March 4, 2010

Wednesday, March 4, 1931: Dow 183.76 -0.62 (0.3%)

Assorted historical stuff:

Gov. Theodore Roosevelt, Jr. of Puerto Rico makes urgent appeal to US citizens to save 200,000 Puerto Rican children from slow starvation; “they are intelligent, industrious and loyal American citizens, but have been the victims of poverty and disease.” Senate passes resolution directing that $5M in drought relief funds be loaned to destitute farmers without security. Gen. F. Hines, veterans administrator, says Veterans Bureau now handling 10,000 bonus loan applications daily, will ramp up to 50,000; says most of the needy cases have been taken care of.

As expected, but after some delay, Pres. Hoover vetoes Muscle Shoals bill; calls it govt. ownership measure; fears political instead of business management; past record of the project is “complete demonstration of the ineptness of the federal govt. to administer such enterprise.” Remedy for abuses in power industry is regulation, not govt. ownership. Sen. Dill (D, Wash.) counters that power cos. are able to circumvent Federal and state efforts at regulation. FTC continues investigation of public utilities, taking up the New England Power Assoc.

Washington report: House passes bill favored by Fed. Reserve making it Federal offense to circulate false rumors concerning the Fed. Reserve. Acrimonious Senate session lasts until 3AM Tuesday; decides to tax all oleomargarine, whether naturally or artificially colored. House passes bill giving govt. workers Saturday afternoons off. House approves tariff commission inquiry into oil prices; other oil-related inquiries pending. Pres. Hoover signs bill requiring contractors on govt. work to pay highest prevailing wage scale of local communities.

Editorial on conference being called by a group of Senators “all classified politically as insurgent or progressive,” inviting a select list of politicians “marked by a tendency to break through their party fences.” Taking Sen. Norris at his word that the aim of the conference is not to form a third party but “to evolve a program that would be beneficial to the entire people,” this would be welcome. It's about time the “opportunist and irresponsible political sniping” that has been practiced by the Congressional insurgents be replaced by a concrete and coherent program.

M. Gandhi and Sir G. Schuster advance in negotiations toward expected Indian peace agreement; people living along sea coast are to be allowed to gather, make, and sell salt instead of buying it from British monopoly interests.

Dr. H. Schacht, former Reichsbank pres., says only international cooperation can overcome "present economic and moral crisis." Presents plan including revision of all international war debts, Allied and German; revocation of Versailles Treaty clause on German guilt for war; and restitution of colonies taken from Germany. Says world commerce needs expansion, not decrease; calls for increased international credit. Dr. H. Luther, Reichsbank pres., contradicts Dr. Schacht, reaffirms German adherence to Young plan; German stocks, bonds rally.

France reportedly may back loan to Italy as result of recent naval agreement.

AFL and other interested organizations to press for stricter bans on products of convict labor.

A knock-down drag-out figures-blazing editorial showdown between T. Woodlock and Walter Parker attempting to settle once and for all the inland waterway transportation question.

NY Trust reports newspaper circulation has increased 36% since 1921, or twice the rate of growth in population. Combined circulation of all US morning and evening papers is now over 40M, and over 28M Sunday newspapers are sold.

Senate passes House bill making Star Spangled Banner official national anthem.

First Ave. Association files statement with NY Mayor Walker urging construction of 2nd Ave subway before the proposed 6th Ave subway is built.

60 story skyscraper erected by Walter Salmon at 42nd St. and 5th Ave. was opened.

St. Louis is home to one of the stranger depression communities - Tanktown, a group of 75 men living in brewery tanks discarded due to Prohibition. The mayor of the group, who acts as spokesman, lives in the largest tank.

London's Big Ben is one of the largest and most accurate clocks in the world. The controlling device is a tray fixed about halfway down the pendulum. When the clock is running slow, a halfpenny is placed in the tray, making the pendulum swing slightly quicker; the process is reversed when Big Ben is running fast.

Market commentary:

Market wrap: Stocks opened under pressure and moved uncertainly in the morning, but resistance developed on reactions; general list turned relatively steady in mid-day, though heavy selling took place in some individual stocks that suspended dividends; rally developed in afternoon, and bull pools resumed operations in trading favorites including Auburn, Case, and Worthington; some weakness developed near the close. Bond market dull; US govts. very quiet, slightly up; European strong, S. American mixed; corp. dull, irregular. Commodities firm; grains mostly higher; cotton up slightly. Copper unchanged at 10 1/2 cents; buying declined.

Conservative observers "inclined to permit the market to prove its ability to absorb profit-taking before again adopting the policy of buying stocks on reactions."

Market appears to be meeting resistance on each end of its current trading range.

Wall Street anxiously awaiting adjournment of Congress; industrial leaders are thought to have been inhibited due to fears of harmful legislation, particularly in the public utility field.

More cautious public attitude seen; some pools have not been able to attract a following recently, and when public has entered the market it has been for standard stocks, in line with prevailing advice from leading brokers. Several firms report customers taking profits in past few days.

Dow Theory adherents growing a bit concerned over recent "reactionary tendencies" in rails. To recap, on Feb. 24 both rails and industrials had recovered about 50% of the ground lost on the late 1930 break; further progress would have been highly bullish, indicating a more-than-just-technical recovery. Some resistance at that point was natural to consolidate gains, but action of the rails since Feb. 10, and particularly in the past week, may indicate a more serious roadblock. Rail weakness is particularly worrisome recalling their earlier weakness in April 1930, which foreshadowed a general market swoon.

