February 11, 2010

Wednesday, February 11, 1931: Dow 181.20 +3.48 (2.0%)

Assorted historical stuff:

Pres. Hoover's emergency employment committee says encouraging reports on employment have been received from various parts of the country.

R. Whitney, NYSE pres., says short selling didn't cause the 1929 panic; based on survey of NYSE members, short position was very small on Nov. 13, 1929. Believes that larger short position would have stabilized market. Defends short-selling as similar to a builder contracting to build a skyscraper, in effect going short steel, brick, mortar, and all other things that go into the building.

Washington report: Pres. Hoover signs and praises Sen. Wagner's (R, NY) bill for advance planning of public works to relieve unemployment during depression. Battle over oil import restriction is in state of high uncertainty, with four proposals still alive, ranging from total embargo to curtailing imports in same proportion as domestic production; Administration seen most amenable to latter option. Some tax hikes may be needed due to projected $375M deficit this fiscal year. One possibility would be raising income tax rates in higher brackets while cutting the capital gains tax. Prohibition has been discussed surprisingly little this session, possibly because neither party is yet sure of its stand in 1932.

During Dec., 23,053 aliens left the US while 16,378 entered, including 6,439 immigrants and 9,939 non-immigrants; immigrant total of 6,439 was lowest for any month since 1919. US alien population in 2d half 1930 increased 20,245, down sharply from increase of 104,050 in 2d half 1929.

Bolivia financial commission says country will default on Mar. 1 interest payment. Provisional military govt. has instituted policy of retrenchment to be followed strictly by incoming administration; commission has also recommended further govt. savings, but reform is slow process with immediate results not to be expected.

German Foreign Min. Curtius says Germany has no intention of destroying the Young reparations plan, not advisable to fix a date for revision in advance. Believes publication of German archives will disprove charge Germany was guilty of responsibility for the war.

Editorial by T. Woodlock warns of threat to NY City's port trade; Boston, Philadelphia, and Baltimore are demanding lower rail transport rates, upsetting a longstanding agreement on rates from the four North Atlantic ports to territory west of "Buffalo-Pittsburgh line" (current rate structure sets rates from NY and Boston equal, and the other two slightly lower).

Senate passes Johnson bill authorizing bridge across San Francisco Bay. New Jersey Legislature's Meadows Reclamation Committee recommends development of large port city on site of Hackensack Meadows, to support population of 5M. Wall Street subway station is installing silencers to quiet crashing of the turnstiles.

P. Litchfield, Goodyear-Zeppelin pres., tells House committee US is in position to take lead in development of overseas airship service due to helium monopoly; estimated crossing time would be 2 1/2 days. Goodyear is awaiting outcome of McNary-Parker bill providing for govt. mail contracts for airships.

US Navy to award contracts for V-8 and V-9 submarines; ships are to be about 275 feet long and 1,100 tons.

International Silver develops non-tarnishing silver eliminating need for polishing; to be known as “Palladiant.”

Pencil manufacturers worldwide use over 600 tons of pencil wood per month. Wood near factories is nearly exhausted, and the industry has detailed special investigators to look for suitable red cedar trees.

India has suffered more deaths due to hailstorms than any other country. Deadliest hailstorm on record occurred April 30, 1888 about 100 miles East of Delhi; over 250 were killed in the storm, mainly by hail. Berlin was invaded by huge swarms of honeybees last summer, probably due to a severe drought in central Germany. The swarms invaded bakeries, laundries, and hospitals; on one day, firemen were called out 55 times to respond.

"For the first time in aviation, women are being employed regularly as crew members." Boeing System has hired ten young women as stewardesses for the Chicago - San Francisco route. Chosen from 200 applicants, the ten are "all about the same height and weight"; their duties are "to serve lunches, supply reading and writing material, send telegrams ... furnish pillows ... discuss points of interest with passengers, etc."

Society of the Genesee held its 32nd annual dinner at the Hotel Commodore; George Eastman, chair. of Eastman Kodak was guest of honor. Mr. Eastman, 75, received congratulatory notes from Pres. Hoover, Calvin Coolidge, Benito Mussolini, and P.S. du Pont.

Market commentary:

Market wrap: Stock advance picked up further momentum across the list and through most of the session. Short-covering "assumed panicky proportions during the fourth hour ... the whole market fairly seethed with activity" and further gains took place, with trading favorites "surging upward in sensational style." Considerable profit taking came in the last hour, but good support came in to limit declines. Bond market strong, volume showed large increase; US govts. quiet, firm; foreign mixed with German strong but S. American irregular; corp. active and firm, with speculative and convertible issues particularly strong. Commodities strong; grains up sharply on unconfirmed rumors of Russian revolution; cotton also up sharply. Silver rallied 3/4 cent to 26 7/8 cents; copper price was firmer at 9 3/4 cents; further rise was indicated as custom smelters were reluctant to sell at that price.

US Steel strong on increase in unfilled orders; coppers up on price rise; buying came into high-grade rails in mid-session on optimistic statements from executives; some foreign markets were also up substantially, with Berlin closing at the highest levels in many months.

Dow Theory advocates were encouraged by industrials' confirmation of earlier rally in rails; considerable confidence felt that general market had embarked on a sustained advance. Study of previous bear movement since 1900 indicates average rally of 15% within 7 weeks of low.

