Thursday, August 13, 1931: Dow 137.63 -2.53 (1.8%)

One hundred years from now (2031):

"The finance ministers of the Council of Friendly Nations met in Geneva as customary ... to review accomplishments and to discuss their problems. Assembled in the historic library, the politenesses of greeting over, the great men sat in brooding silence. There seemed nothing to talk about: they had no problems! It was the Chancellor of the British Exchequer, Sir Eric Playfaire, who opened the floodgates. 'It's the perfection of it all that crushes the spirit,' he said sadly. 'The international money systems are in flawless balance, all war debts are paid, ... the people never were so prosperous.' 'We ourselves might as well be automatons,' jointly affirmed Ministers Gutfreund and Bonhomme, who sat together. ' ... truly the Millennium means monotony to us.'" The aged US Treasury Sec., John Smith, recalled how different things were a hundred years ago. "'Pessimism hung over the cities like a black mist. Ruin was the watchword.' ... 'Just how did they come out of it?' asked the more youthful minister from Rome. ... 'It's a valiant tale, to be told and told again,'" said Smith. "'Let us begin with August 1931 ...'"

Assorted historical stuff:

Sen. Fess, Republican Nat'l. Committee chair., says Pres. Hoover will have concrete program for unemployment relief to present to next Congress. AT&T pres. Gifford had a breakfast conference with Pres. Hoover Wed. to discuss the general business situation; the President was "so interested in the facts laid before him that he remained at the breakfast table far beyond the hour when he usually goes to the executive offices." Even some govt.-employed economists are now reportedly in favor of a dole for the unemployed. "This is in decided contrast to the views of other students who point out that the dole in England has increased unemployment, if anything, and might have the same result in this country." Detailed review of past and planned measures by local govts. for unemployment relief, including NY City (combination of public and large private efforts), Detroit (spent $15M on unemployment relief in year ended June, plus other relief spending and private efforts; city council has been criticized for lavish spending and is planning to cut back), Chicago (not much city relief spending due to strained fiscal condition), Boston (1930 spending $3M, budget for 1931 $5M), Pittsburgh (private work-relief efforts with materials supplied by city), etc.

Nat'l. Commission on Law Observance and Enforcement, after finding many instances of abuse during its investigation of criminal prosecutions, makes numerous recommendations to Pres. Hoover. “Some kinds of lawless enforcement of the law, such as the 'third degree'” or searches without warrants seem due to official policy in certain regions; “the remedy ... involves the serious difficulty of altering rooted official habits.” Recommendations include: inclusion of qualified people on jury lists regardless of color; granting appeals courts the power to reduce sentences without a new trial; abolition of payment of judges and prosecutors from fines; and many others.

Editorial blasting Sen. Nye's call for price-fixing of farm products and a debt holiday to relieve distress of farmers in some parts of the Northwest. Editorial blasting petition of Railroad Commissioners of 6 Western states against the 15% rail freight rate increase; that petition argued that a finding of financial emergency in itself isn't enough to authorize the ICC to increase rates in order to provide relief for the rails.

Directors of China Famine Relief ask the Farm Board to sell 30M bushels of surplus wheat to China on reasonable terms, in order to feed an estimated 10M Chinese who face starvation as result of floods.

Sen. D. Walsh (D, Mass.) says US should insist on a free and unbiased election in Cuba; believes rights of common people trampled on and elections a travesty under Pres. Machado. Based on report from Ambassador Guggenheim, State Dept. believes Cuban situation is well in hand. Bill expected to become law in Cuba provides for two-year moratorium on mortgages; millions of dollars in US loans involved.

Newfoundland Executive Council denies reports from Ottawa that Newfoundland govt. is prepared to sell Labrador for $110M.

Light from the star Arcturus will be used to start the machinery at the Century of Progress Exposition in Chicago in 1933; the light will be "turned into power and amplified, and used to throw switches in Hall of Science." Arcturus was chosen because the light from it started on its journey here in 1893, during the World's Columbian Exposition.

