March 21, 2010

Saturday, March 21, 1931: Dow 187.72 +1.16 (0.6%)

Assorted historical stuff:

R. Stephenson, Amer. Bankers Assoc. pres., issues passionate plea against unemployment insurance: "The present period has all the appearance of being one of the critically decisive turning points in American history." We're faced with choice between "fundamental traditions of ... sturdy, self-reliant, independent American individualism" and a new path of "typical European personal dependency that has long stunted" social vigor in the old world.

Editorial: In 1931, about 34,000 people will be killed and 966,000 injured in car accidents, slightly more than 1930. A large percentage of this heavy toll is preventable; last year, 84% of deaths and 67% of injuries were caused by illegal driving. It's therefore strange that this waste of human life goes on year after year with little public concern. Only 13 of 48 states require driving tests for licenses; traffic law enforcement is lax. "Reckless, careless, or drunken driving is a crime and should be treated as such in the courts."

Washington report: Farm Board may face difficulty getting rid of its stored wheat surplus; it may need to build new storage to avoid congestion when the new crop arrives. Sen. Borah's stand that oil production curtailment violates antitrust laws not anticipated to have much practical effect.

Arkansas reportedly well on road to drought recovery; Red Cross to withdraw relief workers April 1.

French Chamber of Deputies again takes up law to enable development of Mosul oil fields in Iraq.; govt. argues this will free France from dependence on foreign oil in wartime and limit influence of "Anglo-Saxon" groups (Royal Dutch and Standard Oil). The San Remo treaty divided the oil in the new Mosul fields between England, France, the US, and Turkey, but England and the US haven't been anxious to develop the fields due to present overproduction of oil.

French coal workers likely to strike nationally Apr. 1. British electrical workers threaten strike in London. British rail workers to decide on accepting pay cut. British miners refuse to continue spread-over hour system. German textile workers' strike ends after several months.

Richest man in Italy isn't easy to determine since income tax returns aren't available. King V. Emanuel is reputedly among the wealthiest; another is Senator Count G. Volpi, whose fortune is about 500M lire, with interests in tobacco, utilities, steel, etc.; still another is Senator Agnelli, Fiat pres.

Agreement reached between Medical Society of NY and leading stock insurance cos. allowing any member of the society in good standing to treat workmen injured on the job without previous authorization from the insurance company concerned.

Many believe development of the airplane industry will create thousands of jobs over the next 25 years, as the auto industry did over the last. One optimist believes airmail will increase from 8M pounds in 1930 to as many tons in 25 years. Gains in air transport accelerated in Jan.; air mail carried was 778,937 pounds, up almost 50% from 1930, vs. average 12.7% gain in 1930 vs. 1939; passengers carried were 17,549, up 56%.

Rails were once made almost entirely of wrought iron instead of steel due to cost. In the 1870's the Bessemer process helped push steel ahead; recently developed methods of automating wrought iron production may restore some of its prestige.

Holland Tunnel traffic reaches 35M car mark Thursday; traffic this year about 7% over 1930.

Speedboat Miss America IX, driven by Gar Wood, sets new record of 101.154 mph on Indian Creek.

US stockholders, by and large, continue to lag behind British ones when it comes to intelligent study of their companies. At Montgomery-Ward's recent annual meeting, following a tumultuous year in which profits plunged and the dividend was suspended, there was again just a sprinkling of stockholders in attendance. Only two questions were asked, one of which concerned why on one occasion it took a while to get an OK on a check to buy something in the store.

Story by H. Alloway on 100th birthday of George Pullman: His original rail car failed to accomodate some railroad features; its roof collided with bridges, its sides with platforms, etc. However, he didn't have the capital to do a redesign. He was saved when Lincoln was assassinated, and the request went out for a train to carry him home to Illinois; his car was requisitioned, no matter the expense. Mr. Pullman, late in life, reminisced about Lincoln, who he had gotten to know a little in Illinois; he recalled him as quieter than his popular image of a "jolly good fellow" - he usually chose to listen rather than lead conversations, and "in all the times I saw him, I never heard him tell a story." After he became President, "he grew on me tremendously"; as one man put it, "Old Abe is not our man - he's our religion!"

Market commentary:

Market wrap: Stocks continued strong, with major industrials moving ahead and particular strength in recent bear targets; a spirited rally broke out in major rails; short-covering and public buying increased. Some profit-taking developed in the afternoon; however, sales were easily absorbed and rallying broke out again late. Bonds mixed; US govts. down on reports of increasing Treasury deficit; foreign irregular, European firm; domestic corp. quiet, rails, amusements and convertibles higher. Commodities irregular; grains weak most of session but closed little changed; cotton off.

Conservative observers still advise against reaching for stocks on rallies in spite of improved sentiment; favor waiting for good-sized technical reactions to buy and protecting accounts with stops.

Bulls encouraged by recent gains above range that had prevailed since early March, and by recent resistance to declines. Also positive was better action of rails, particularly since further dividend reductions are likely now that NY Central "has broken the ice."

Strong spots included Allied Chemical on better than expected earnings; Westinghouse on expected maintenance of dividend; Douglas Aircraft on expected govt. orders; Noranda Mining on gold discovery; Parker Rustproof on new spray-on process.

Bond market strength has led to speculation on possible new foreign issues after a sharp dropoff in 1930. First test is expected to be made with high-quality loan.

Interest has been growing in companies likely to benefit from large upcoming projects such as Radio City and the Pennsylvania RR improvement program; aside from the obvious US Steel, candidates include Bethlehem, Ludlum Steel, Amer. Radiator, Johns-Manville, and U.S. Gypsum.

