January 23, 2010

Friday, January 23, 1931: Dow 168.46 +3.70 (2.2%)

Assorted historical stuff:

Editorial: Commission of the League of Nations, meeting in Geneva to consider Briand plan for European union, took dramatic step of acknowledging "widespread political anxiety" and issuing solemn declaration by representatives of 27 countries: "we are more resolutely determined than ever to use the machinery of the League of Nations to prevent any resort to violence." All very well, but in the past decade since the League has been established, treaties have been signed, nations have foresworn violence repeatedly, and all the while "widespread political anxiety" has increased. One effective settlement of an international dispute would do more good than "a dozen repetitions of threadbare phrases of pacific intentions."

Commission created by Congress to study methods for removing profits from war and distributing its burden equitably has its first meeting.

Washington report: Increasing possibility seen of subjecting Prohibition to national referendum following Wickersham report; Rep. Fort (R, NJ), a prominent dry, reportedly favors this. Nomination of Eugene Meyer to head Fed. Reserve resubmitted to Senate banking and currency committee after Sen. Brookhart (R. Ia.) complained he hadn't been given an opportunity to question Meyer; Senators supporting Meyer said he welcomed the opportunity to refute charges brought against him. Recent trend to govt. paternalism seen in $25M relief bill, tariff agitation, call for more Fed. Reserve authority on banks, public power development, etc.

NY Fed. Gov. Harrison testifies before Glass committe; favors control of brokers' loans to avoid speculation getting out of hand as in 1928-29, preferably by agreement of NY banks and NYSE rather than by law; says “we raised our rate too late” in 1928.

Argentine Finance Ministry says received offer of 40M pound loan from Paris, but refused because of lack of evidence lenders were financially responsible.

Canadian PM orders all Cabinet members' cars to be auctioned off.

French Premier Steeg's Cabinet defeated in Chamber of Deputies in connection with proposed increase in wheat prices; resignation obligatory.

Japanese Fin. Min. Inouye says believes worst of depression over, commodity prices can't go much lower; praises 1930-31 budget of 1.440B yen, down 320M from previous year; decries public borrowing to cope with unemployment.

Editorial by T. Woodlock: US shouldn't trade with Russia in spite of profits to be made doing so; while Russia isn't at war with us by common meaning of the word, it has made clear its intentions to destroy our social order; “has that government introduced for the first time in ... [history] a new kind of 'war'?”

Editorial: Trends in US auto exports are revealing. Total for Nov. was 6,039 passenger cars vs. 13,933 in Nov. 1929. Argentina and Australia have in the past been the top two buyers; Argentina declined to 820 from 1,502, while Australia fell off the list entirely; this is probably due to decline in wheat and other commodities. Every other country but Denmark also shows declines; since US cars have no serious competition, this indicates reduced buying power.

One of the first hotels to install elevators about 75 years ago was the US Hotel in Saratoga; these transported an astounded public at 50 feet/minute. Modern skyscraper elevators are capable of 1,200 feet/minute but restricted to 750 feet/minute by law.

Baltimore & Ohio RR orders air conditioning to equip all coaches on “Columbian” NY-Washington express.

Indiana Limestone Co. to start shipments for construction of Mellon Institute in Pittsburgh, including 62 columns, each 36 feet high by 5 feet 10 inches diameter; each column will weigh 142 tons when quarried and 64 tons when finished.

NY City Tenement House Commissioner Deegan says was misquoted in saying 40% of Park Ave. apartments unoccupied; was referring to tenements.

Irving Trust moves to their new building at 1 Wall St.; features include spacious 3-story safe deposit vault, largest in NY next to the Fed. Reserve one.

At least 57 people were lost in the dense US West Coast forests last summer, including several children, a policeman, and many hunters; to locate them, the Forest Service spent about $700.

Curtiss-Wright plans construction of small light plane to sell for $1,490.
Single men haven't always had it this easy. In 17th Century England, bachelors paid an annual tax on a sliding scale from 1 shilling for a laborer to 12 pounds, 10 shillings for a duke. In Rome, men were compelled to marry by a certain age. Unmarried Spartan women were "privileged to treat bachelors with indignities."

Edwin S. Votey, inventor of the pianola, dead at 74.

Market commentary:

Market wrap: Stocks worked higher throughout the session; bears made several attempts to stop the upturn, with little success, as leading industrials were able to resist pressure; brisk advances in trading favorites. Bond trading quieter but prices continued steady to higher in almost all departments. Commodities mixed; grains mostly down; cotton up moderately; copper slightly weaker in secondhand market.

Conservative observers more cheerful; advise scale buying with stop orders for protection, against taking short side.

Market observers encouraged by recent strength in rails, which hit new 1931 high Wednesday; rails are believed less subject to professional manipulation than industrials, and more accurately reflecting investment attitude of the financial world. Also encouraging was recent pattern of heavier volume as stocks rallied and lighter volume on dips.

