Wednesday, September 16, 1931: Dow 120.59 -0.71 (0.6%)

Assorted historical stuff:

"High Washington officials are understood to have reached the conclusion that it is time for the Federal Govt. to assume the leadership in organizing to bolster the business and financial weak spots," though reports are conflicting on what actions are planned along these lines. Rumors of immediate further action on war debts or legalization of beer said without foundation. There are discussions of organizing bankers to "support foreclosed and weakly held real estate," as well as to stimulate cotton exports through offering credit for purchases. Administration approach seen aimed at having govt. “take the leadership in suggesting the organization of private resources and efforts” rather than passage of new laws. "Hoarding" of currency is causing some concern; "obvious way out ... is a reestablishment of public confidence in the banking structure. The method of doing that has escaped officials and experts here so far." Some have suggested guaranteeing bank deposits, but it's understood this has been "rejected since such schemes usually have ended in disaster." Rumors have circulated for some time that Pres. Hoover or some other high official plans an important statement, but White House officials say they're aware of nothing of the kind.

Labor Dept. reports five-day week gaining; of 37,857 establishments in 77 industries, 2.4% have permanently adopted a 5-day week, and 5.6% of employees are now on a 5-day week. Auto industry had highest percentage of workers on 5-day week, 44.3%.

London Times reports US bankers who met Pres. Hoover Monday asked him to amend Hoover debt plan to 4 or 5 year moratorium on all war debts. T. Joslin, secretary to Pres. Hoover, denies London Daily Herald report Hoover is considering a proposal for a world trade conference. British newspapers support move for world gold conference by NY Gov. Roosevelt.

German Foreign Min. Curtius “startles audience” at League of Nations luncheon, saying he will follow French Foreign Min. Briand on road to common goal of peace.

Mahatma M.K. Gandhi addressed the London Round Table Conference [on India], “wearing his loincloth.” Said was participating in the conference “absolutely in the spirit of cooperation”; offered to withdraw from negotiations if this would help reach an agreement.

The Cheltenham Express of the Great Western Rwy. in Britain established a new world record for a regular railroad run on Tuesday, averaging 80.4 mph on its run between Swindon and London.

“The Spectator, an insurance magazine,” has compiled a list of the 391 people in the US carrying personal life insurance policies of $1M or more; heading the list is Pierre S. du Pont, with a $7M policy.

Glass jar makers are operating at full capacity to supply demand for home canners, which is “10 times larger than at any time since 1920”; some farm families are reportedly using as many as 5,000 glass jars to preserve food for the winter.

Market commentary:

Market wrap: Rallying in major stocks petered out mid-session after announcement of dividend omission by Western Electric. Industrials and utilities weakened; rails severely pressured. Some rallying toward the close. Bonds generally lower in increasingly active market; Dow average of 40 domestic corp. bonds hit another yearly low; US govts. easy; foreign list depressed by steady liquidation in German govts. However, the $40M NY State long-term bond issue sold at a record-low yield of 3.23%. Grains and cotton rose. However, copper was offered at 7 1/4 cents/pound, a new record low and 1 3/4 cents below the lowest price previous to this year.

Dow industrial average closed at a new bear market low; there were no new yearly highs and 209 new lows.

Yet another rumor of wage cut announcement by US Steel failed to materialize.

Middle West Utilities was heavily pressured and broke sharply into new low ground.

Sun Life Assurance of Canada again denies rumors it is selling common stock holdings.

Brokers report renewed short-selling by the public (non-professionals).

Now that the Dow averages of rails, utilities and industrials are all at new bear market lows simultaneously, observers once again believe it will require a “selling climax”on large volume for several days before a definite turnaround. Many analysts feel “further immediate progress will be seen on the downside.” However, extent of the decline is disputed; “extreme bears” argue the industrial average might fall into double figures before the current decline is checked, while the more bullish feel that due to the market's “drastic” deflation already, it's illogical to expect the current decline to be as bad as the previous ones.

“Judging by many comments made in the financial district, a few important interests seem to be waiting for various readjustments they deem necessary before conditions in business and the stock market can change materially for the better. It is contended that these interests have the funds for investment, but are not eager to do much until some of the uncertainties confronting industry are out of the way”; most often mentioned are dividend and wage cuts.

Observers encouraged by recent signs of greater stability in commodity prices; Irving Fisher's wholesale commodity index hasn't varied much in the past 18 weeks.

Economic news and individual company reports:

The British Treasury has reportedly drawn on the most recent $200M US credit for $80M; of the total $650M in recent US and French credits, $325M-$350M has been used.

Western Electric Co., manufacturing subsidiary of AT&T, omitted its quarterly dividend, though AT&T officials said they expected total earnings of the Bell System this year to cover AT&T's $9 annual dividend.

Rail freight loadings for week ended Sept. 5 were 759,546, down 4,218 from prev. week, down 11.3% from 1930 week, and down 25.4% from 1929. Comparison with prev. years distorted by different week in which Labor Day holiday fell. Most class 1 rails showed seasonal increases in freight in the last two weeks of Aug., but the increases weren't as large as last year.

Weekly bank statements somewhat discouraging; deposits have failed to show seasonal increase. However, there's some evidence of greater confidence on part of bankers; “all other” (mostly business) loans have grown over the past two weeks, while holdings of non-govt. securities have been steady.

Boston retail conference finds some differing opinion on state of retail trade; J. Rosenwald, Sears, Roebuck vice chair., characterized prospects as “not particularly promising,” while John David, head of the John David chain of men's clothing stores, said business was ahead of last year, attributing improvement to strong effort at getting new customers and strategy of lowering prices on goods of the same quality.

[Note: Disinterested Observer Dept.] Fred Pabst, pres. of Pabst Corp., says the US govt. would conservatively net $200M/year from tax on legalized beer.

NY Trust Co. estimates annual US food bill at $22B, of which hotels and restaurants account for 26% and family homes 71%. Raising, manufacturing and distributing food remains the largest US industry, slightly exceeding autos.

Companies reporting decent earnings: Sweets Co. of America.

Musical:

George White's Scandals - “11th edition of the Scandals is lusty and merry entertainment ... full of resounding voices and tunes and half-mad knockabout sketches.” The latter include “Pay the Two Dollars” and “The Pedestrian”; the comedy is low, “but in the Scandals, low comedy is at least not ... seen through a keyhole; it is rowdy and unabashed in the burlesque tradition.” Featured performers include singers Rudy Vallee, Ethel Merman and baritone Everett Marshall; the dancing comedian Ray Bolger is “a most welcome rediscovery ... both an ingratiating clown and mimic and a supremely artful dancer.” [Note: yes, it's the guy from the Wizard of Oz.]