Thursday, September 17, 1931: Dow 119.26 -1.33 (1.1%)

Assorted historical stuff:

Sen. Glass (D, Virginia) believes tax increase at next Congress inevitable; impossible to cut spending enough to "justify maintaining present policy of meeting deficits by short and long-term loans."

Editorial calling Pres. Hoover's response to bankers' call for longer war debt suspension disappointing; now is the time for courageous and prompt action; etc.

Administration favors idea of naval construction holiday; would create better atmosphere at disarmament talks, and give economic and budgetary relief.

Pres. Hoover's conference on home ownership to convene Dec. 2; hopes to increase credit for home building.

G. Swope, GE pres., presents industrial stabilization plan in which industries would cooperatively control production and other matters through trade associations under Federal supervision. Plan would also provide for various worker protections to be adopted by participating cos.

Sir John Simon, "lifelong freetrader," reverses stand and urges protective tariff to correct British trade imbalance. Winston Churchill says unnatural accumulation of gold in France and US cause of present situation, urges int'l conference. W. Graham blames troubles on attempts to meet reparations and war debt payments while maintaining gold standard.

French press and industrialists alarmed at effects of possible British tariff on luxury exports from France valued at $200M last year.

NY City Comptroller Berry says city getting “little or no permanent benefit” from millions in relief spending; urges that instead of current emergency employment plans, city place under contract at once $190M in public improvements already authorized.

Yet another use has been found for rubber - plants to be shipped or transplanted are dipped in a rubber solution, coating all but the roots. This retains moisture and preserves shape of the foliage. After replanting, resumed growth causes the rubber coating to crack and fall off.

The state of the art in moving buildings was recently demonstrated by Indiana Bell Telephone, which was able to move an 8-story steel-frame structure across a busy Indianapolis street without any disruption of telephone service.

Market commentary:

Market wrap: Stocks went through an irregular session; early trading was on the downside, but several periods of short-covering caused good rallies, particularly after unexpected Westinghouse dividend announcement; however, as soon as this demand was supplied the rallies petered out. Utilities suffered outburst of selling in late afternoon. Bank and insurance shares weak. Bond trading featured early “urgent selling” carrying “numerous issues to record low figures”; this was followed by some moderate rallying. Dow 40 corp. bond average hit new yearly low. US govts. firm; German govts. rallied on favorable trade report. Grains firm; cotton lower; some copper sold at new low of 7 cents/pound.

Dow industrial average closed at a new bear market low; there were no new yearly highs and 181 new lows.

Conservative interests discouraged by recent bond market weakness; believe bonds should by precedent lead the way in any rally of securities.

Better resistance shown by leading stocks since start of the week is attributed to traders buying in anticipation of a technical rally, based on the amount of time the market has gone without a recovery of “more than an hour or so's duration.”

H. Branch, pres. of the Federated Chambers of Industry of Mexico, says credit virtually no longer exists in Mexico after new monetary law.

S. Abrams, Schlitz Brewing Co. treasurer, joins list of observers predicting business stimulus would result from legalization of beer.

Economic news and individual company reports:

Editorial calling for one-year suspension of rules requiring savings banks to sell bonds that fall below legal requirements. Bond market is in a “condition of utterly unreasoning and unreasonable fear ... sellers have been obliged to make ... positively absurd” concessions. “There is no sense in requiring or pressing institutions to sell bonds ... at a time when it is manifest that ... they can be sold, if at all, only at prices materially below their actual worth.” Current condition of extreme fear can't last that long: “Men do not long rest in violent emotions ... there is, in this world at all events, an end at some time to punishment, and it can not, speaking humanly, now be far off.” NY Savings Bank Assoc. opposes change in requirements for legal bonds; favors efforts to restore rail credit instead. Value of all NYSE-listed bonds fell $1.057B in August, to $47.319B; largest monthly decline since NYSE began compiling figures in Jan. 1925.

Westinghouse unexpectedly declared a quarterly dividend of 62 1/2 cents vs. previous $1; Street had been expecting a dividend suspension.

Steel operations partly recovered from the Labor Day; production for week ended Monday was slightly over 30% vs. 28 1/2% previous week, 31% two weeks ago, 58% in 1930, and 84% in 1929. Weekly steel reviews somewhat divided. Iron Age reports more promising inquiries from railroads, pipelines, and auto makers, and increasing construction activity. Steel reports slight improvement in current production, but “Sept. is now more than half gone with no acceleration in either production or new business”; continuing hopes for seasonal improvement “have no actual, tangible support in consumer committments.”

East Texas oil prices weakening as production mounts; sales as low as 32 cents/barrel reported. Chicago wholesale gasoline steady at 3 1/2 - 4 cents/gallon.

Analysis showing Kreuger & Toll securities have now fallen to the point that “net asset values of the Kreuger & Toll Co. exceed by a substantial margin the present market prices for its various securities. ... Net income ... in the current year probably will make a good showing although not up” to the 1930 record high; earnings of about $2.75 per American certificate are expected, while the certificates are selling at about $11.50. Swedish stock exchange rallied sharply; Kreuger & Toll and Swedish Match up strongly.

German trade surplus in Aug. a monthly record of $77M due to sharp fall in imports. Surge in trade surplus caused improved sentiment on German situation; marks rose sharply.

French banker Albert Oustric, imprisoned for financial manipulations, to be freed due to ill health.

Good demand reported for just-issued $40M in long-term NY State bonds (at record low yield); over $25M have already been distributed.

Mortgage foreclosure suit filed against Hotel Pierre.

Companies reporting decent earnings: American Tobacco, Long Island RR.

Theatre:

The Constant Sinner - written by and starring Mae West, from her novel of the same title. West is indeed “a constant sinner against all generally accepted notions of good taste in the theatre,” though she does bring “an undeniably unique personal quality to all her efforts” and arouses “a certain degree of enthusiasm in her audience.” The play, however, is “downright boring and poorly written,” tracing through 16 scenes the rise of Babe Gordon, a white prostitute in Harlem, from the day she meets and captivates a rising white boxer. While she eventually marries the boxer, she also obtains “material advancement” from a black “policy king” and a rich white department store manager; “vice would appear to have its own rewards in this tale,” though Babe is also reduced to peddling dope for a short time after she has ruined her boxer husband and been temporarily impoverished. “Miss West moves on and off the stage ... in her inimitable slouching manner, reading the play's choicest salacious lines, written by her especially for her experienced delivery.”