Growing market resistance to pressure in past few days has caused some change in sentiment among traders from bearish consensus two weeks ago. Bears have operated aggressively, but made little headway in the main body of stocks; new lows have only been produced in isolated issues including Allied Chemical, Westinghouse, and GE. In fact, behavior of the general list since mid-Dec. has created some hopes of an extension of the new year's rally.

Several brokers advise taking tax losses now since market may be doing much better by end of year, the normal time for taking losses.

Broad Street Gossip: Some market observers marvel at ability of many high grade stocks to make new lows while shareholder lists increase and floating supply drops to record lows. One investor recently sold a block of US bonds at a near record of 104 that he bought 10 years or more ago at 86. Many executives believe they're captains of industry in times of prosperity, when they are simply being carried along by the general business trend. “It is when the country is in the throes of depression that the true captain of industry stands out.”

R. Rutter, Spokane & Eastern Trust pres., says Washington state business conditions markedly improved; crop prospects good, little banking trouble, enormous construction just across border in British Columbia.

H. Hayes, Stone & Webster VP, says power utilities must inform public to counter misconceptions fostered by sensational newspaper articles and campaigning politicians; investors may be deterred by political agitation. Finds state regulation mostly but not universally adequate, accounting sound.

Owen Young says signs business more sensitive to improvement, near or past "dead center" of depression.

R. Whitney, NYSE pres., says the NYSE affects many aspects of US economic life; even farmers depend on and benefit from it; closely reflects business conditions; "It is a creation of the whole American people ... a supreme single expression of modern economic life ... a living pulsating mechanism by which the savings of the thrifty everywhere steadily pass into a practical effort to realize the dreams of science, invention and national well-being."

Lee, Higginson & Co. sees some precedent for favorable market action in face of poor earnings. Cites report by leading financial publication in June 1924: "The tone in the security markets has become positively buoyant. The movement is the more noteworthy as there is nothing in the condition of trade to justify rising prices. Nearly all the leading industries of the country are in a state of utmost depression. The complete collapse in business ... ranks as the most pronounced in trade annals." [This was, of course, followed by the roaring 1920's bull market.]

Economic news and individual company reports:

Special Assistant D.A. Steuer charges Bank of US directors didn't lose money in the failure because all had loans from the bank exceeding deposits, many granted on doubtful security; “If the bank failed, the people who were safest were the directors.” Also outlines circuitous transaction that wiped off an $8M debt to the bank from its affiliates before a bank examination.

Oklahoma proration fight appears to be brewing in state House of Reps.; resolution introduced charging "stagnation, manipulation, starvation and discrimination."

Fed. Reserve reports money in circulation Jan. 21 down $56M to $4.593B, total Reserve Bank credit outstanding down $91M to $1.020B. Member banks in NY City report brokers' loans down $63M to $1.757B; loans on securities to non-brokers down $32M to $1.960B.

Dept. of Labor reports Dec. building activity in 293 cities was $128.9M, up 8.1% from Nov. and up 2.6% from Dec. 1929, first increase recorded in 1930.

Dow steel and iron average holds at 1931 high of $44.56/ton. Scrap markets less active after a week or two of stronger buying.

NYSE firm of Lorenzo E. Anderson suspended, alleged insolvent; little market impact seen.

Farm Board chair. Legge asks Congress to appropriate $100M to complete $500M authorization; sees little recovery yet in general business; Board's money tied up in commodities will only be liquidated slowly.

Canadian wheat surplus as of mid-Jan. estimated at 253M bushels.

Bank of Switzerland joins France and US in reducing rediscount rate to 2%.

British gold losses to France resume, on smaller scale. Bank of England reserves now 142.9M pounds, or 31% of notes in circulation; Bank of France has reached more than triple British gold reserves, at 54.4B francs, 70% of circulation.

Some top officials in Chinese govt. at Nanking said ready to accept US silver loan, though businessmen are opposed, believing it would further depress values.

Mexican oil exports to US in 1930 valued at $40.5M.

American Tobacco reports sales of Lucky strike cigarettes in Dec. were up 653.1M over 1929, full-year sales up 6.220B.

Sales at the NY Motor Boat show reported better than last year.

Companies reporting decent earnings: General Parts (servicer for about 30 discontinued car lines, including Rickenbacker and Locomobile), Household Finance, National Dairy, US Pipe & Foundry, Montreal Light Heat & Power, Italian Superpower.

Lambert (toiletries and medicinals) stock about 79, annual div. $8, 1929 earnings $10.04/share, 1930 earnings $9.50/share.


How He Lied to Her Husband - First talkie made from a George Bernard Shaw play. Very unsatisfactory; bad sound and photography; cast fails to enter into light cynical spirit of the play; female lead, Vera Lennox, rather than leaving impression she's had several previous affairs, seems like a "silly school girl afraid to be caught in the arms of her first beau."


"Soprano - Did you notice how my voice filled the hall last night? Contralto - Yes, dear; in fact, I noticed several people leaving to make room for it."

"Customer - I don't like the flies in here. Waiter - Sorry, sir, there'll be some new ones in tomorrow."

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