Wild elk, which once roamed in countless thousands over the Northwestern part of N. America, have now been reduced to a few scattered herds. However, the British Columbia game board now plans to give the species another chance to multiply on the wild lands of the Queen Charlotte Islands off Western Canada; the islands are being stocked with elk from some of the finest herds on the mainland.

Plans filed for $7M International Music Hall on 6th Ave. between 50 St. - 51 St.; unit number 10 in $250M Radio City.

Market commentary:

Market wrap: Stocks experienced rather indecisive session following Tuesday's explosive upturn; early trading featured considerable selling, but this was absorbed without extensive setbacks; stocks then settled into narrow range for most of the day; attempted rally in the last hour gave way to renewed selling on news of decline in Youngstown steel output. Bond trading quieter, with modest improvement in many sections; European and S. American bonds rallied mildly; US govts. steady; amusement bonds were a strong feature of the industrial list. Liquidation of second-grade rail bonds eased, though the Dow averages for both high-grade and second-grade rail bonds hit new yearly lows. Grains closed higher after "erratic fluctuations." Cotton declined close to the lows hit at start of the week. Copper remained at 7 1/2 - 7 3/4 cents, with buying small and large producers out of the market at 8 cents.

Observers generally believed the market's technical position had been weakened by Tuesday's sharp rally. Some declines were therefore expected over the next few days, but observers differed on what would come next. Bulls expected a rally to discount seasonal business improvement in the fall, pointing to strong recent resistance shown by industrials; also encouraging was higher volume during the rally Tuesday. Bears believed "considerable bad news was ahead" and attributed Tuesday's rally to clever exploitation of an overcrowded short position; they also cited persistent weakness in rail stocks and bonds.

Technical analysis: owing to clear double-top pattern in the industrials in July, "the limits of a technical rally at this juncture are clearly defined." The critical level is 147 on the industrial average; an early rise above this level "in a substantial way" would indicate a more-than-technical rally.

Testimony before the ICC that savings banks and life insurance cos. hold over $3.4B in railroad securities seen having "considerable weight with the commission in granting some relief to the carriers."

Composite dividend yield of 21 leading NY banks and trusts is now 4.75% vs. 1.5% at the 1929 market peak.

Past depressions have brought greater industrial efficiency that "could not have been attained during a prosperous period. The more drastic the depression, the greater the resulting efficiency. The current business depression, therefore, has some favorable points which will be reflected in industry once a definite turn for the better sets in."

W. Dickerman, Amer. Locomotive pres., returning from Europe on the S.S. France, was optimistic: "I found a basis for better feeling for the business outlook in Europe lately. The recent vote in Germany ... improved confidence throughout Europe. There is a sense of security developing gradually and I think that when this is fully grounded prosperity will begin to return."

Middle West Utilities monthly survey finds recent improvement in business conditions throughout Eastern half of the US is continuing, though at a somewhat slower pace. Eastern states are showing slightly increased industrial activity, while better crop outlook is stimulating business elsewhere. "Brisk tourist trade" is helping business in most sections, particularly New England.

Economic news and individual company reports:

"A change from monarchy to republic in Spain has evidently had no influence" in stopping decline of the peseta. "The current threat of financial disaster facing the new regime can no longer be ignored - immediate steps must be taken to stem further inflation and to stabilize the peseta within narrow limits with the eventual prospect of placing it on the gold or gold exchange standard." Reviews peseta's movements since 1914, culminating in current crisis; "each passing week sees a substantial rise in the currency circulation" and govt. is having increasing difficulty supporting value of the currency against sterling and francs. Until recently, Spanish banking authorities had kept hope of bringing the peseta back to par, but now a target of half that is suggested.

Hope is expressed that US and European banks will sign an agreement Friday freezing for 3 months their short-term credits to Germany, estimated at $750M. BIS bankers committee continues to discuss a long-term credit for Germany.

British Labor govt. hopes to balance budget with "sympathetic cooperation" of the opposition conservatives, who will support spending cuts proposed by Labor. Sterling continued recent moderate but steady gains; "much of the nervousness which was so apparent a short while ago has been dissipated"; weekly Bank of England statement is expected to show gain in gold holdings through release of "gold held under earmark."

