Saturday, March 14, 1931: Dow 178.91 -1.23 (0.7%)

Assorted historical stuff:

Editorial: The two-day "tournament of progressivism" in Washington was most successful when it was most abstract. The specific proposals made, while diverse, were united by the assumption that government has "unlimited power ... to right all the wrongs, the distresses, even the inconveniences, of human existence," if only it can be compelled to follow the right policies. “Yet with all its confusion of dissatisfactions and political animosities,” the conference did express that all of us could well consider the existing order and ways of improving it - “and that is something.” Sen. LaFollette (R, Wis.) names special committee to survey progressives to decide whether to demand extra session of Congress for unemployment relief.

Gen F. Hines, veterans' affairs administrator, reports almost 1M applications for veterans' bonus in first week; 105,766 checks mailed totalling $40.359M.

Washington report: Progressive conference made clear their agenda for govt. ownership of power plants. Those advocating this also were enthusiastic supporters of Gov. Roosevelt; while this may help him in some states such as Nebraska and Iowa, it's likely to hurt in others with many more votes. Washington officials, in their anxiety to defend against political attacks, are flirting with attempts at “prosperity by propaganda.” It will be recalled that last spring, officials issued positive statements on the economy, against express advice; the result was severely harmful to public confidence. No political attack will hold water if conditions are obviously improving; on the other hand, no statements will make the country believe in improvement unless it's real.

Improved prospects seen for getting oil industry situation under control. Pres. Hoover notes progress on negotiations with oil importing cos. to cooperate in reducing imports; this would be combined with curtailment by domestic producers; points out importance of bringing rapidly growing new East Texas area under proration. Ultimate aim seen as system of unit (cooperative) development of fields, regulating production to demand, and restricting imports proportionally.

Agriculture Sec. Hyde reports drought relief loans of $12M made so far, average amount of $150-$200.

French Chamber of Deputies sustains govt. of Premier Laval in confidence vote after he defends Finance Min. Flandin, who was previously connected with the failed Aeropostale.

Reynolds Metal has perfected and is marketing a foil for cooking purposes; new product is expected to aid profits substantially.

Maj. Gen. J. McBrien, Aviation League of Canada pres., predicts commercial air mail service will be established between Canada and England within a year, making necessary stops in Hudson Bay outposts, Greenland, and Iceland; expedition is now in Greenland choosing best route across.

Old method of laboriously cleaning locomotives by scrubbing with cotton waste has been replaced by "locomotive laundries," gigantic high-pressure shower baths of hot water and oil that clean them much more thoroughly.

R.J. Reynolds Tobacco received more than a million letters in response to advertising campaign for new cellophane wrapped Camel cigarettes.

NY State Assembly reportedly witnessed the first time a prayer in the state legislature was applauded, delivered by Rev. Kenneth Wells: "Almighty and Everlasting God ... Grant unto us wise laws and fewer of them ... "

Market commentary:

Market wrap: Stocks worked irregularly lower in quiet market; selling pressure was persistent but gained no particular momentum. Shares whose dividends were suspect broke to new lows early, including Bethlehem, Westinghouse, and B. & O.; decline broadened as morning progressed, but majors drew fair support on recessions; general recovery occurred in the last hour. Bond market mixed; US govts. firm; foreign mixed, with European firm but S. American irregular; corp. irregular but higher-grade firmed in the afternoon. Commodities weak; grains and cotton off substantially. Copper slightly weaker; sales made at 10 - 10 1/4 cents.

Conservative observers continue recommending sidelines; no sign of definite reversal yet seen.

Market concerns included dividend cuts, poor earnings, and possible poor tax receipts on March 15 due to lower incomes last year.

Editorial: Rough calculations show a severe shortfall of corn can be expected up to the new season; total supply is about 729M bushels as of Mar. 1; this is about 244M short of average usage in the next 6 months and compares to last year's 987M. Strangely, the corn market hasn't responded to this situation, with price about 14 cents/bushel below a year ago.

This week's bank statements contain some encouraging features. Continued increase in Fed. Reserve credit outstanding, vs. a decline last year, indicates tendency to inflation in credit rather than deflation. Increase in non-govt. securities reported by NY banks may indicate return of bank buying to general bond market, which would be very helpful for business recovery. Bank loans are still being liquidated, though part of decline may be due to sales of bankers' acceptances to Fed.

Bond dealers encouraged by manner in which market easily absorbed heavy week of new issues, while prices for older issues were only slightly affected. Intense speculation centers on possible resumption of long-term foreign bond sales in NY, seen likely to start with small “feeler” issues. Investors are selling bonds of railways that may lose legal status as bank investments due to lower earnings. Some brokers report increased demand for good preferred stocks.

Increase in brokers' loans last week in face of declining market may be due to income tax payments and unusually heavy bond issuance; another interpretation was tha “distribution had been in progress.” Brokers report some selling of stocks "from strong boxes," possibly due to dividend concerns after NY Central cut. Stop-loss orders are more common now than in some time; leading brokers have been urging their use, and they are a natural response to recent market action.

Economists are growing concerned about steel industry Q2 earnings (it's already known Q1 will be poor). The industry needs higher production, and that's unlikely to come until general business is much better.

