the panic low last fall), and succeeding in penetrating that level slightly after a tough fight. A broad selling wave then spread through the list, and the downtrend intensified following announcement of suspension of a major brokerage; many stop-loss orders triggered; many majors hit new yearly lows, including New York Central (rail), GM, AT&T, GE. Prices closed near the day's lows. Bond market down on high volume; almost all bonds classes weak; Brazil and German bonds plunged, with substantial declines spreading to other South American and European bonds.
In spite of large selling volume and signs of forced liquidation, trading was generally orderly; most stocks had plenty of bids under the market and there were few wide-open breaks except in stocks sponsored by Prince & Whitely.
German stocks and bonds down on unexpected Reichsbank discount rate hike from 4% to 5; first rate increase by major banks since the fall panic. Step attributed to desire to reduce capital flight, though it hadn't yet reached serious proportions; German industry has shown market seasonal improvement in Sept.
F. Corley, Marshall Field VP, says inventories have been cleaned up, general business and industry on eve of recovery.
Automotive industry seen planning significant price cuts on 1931 models; in past year carmakers who held or reduced prices have done much better than those who tried to increase prices to maintain profit margins; recent drastic price cuts to clear old models have also shown public willing to buy bargains.
Dow closed below Nov. 13 panic low of 198.69. There were 3 new yearly highs and 321 new lows.
Economic news and individual company reports:
Dow steel average of 8 finished products was $44.76, down from $45.60 last week and new yearly low. Steel scrap prices continue decline; heavy melting steel at Pittsburgh is down 50 cents to $14.75/ton, and down $1 in past 2-3 weeks.
US electric output for a week ended Oct. 4 was 1,695 GWHr, down 5.1% from 1929.
Sept. department store sales were down 7% from 1929, with daily avg. down 11%; first 9 months were down 6%.
US and Canada Sept. cars and truck production estimated 226,361, down 3% from August, 47% from Sept. 1929, and 40% from five-year avg. for Sept. First 9 months 3.061M, down 37% from 1929 and 18% from the five-year avg.
Mexico suffering severe inflation, with costs of “articles of prime necessity” doubling over past 2 months; blamed on currency weakness.
Companies reporting decent earnings: White Rock Mineral Springs, International Agricultural Chemical.
“ Mother - Your face is clean, but how'd you get your hands so dirty? Small Son - Washin' my face.”
+ The Boring Stuff: