Tuesday, September 15, 1931: Dow 121.30 -2.55 (2.1%)

Assorted historical stuff:

Editorial: While it's reasonable that the American Legion convention next week should ask aid for its members in need this winter. However, based on the recent experience of the veterans' bonus loan, which was estimated to total $350M in new loans has already reached more than twice that, “may not the Legion be asked to consider in all seriousness the justice and even the necessity of limiting relief to veterans” in real need?

Washington report: In spite of recent frank admission by high Administration officials that the Farm Board has failed at supporting cotton and wheat prices, the Administration expects to continue the Board as is and defend it vigorously in political campaigns. However, it's believed the Board made its mistake in trying to stabilize prices before controlling production, and “in the future, it was said, every effort will be made to concentrate the board's activities upon building soundly managed cooperatives, with a view to using them to bring about acreage reduction ...”

Close advisors to NY Gov. Roosevelt say he will call the legislature into special session as many times as needed to get the type of unemployment relief he wants.

Aviation safety improved dramatically in the first half of 1931 vs. a year earlier; passenger deaths fell from 22 to 9 while miles flown in scheduled operations rose from 16.9M to 20.3M, making miles flown per passenger death 5.3M vs. 2.4M.

British Schneider Cup team sets new airplane speed record of 386.1 mph over 3 kilometer course.

Latest labor-saving innovation in California is planting of rice by airplane; a single plane can sow 250 to 450 acres a day, flying from 20 to 25 feet above ground at high speed; cost is about $1/acre.

Few countries have gone through greater changes in the postwar years than Ireland; the country has been electrified by the Shannon River hydroelectric development; motor traffic and radio broadcasting have been developed; “nearly all scars of civil war have been eradicated.”

NY City Transit Commission decided to open operation of the Eighth Ave. Subway to competition; traction [mass transit] co. securities fell sharply.

Origins of George Spelvin as the traditional theatre version of John Doe: Producer John Golden had a favorite carpenter by that name on his first play, Turn to the Right (1916). One of the play's actors played two small roles in different makeup, so Golden used the carpenter's name for one of the roles on the program to avoid exposing the double. [Note: Wikipedia, on the other hand, traces the name back to 1886. Georgina Spelvin was the female version, though it has apparently fallen out of use since it was adopted by the star of the X-rated The Devil in Miss Jones.]

Market commentary:

Market wrap: Following Saturday's weak session, stocks opened under an accumulation of selling orders; ticker ran several minutes behind for the first hour. Industrial and utility averages both broke through the early-June bear market lows, and liquidation continued in the rails. Some feeble rallying in last half-hour. Bond prices fell almost across the list in an active market. Rail and traction [mass transit] bonds particularly weak. Dow 40-bond average hit new yearly low; record low pries in many individual issues. US govts. slightly lower. European govts. generally lower. Grain markets bucked the general downtrend, finishing higher. Cotton held just above season lows.

Dow industrial average closed at a new bear market low; there were 2 new yearly highs and 199 new lows.

Conservative observers, because all three averages have now broken the June lows, now advise even more caution; urge clients to wait for market to establish a new support base.

Bearish professionals “hailed penetration of the June 2 bottom of 121.70 ... as a distinct triumph for their cause,” though it was felt the decline would have to extend for several points to indicate “a further phase of the bear market had been entered.”

Brokers report increased liquidation from discouraged longs; extent of liquidation indicated by selling in investment issues over past week, including preferred stocks certain to maintain dividends. "Important interests with funds available for the purchase of investment stocks have not been attracted into the market in large numbers thus far."

Foreign currencies have been moving in a narrow range. Dealers are cautious about taking positions in view of swiftly changing sentiment; “market opinion about sterling has shifted constantly.”

Economic news and individual company reports:

F. Sisson, Guaranty Trust VP, cites study of 97 companies over the past two years showing those that increased advertising spending in 1930 did relatively better than those that decreased it (profits only down 29% vs. 55%), and did still better in 1931.

Average yield of 12 leading NY and Boston bank stocks is now 5.67%, a high for the depression but still lower than the peak of 6.88% in 1921.

Arrangements made to provide relief to 70,000 depositors of seven recently closed banks in NY, Brooklyn and Queens; Manufacturers Trust will open new accounts immediately for the depositors containing 50% of their balances at the closed banks, and then liquidate the closed banks' assets. Total deposits at the closed banks were $42.1M. The relief undertaking is supported by a large group of leading NY City banks.

With all signatures assured on the plan for maintenance of short-term credits to Germany, the agreement will take effect by the end of the week; at that time, foreign banks will be allowed to withdraw 25% of mark balances, or 350M - 400M marks. Some public nervousness is reported about possible currency depreciation, though the Reichsbank reportedly believes the mark's value can be maintained without difficulty for the next few months.

Berlin bonds are not being quoted; interest payments are due Oct. 1, but “leading bankers call it inconceivable that the Reich will not aid the city ...”

Companies reporting decent earnings: Telautograph (machines transmitting diagrams by wire).

Movie:

Five Star Final - First National film, at the Winter Garden. Louis Weitzenkorn's “bitter dramatic broadside against tabloid journalism” is adapted into a “vitally effective talking picture” starring Edward G. Robinson. Randall, a cynical editor for the Evening Gazette, digs up an old murder story and investigates the current life of the “murderess”; it turns out this woman is now happily married, with a daughter unaware of the episode and about to be married. The girl's mother and stepfather commit suicide after the story, and the girl herself tries to shoot Randall but is restrained. “The film ends with a powerful cinematic touch, showing a ... copy of the Evening Gazette being swept up in the gutter along with the mire and filth of the street. While the movie adaptation was largely faithful to the play, a few interesting changes were made. “Some of the dialogue has been softened for the benefit of movie-goers whose ears are more sensitive to rough language than those of the hardened denizens of Broadway.” Also, to comply with the Will Hays code, the unsympathetic clergyman in the play was changed to “a man who was expelled from divinity school for immoral conduct, and Boris Karloff is caused to enact the role in an excessively unctuous manner”; in addition, a genuine minister has been added who does show sympathy.