Broad Street Gossip: Bears and bulls can each get ammunition from recent developments; bears have dividend cuts and poor earnings; bulls counter with moderate business improvement and markedly better public confidence; bears reply the improvement is disappointingly small and may not continue. Both sides admit little liquidation is taking place. The Old Timer notes American Tobacco paid $150M to the govt. last year, about 3.5 times earnings and 5 times dividends; rails also pay more to the govt. than to shareholders; "all this convinces me that there is something wrong economically somewhere." Many big bear professionals are reported back on the job, though one admits "the market shows better resistance now" than last year and sees need for caution, since proof business has definitely turned upward "would make the short side very dangerous."

Atlantic City mayor H. Bacharach comments: “Atlantic City never was on a sounder economical basis than it is this day. We have less evidence of the world-wide depression and are recovering more rapidly than any other city in these United States.” Says city bonds are safe, sound, and attractive investment.

Carreau & Snedeker say "American Woolen emerges from the 7-year textile depression in the strongest position in its history ... readjustment of the industry ... appears to have been largely completed."

F. Brownell, Amer. Smelting chair., says silver could be stabilized by agreement between govts. particularly India and Britain, not to sell below a given price.

D. Houston, Mutual Life of NY pres. and former Treasury Sec., says bottom of depression reached and any change will be upward.

Chairmen of New England state employment committees unanimously report conditions in their states indicate “worst of the business depression” is past.

Economic news and individual company reports:

Labor Sec. Doak reports first satisfactory indication of general upward employment trend since Oct. 1929 market collapse; based on reports of 13,377 mfrs. employing 2.772M workers, employment in Feb. gained 1.4% over Jan. and payrolls increased 7.5%.

Norfolk & Western Rwy. launched a wide-ranging attack on ICC order directing it to pay the govt. $15.8M that the Commission found was "recapturable excess net income" allegedly earned between 1924-26. Rails considering suing ICC to block drastic cuts in grain rates to take effect June 1.

Bradstreet's weekly review reports continued gradual growth in manufacturing and spring trade; Dun's reports wider indications of acceleration in commercial activity, but not to the point of suggesting a dramatic upswing; sentiment is improving, helped by better turn in agricultural conditions.

Increase of 29% in Feb. auto production was sharpest monthly increase since Feb. 1928; recovery is likely to continue in March with another 15%-20% gain. Public buying is increasing; reports from retail centers indicate a good seasonal increase over the next 2 months. However, production remains low; first quarter will be about 35% below the 1.047M produced in 1930, and 40% below the 6-year average. Of first quarter production, GM will have about 43% vs. 35% in 1930, and Ford 35% vs. 38%, though Ford production gained sharply in Feb. Michigan Labor Dept. reports strong turn toward normal conditions in late Jan. - early Feb.; auto concerns reported payrolls up 83%, while reports from 422 concerns in all lines reported payrolls up 53%.

US gold imports have continued steadily, though not in sensational amounts; total received so far this year is $73.7M, with minimal exports.

NYSE bond trading (US govt., foreign, and corp.) in Feb. was $194.4M vs. $264.1M in Jan. and $203.2M a year ago.

Official French figures showed 44,644 people on official unemployment relief rolls, vs. 11,952 at start of year. Chamber of Deputies passes 1931-32 budget with estimated $2.029B spending, $2.030B receipts; estimated surplus of $462,000 smallest in years; rejects socialist motion for 2% cut in war materials.

France has at least temporarily stopped importing gold; development almost entirely due to high open market rates being maintained by Bank of England.

Manchester cotton market reports sharp improvement in inquiries; substantial gain in business hoped for after lifting of Indian boycott.

Italian 1931-32 budget deficit estimated at 424M lire, or $23M; large drop in receipts predicted. Italy gives up plan to import large amounts of Soviet grain, agrees to fill requirements from Hungary.

Plan for reorganization of Chelsea Bank appears near approval; NY State banking dept. confident plan will repay depositors in full.

Exports of radio equipment in Jan. were $1.673M vs. $1.523M in 1930; exports of all electrical equipment $7.927M, down $4.837M from 1930.

Company reports since Jan. 1: 210 companies reported higher earnings vs. 1930 and 839 lower; 800 dividends unchanged, 45 increased, 167 cut.

Sears forms Allstate subsidiary with capital of $350,000 to offer auto insurance to underserved customers in rural areas; all sales will be by direct mail.

Hershey sales were down 7% in 1930, but profit margin hit a record high 21%, leading to record earnings; lower raw material prices helped.

A&P reports Feb. sales $82.4M, down 4.3% vs. 1930; however, this was due to price declines since tonnage sold was up 10.7%.

Companies reporting decent earnings: Pitney-Bowes Postage Meter, Canal Construction Co., Richardson Co. (box manufacturing).

Theatre:

Napi - Farce starring Ernest Truex as Paris shopboy Aristide Latouche, who is discovered to be Napoleon's double and enlisted by his courtiers for a mission of the utmost delicacy - breaking off the Emperor's affair with the voluptous performer La George. Of course, Aristide fouls up matters since he has long been besotted with La George himself, and refuses to leave her boudoir. Play is “awkwardly fatuous in pursuit of a familiar type of naughtiness.”

Jokes:

"Customer - That parrot you sold me hadn't been in the house a day before it began to swear dreadfully. Dealer - Well, Madam, you asked me for one that would be quick to learn."

Inscription on a long neglected Boston gravestone: "Sacred to the memory of Eben Harvey who departed this life suddenly and unexpectedly by a cow kicking him on the 15th of September, 1853. Well done, thou good and faithful servant."

Some remarkable names: R. Corker of Des Moines, operator of bottling plant; Sam Temperance of Evanston, jailed for intoxication; the Doom brothers of Illinois, undertakers; Dr. Pruner of Omaha, a surgeon.