No Journal was published Monday, September 7, 1931, Labor Day. I'm putting the week in review for last week in today's blog for consistency with other weeks.
Week in review:
Stocks suffered declines throughout the list, attributed to failure of expected seasonal fall business improvement to materialize. The Dow rail average hit a new bear market low in Wednesday's trading, and finished the week below 65, the lowest level since 1898; this disturbed sentiment since the rails have led the declines in the major bear market of the past two years. Unfavorable factors for the rails included bankruptcy of the Florida East Coast Rwy., dividend suspension by the Lehigh Valley, dividend uncertainties at other major rails, and poor freight loadings reports.
Disappointment on seasonal business trends centered on the steel industry, which had been confidently expected to show some increase in production as September approached but instead dropped back slightly to start the month; this disappointed even the more conservative industry observers. US Steel hit a new bear market low below 83, the lowest level in a decade.
Feature of the bond week was outstanding success of the Treasury offerings of $800M 24-year 3% bonds and $300M one-year 1 1/8% certificates at par; large oversubscription refuted criticism that rate on the long-term bonds was too low. US govts. were steady to firm throughout the week. Municipal bonds quiet but firm. Domestic corp. list featured sharp swing in second-grade rail bonds, which rallied early in the week but fell later; however, closing prices were substantially higher than the yearly lows established last week. High-grade industrial bonds bucked weakness elsewhere to rise on the week, while public utilities were steady. European govts. were generally steady, though German bonds fell Thursday when the stock exchange there reopened. S. American govts. erratically lower; unfavorable news included partial Brazilian moratorium and defaults by Chile, Peru, and state of Pernambuco, Brazil.
Wheat futures fell into new low ground. Corn worked irregularly lower. Cotton “developed easier tendencies,” falling below 7 cents again to start the week but experiencing small rallies thereafter.
Foreign currency market quiet and somewhat steadier. British Treasury reportedly has dipped into the new $400M US-French credit to defend sterling; it was also reported, but not officially confirmed, that “the British Prudential Assurance Co., together with a number of other insurance cos. and investment trusts, has mobilized some 100M sterling of securities in NY for the benefit of the British Treasury.” Berlin stock exchange reopened for trading Thursday under strict control; declines were heavy and orders unbalanced on the Thursday but appeared to settle down on Friday. Swiss francs rose steadily; “brokers are at a loss to furnish a satisfactory explanation for the movement in Swiss as ... the only reason for transfer of funds to that point is safety.” On the other hand, another safe-haven currency, Dutch guilders, surprisingly diverged from Swiss francs and declined.
Money markets passed through another dull week; rates were unchanged in spite of rise in currency circulation of $255M since July 29, to about $5B; Reserve credit outstanding rose $276M in the same period. “Funds are still so plentiful as to be able to soak up any unusual demand ... The credit structure is apparently in such a flexible condition as to be able to absorb huge expansion without affecting money rates materially.” US gold holdings rose $6M to a new record of $4.998B.