Broad Street Gossip: List of "non-progressive" industries unable to make headway even in prosperous times, and therefore unable to treat investors well: coal, textile, sugar, leather, paper, railroad equipment, rubber, meat packing, fertilizer. These include some of the largest industries in the world; poor conditions mainly due to "overproduction or unwise competition." Paine, Webber reviewed rather grim 1930 year for the rails: revenues lowest since 1919; operating expenses cut to lowest since 1918; fewer passengers than any year since 1906; passenger receipts off 44.2% from peak year of 1920; net operating income lowest since 1922.

Editorial: Senate committee's report on "alarming tendency" toward monopoly in food is not very convincing or alarming. It seems to claim retail prices should decline in proportion to raw material, which is only a small percentage of costs. Also, it inconsistently blames high bread prices on too few large bakers but high meat prices on too many small retailers.

D. Del Rio of Central Hanover Bank praises Colombia's determined attack on economic problems; has drastically cut govt. spending; Colombian coffee still provides good profit margin due to superior quality.

Edsel Ford predicts all manufacturers will adopt shorter work week as means of meeting unemployment problem.

G. Swope, GE pres., cautious on predicting improvement, though believes “conditions will be no worse.”

Economic news and individual company reports:

Leading auto companies are increasing production schedules in March by 20% or more over Feb. due to increased retail demand. Executives cautious as to whether upturn in sales was due to seasonal trend, unusually good weather, or real revival; focusing on keeping production strictly in line with sales. Second quarter will be critical, but year so far has been better than expected.

J. Broderick, NY superintendent of banks, testified at Bank of US investigation regarding attempts to prevent failure and arrange merger with other banks. Attributes failure to ill-advised previous mergers and real estate policy. Atty' Gen. Bennett and D.A. Steuer say they're working on reorganization plan; believe bank directors should contribute funds toward reopening.

Rail freight loadings for week ended Feb. 21 were 713,938 cars, down 6,751 from prev. week, down 13.7% from 1930 week, and down 21.1% from 1929.

Refineries ran at 63.5% in week ended Feb. 28; stocks of gasoline increased 1.184M barrels to 44.792M. Crude oil production in week ended Feb. 28 was 2.103M barrels/day, down 55,673 from prev. week and 516,087 from a year ago. Standard Oil NJ cuts tank car gasoline 1/2 cent to 7 cents/gallon.

Treasury's plans for March 15 financing "radically changed" by veterans' bonus; original offering of $1B long-term bonds at 3 1/4% replaced by $500M at 3 3/8%, with remainder in short-term issues; plans for necessary reduction of short-term debt now uncertain. Fed. Reserve says Feb. money markets slightly firmer, but no indications of unusual business demand that would materially affect rates. US gold holdings gained $70.5M in first two months.

New Feb. bond offerings were $147.0M vs. $602.4M in Jan. and $344.9M in Feb. 1930; drastic decline attributed to veterans' bonus agitation.

Agriculture Dept. reports farm prices of agricultural products were 90% of prewar level Feb. 15, vs. 94% a month previous and 131% a year previous.

Railway Age reports 24 freight cars ordered from US makers vs. none in Jan. and 15,931 in Feb. 1930; no passenger cars in Jan. or Feb. vs. 134 in Feb. 1930.

French govt. commission inquiring into fraud in Oustric bank failure seeks to have immunity lifted from cabinet minister Peret, who has persistently refused to testify.

Large London brokerage Wheeler & Co. fails; attributed to decline in securities; impact limited so far.

C. Schwab, Bethlehem Steel chair., asks stockholder approval for executive bonus system [subject of shareholder lawsuits].

Survey of first-run movie theaters in 20 cities reports receipts for 19 weeks ended Feb. 7 up 6% vs. 1930 period.

Warner Bros. (movies) shows no progress toward recovering formerly large earnings power; net for quarter ended Nov. 30 was $0.39/share vs. $2.07 prev. year.

Starrett (construction) stock dropped below 10 after reporting earnings of $3.02/share; preferred stock yields 14%. Investors may be concerned about volume of upcoming business, and about construction cos. generally.

R.J. Reynolds launching 7-day $1M advertising campaign to introduce new moisture-proof Camel package; placing full-page ads in 1,713 daily newspapers. Kelvinator reports Feb. sales up 11% over 1930.

Companies reporting decent earnings: Axton-Fisher (mentholated cigarettes), Federal Knitting Mills.

At the galleries:

Third Int'l Antiques Exposition [mentioned a week ago] opened Friday night at the Grand Central Palace. Show is “by far the greatest ever held in this country, and rivals that of the British Antiques Exposition, held in London last year ... Every conceivable type of the arts is represented.” The Fifteen Gallery is showing paintings by Katherine Lovell of the California coast and Flatbush. “Besides the hosts of arriving Frenchmen to exhibit in our galleries, it is a pleasure to extend welcome to an Englishman, Bertram Nicholls, whose landscapes are on view at the Ferargil Galleries.” The Arden Gallery is showing a group of six women sculptors; though the show “is dimensionally a modest affair - their being no heroic marbles or bronzes or plastic effigies on hand - a surprisingly robust sense of form and individualistic conception is felt ...”


"'Well, old man, what are you doing these days?' 'I'm selling furniture.' 'Are you selling much?' 'Only my own, so far.'"

"Mistress - I don't like to have to keep complaining, Mary, but I do wish you'd realize that when master leaves his shoes outside the bedroom door, it means that he wants them cleaned. Maid - Oh, does it? And what does it mean when he leaves them outside the front door?"

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