Australian Premier Scullin appealed to 400,000 bondholders to “accept the sacrifice of a lower interest rate ... and give a demonstration of national self-help”; announced conversion already accepted on 150M pounds sterling, mostly in hands of financial institutions.

Philadelphia banks will lend $3M to the city to pay 4,700 policemen and 2,000 firemen over the next three months; loan made after city failed to sell notes.

Total resources of 6,805 reporting national banks in the US, Alaska and Hawaii on June 30 were $27.643B; this was a decrease of $484M from Mar. 25 when there were 6,935 reporting banks, and a decrease of $1.474B from June 30, 1930 when there were 7,252.

Texas Legislature now considering compromise measure empowering the Railroad Commission to curtail production. Gov. Sterling says may call Legislature into another special session if it fails to pass effective oil and gas conservation law. Gasoline prices continue to firm; "demand growing in face of a diminishing supply."

Weekly steel reviews report confused picture due to mixed trends in different lines, but overall outlook is seen as moderately encouraging. Bright spots include pipeline and structural steel, and rail demand seems to have bottomed; on the other hand, tin plate (used for cans) and sheet steel (used for cars) are still declining; total demand is little changed. However, whether or not steel output has hit bottom, indications point to upturn in near future; vacation shutdowns by various manufacturers will end this month, and retail car demand is encouraging, indicating higher automotive production. Steel production for week ended Monday was a little under 32% vs. a little under 31% previous week, 33% two weeks ago, 56% in 1930, and 93% in 1929. Youngstown district steel operations may drop as much as 5% at midweek from 42% starting the week. Tin plate rate is down to about 50%.

NY Industrial Commissioner Frances Perkins reports NY State factory employment fell 2% in July, about double the usual seasonal decline. Number of factory workers in July was down 14% from 1930 and 26% from 1929; payrolls were down 20% and 35%.

Little prospect seen for abandonment of cotton in the fields even though a price considerably below the cost of production is expected. "With business generally so bad there is little else that the farmer can turn to for a livelihood, and ... the farmer will need to sell all the cotton he can."

Agriculture Dept. estimates US wheat carryover at 319.1M bushels as of July 1, up 28.5M from a year ago. While the Farm Board has "persistently refused to divulge" how much surplus wheat it's holding, indications are it still holds over 200M of the total.

Copper situation continued to worsen. Refined copper inventories in N. and S. America on Aug. 1 were 440,417 tons, up 26,943 in July and up 118,378 over 1930; production of refined copper was 96,408 vs. 98,275 in June and 123,179 in July 1930; shipments 69,465 vs. 83,468 and 117,902.

US electric output for week ended Aug. 8 was 1,643 GWHr, down 2.9% from 1930, vs. a 2.0% decline prev. week and a 1.9% decline two weeks ago.

Companies reporting decent earnings: Bendix Aviation, Commercial Credit, Nat'l. Oil Products.

Movie:

Young as You Feel - Fox Film, at the Roxy. Will Rogers stars as a "dyspeptic widower who has amassed a fortune as a meat-packer" and taken his sons into the business, only to find them more interested in golfing, dancing and other such frivolity. He's at a loss to solve the problem, when he fortunately meets Fleurette, a charming French singer who "persuades him that he is really not old and introduces him to Chicago's nightlife." Shortly thereafter, it is he who "shows up at the office in mid-afternoon and refuses to join in important conferences on the plea that he must be off to the races." The sons become worried when they discover Fleurette is associated with "notorious blackmailers," and follow her and their father to Colorado along with a lawyer and their fathers' partner. However, upon arrival they find Fleurette isn't as bad as she seemed, and their father quite able to look out for himself. Happy ending ensues as Fleurette, her husband, Mr. Rogers, his partner, and "two beguiling ladies" go off to Paris; "the youngsters are left behind to manage the meat-packing business."

Joke:

"How long have you been working here?" "Ever since they threatened to fire me."

"There was only one painting at the exhibit I could look at - yours." "Thanks, old fellow." "Yes, there were so many people around the others."