Demand for borrowing stocks remains high, indicating a substantial short interest still exists. Several important bears have continued fighting the market, and short positions apparently have increased in the past 2 weeks as "speculative circles" have grown more skeptical. Bears agree resistance has been stiffer recently; on some occasions, operations have only paused a rally instead of causing a reaction. This may be due to thoroughly liquidated state of the market caused by heavy outside selling late last year, which eliminated many weak holdings.

Dr. D. Starch, in Financial World, estimates there are about 10M stockholders of leading US corps., only half the commonly believed figure.

Broad Street Gossip: "A quarter of a century or more ago ... the wealthy were the big owners of the big corporations. Since then, a big change has taken place in social and economic conditions with all the big corporations from a majority viewpoint, controlled by the little fellows." At the close Friday, the Dow industrials were 6.64 points off the 1931 high and 26.27 off the low; rails were 10.78 off the high and 2.17 off the low; utilities were 0.12 off the high and 13.06 off the low. After a decade of indifference, Wall Street is again watching the textile industry. Improvement in textiles has often preceded general business recovery, as in 1921. Recent improvement in textiles has aroused hopes of a similar pattern now, "though conditions today are not altogether analogous to those of a decade ago."

Former Gov. Smith urges wider cooperation among business as solution to its difficulties.

Editorial: Terms of the refinancing of Berlin's city-owned electrical plants are interesting as a precedent for future foreign investments. The financing looks more like a partnership; while the Berlin govt. and German investors retain control, US-owned shares will be lodges with a leading US utility holding company, which will supply expert observation and technical advice.

Jackson Brothers, Boesel note $4B was allocated by the last Congress to aid business recovery; this spending, along with large private projects including the $250M Radio City and the Pennsylvania RR improvement program, "offers tangible basis for believing that the moderate business revival already noted ... will broaden out in the near future ... stock market prices have farther to go in discounting a return of normal industrial prosperity."

Economic news and individual company reports:

Bethlehem Steel dissidents mail letter protesting bonus to 85,000 shareholders, ask for proxies at annual meeting.

Bank of US audit of all accounts now underway by Price-Waterhouse, in connection with Rosoff reorganization plan. Small banks closed in NY City and Boston.

Income tax receipts Mar. 1-18 were $194.9M vs. $314.2M a year ago, and for fiscal year to Mar. 18 were $1.366B vs. $1.567B. Treasury's situation seen as most difficult in years; complete income tax returns likely to be more than $100M under last year, and deficit over the forecast $500M (although $391M of the deficit is a "paper transaction" that goes to the sinking fund for reducing national debt). Large amount of funds needed in near future for veterans' loans and refinancing is causing concern, though recent Treasury issues at low interest rates were heavily oversubscribed.

Dun's reports business improvement continuing, remains uneven and mainly seasonal, but "rests upon a more solid basis than was true of the temporary uplift in the spring of 1930. Bradstreet's reports increasing buying of shoes, women's wear, and men's work clothes.

Feb. cigarette production was 8.836B vs. 8.465B in 1930.

Detroit employment index Mar. 15 was 82.5 vs. 81.2 Feb. 28 and 78 Feb. 15, and 108 a year earlier.

Producers in new East Texas oil fields expected to launch bitter attack on curtailment at hearing Mar. 24.

Western rails are considering ways of making passenger service more profitable. Attempting to combine services would run into some difficult obstacles due to competitive conditions. Experiments at attracting more passengers by lower rates have had indifferent success.

F.W. Dodge reports NY Metro. building contracts in first 2 weeks of March were $43.7M vs. $31.4M in 1930.

FTC completes investigation of New England Power Assoc., adjourns its utility investigation for two or three weeks; next target uncertain.

Call money rate hits 1%, lowest on record.

Largest banks in "English speaking world" are Chase, $2.074B deposits; Midland, $1.954B; Lloyds, $1.775B; Barclays $1.700B; National City $1.460B. Of largest 150, there are 93 in the US with $23.5B deposits, and 57 in British Commonwealth with $19.2B.

Russian exports in fiscal year ended Sept. were $501M, up 14%; imports $534M; trade deficit may explain Russian "dumping" last year.

German "situation has been greatly clarified"; "political horizons are now comparatively clear." Marks have strengthened as capital returns, and Germany may soon reverse a long trend by importing gold from France.

French Chamber of Deputies approves increase in duty on sugar to protect French sugar beet producers.

M. Louise Atterbury, relative of Pennsylvania RR pres. Gen. W. Atterbury, sues broker for $106,058 for unauthorized transactions.

Company reports since Jan. 1: 231 companies reported higher earnings vs. 1930 and 918 lower; 932 dividends unchanged, 46 increased, 203 cut.

Companies reporting decent earnings: Connecticut Electric Service, Phila. & Reading Coal, Brooklyn-Manhattan Transit, Mickelberry's Food Products, Telautograph (machines transmitting diagrams by wire).

Jokes:

"'Make a sentence using the word evanescent.' 'Well, well, well, evanescent my old friend Charlie.'"

"'What must one do to have beautiful hands?' 'Nothing.'"

A bishop on the use of cosmetics by girls - 'The more experience I have of lipstick, the more distasteful I find it.'

"He - We're coming to a tunnel - are you afraid? She - Not if you take that cigar out of your mouth."

Musical:

The Wonder Bar - After a long sojourn in "Hollywood and other foreign parts," Al Jolson returns to Broadway, "stripped of his familiar guise of blackface, but displaying all of his old time fervor and zest." Vehicle is unfortunately weak, built on "insipid story of a gigolo," his fiery "Spanish by temperament" dancing partner, and an estranged couple that Mr. Jolson plays guardian angel to. However, Mr Jolson, together with colorful stage setting, raise play above mediocrity.

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