Short interest is said to be condsiderably reduced, though sizeable short positions still exist in some issues including American Can, US Steel, GM, and Auburn. Brokers report outside (public) interest has increased; spirited outside buying has come into some stocks, and a number of dormant accounts have become active.

Editorial: It now appears the Farm Board's estimate that 236M bushels of wheat would be used as animal feed, helping to clean up the wheat surplus, was too optimistic. Rough calculation shows the wheat carryover to next season may be 250M bushels, much of it in Farm Board hands.

J. Ogsbury, Dayton Scale (IBM subsidiary) pres., favors veteran's bonus: "it is difficult to imagine a more opportune time than the present to provide these men with money"; business should be helped since money would be spent within a reasonable time. [Note: first businessman quoted in favor of the bonus.]

Meat packers said to have good profit outlook for this year based on lower inventories and decline in hog prices.

Broad Street Gossip: Recent rise looks substantial to those who bought at the lows a few weeks ago, but many traders who entered the market after the fall 1929 crash believing the worst was over are still sitting on big losses. Some bankers say more money was lost after the Oct. and Nov. breaks than in the breaks themselves. Reading 1930 earnings statements can be tricky since much of the fall in earnings is a bookkeeping matter due to inventory writedowns. Coca Cola, which recently announced record 1930 earnings, was introduced to Wall Street in 1929; the underwriting bankers, not overly enthusiastic, got rid of the stock as soon as possible at about 30. It's now selling about 160, with twice as much stock outstanding.

T. Macaulay, Sun Life Assurance of Canada pres., says personally believes stock market bottom was passed on Dec. 16. Based on experience of past 18 months, now believes company policy of holding investments permanently might need to be modified; "even for permanent investors ... there may come times of abnormal inflation ... [when] it will be wise to convert excess market values into cash profit. In other words there may be a time to sell as well as a time to buy ..."

Royal Bank of Canada monthly letter notes uptrend in savings deposits in Canada since July, says this is necessary to lay foundation for business recovery.

Middle West Utilities Dec. report on trade and agriculture in territories it serves finds conditions still very spotty.

Amer. Bankers' Assoc. sees definite gains in industrial activity starting to appear; reports better feeling in financial circles based on stock market rally.

Economic news and individual company reports:

Rail freight loadings for week ended Jan. 24 were 719,281 cars, up 3,591 from prev. week, down 19.9% from 1930 week, and down 24.0% from 1929.

NY County grand jury returned indictments against 8 Bank of US officials, including Bernard Marcus, pres., and Saul Singer, executive VP, based on alleged transaction in which Bank of US paid off an $8M dollar debt owed by two important affiliates with bank money.

Following a period of "banking hysteria" in the South at the end of 1930, a number of banks have been reopened; Arkansas has taken the lead, reopening 54 out of 111 banks that closed in the last two months of 1930. R. Dickinson, Asst. State Banking Commissioner, says Arkansas banking situation best in past 10 years.

US Steel unfilled orders end Jan. at 4.132M tons, up 188,755 in Jan., and comparing with 4.469M in 1930 and 4.109M in 1929. Increase was much better than expected, and came in spite of uptrend in operations.

Refineries ran at 59.9% in week ended Feb. 7; stocks of gasoline increased 800,000 barrels to 42.457M; oil production was 2.117M vs. 2.086M prev. week, but down 497,300 from a year ago.

Nat'l Lumber Mfrs. Assoc. reports stagnation in Jan. lumber business compared to Dec., buying restricted due to unstable prices and uncertain public demand.

Final figures from Ford show 1930 US new car registrations of 1.055M vs. 1.310M in 1929; GM 906,164 vs. 1.271M.

Jewel Tea increases regular dividend rate from $3/year to $4 based on earnings and outlook (stock closed up 3 to 53).

Pan American reduces passenger prices on entire system 8%-42%.

Companies reporting decent earnings: McKeesport Tin Plate, Nat'l Dairy Products, Harrods, Blaw-Knox (steel and construction products), Equitable Office Bldg., F. & W. Grand-Silver Stores, Hathaway Bakeries, Lehn & Fink (toothpaste, candy, Lysol), Westmoreland Coal.

At the galleries:

Museum of Modern Art exhibition features Odilon Redon and Henri de Toulouse Lautrec; “By comparison it is Lautrec who suffers. His biting sarcasticisms subject themselves to little consideration beside the softer strokes from the Redon brush,” though his “knowledge and understanding of Parisian life produce brilliant and enjoyable canvases.” The Rehn Galleries has a refreshing exhibit of Provincetown paintings by Ross Moffett, who “has kept himself free of the mannerisms usually associated with painters of this colony.”


The Queen's Necklace (Le Collier de la Riene), a French production directed by Gaston Ravel. Cumbersome and drawn-out costume drama, saved from the mediocre only by a thrilling climax featuring the striking actress Marcelle Favrel-Chantal; "It is only as the beautiful courtesan is dragged screaming from her Bastille cell, her precious finery torn from her back by cruelly effective lashes at the public whipping post, that one catches the real color of the Dumas novel and realizes by the furtive presence of Marat and Robespierre in the background ... that the French Revolution is imminent."


"'What kind of a car has Tom?' 'Well, he'd feel tremendously flattered if you called it second hand.'"

"'Oh dear, Johnny, have you been fighting again?' 'No, miss, we moved yesterday, and I moved the cat.'"

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