Wednesday, September 2, 1931: Dow 140.13 +0.72 (0.5%)

Assorted historical stuff:

F. Jones, director general of the US Employment Service, resigned. Labor Sec. Doak says resignation "demanded for the good of the service"; Jones sent letter to Doak saying the newly reorganized service was ineffective, unsatisfactory and bitterly disappointing, and that Doak's request for his resignation was a compliment.

Editorial by T. Woodlock on the subject of doles - not the conventional kind, but those given to various groups including farmers (through price supports and reduced rail rates), buses and trucks (don't pay their share of highway costs) and inland waterways. “Nowadays not only does no one feel any delicacy about 'going on the nation' but there is a positive rush in that direction. It seems as if everybody considered his troubles to be everybody else's business, and more particularly the business of the National Government. Has something happened to our national morale? Did we ever have a national morale, and if we did, what has hit it?”

Editorial on resilience of farm communities; "a denizen of Wall Street who should visit ... the Middle West now, expecting to find the gloom of drought, insect pests and low prices ... would be agreeably surprised ... He would find discouragement enough, but seldom or never despair. On the contrary, he could not but be struck by the quiet determination ... to carry on and the unspoken but obvious confidence that the outcome, some how and some time, will be good."

The Hague Court postponed its opinion on legality of the "Anschluss" (Austro-Germany customs union) until Saturday. Reports in Vienna say Austria will be rewarded for abandoning the union with a new loan. France, foremost opponent of the union, was instrumental in getting the League of Nations to request the opinion from the Court. Annual League of Nations assembly is to begin Sept. 7.

Washington report: Administration seen postponing decision on tax increases for two or three months, until business trend becomes clearer. However, govt. won't "delay any measures that may be necessary to maintain the confidence of the country in the stability of the government's finances." National City Bank, among others, has advised taking action on reparations relief to end uncertainty and remove a bar to world recovery. However, the Administration continues to officially deny contemplating such action, possibly influenced by position of France and by political opinion in the US. Also, the Administration's position against Federal relief spending might be difficult to defend if foreign debts are being scaled down. Administration position on relief misunderstood; not opposed to any taxation for relief, but believes it's more properly a local function rather than one for "a government in Washington hundreds of miles from the scene." US loan to Great Britain involves "delicate political problem"; the London Herald printed a charge that the British govt. had been forced to cut the dole in exchange for the loan. Despite prompt denials on both sides of the Atlantic, "it is proving a somewhat difficult job to make the denial stick, as far as some Britons are concerned."

Labor Sec. Doak says coal operators overwhelmingly oppose calling of national conference to discuss industry problems as requested by John L. Lewis of the United Mine Workers. Doak says attitude of operators has ended plans for conference at this time, doesn't know what next move will be.

W. Gifford, dir. of the President's unemployment relief organization, has named Owen D. Young chair. of committee to coordinate collection of funds.

Coincident with the mass movement against racketeering, Chicago is now also to be the initial site of the battle against the health menace of the common house fly. "Statistics reveal that a toll of no less than 75,000 persons, mostly children, is exacted yearly through the 30 diseases carried" by the fly. Swatting believed ineffective; "war is to be waged with chemical sprays ..."

Yet another editorial on the Eskimos' prosperity; indulgence in luxuries, "particularly white man's food such as canned goods, chocolate and cakes," has lowered resistance to disease, and influenza epidemics frequently take a heavy toll. Establishment of reindeer herds believed to offer "salvation of the Eskimo," supplying excellent meat and hide; "3,000 reindeer are being imported from Alaska, and Scandinavian families brought from Lapland to train the Eskimos in herding."

Editorial blasting George Bernard Shaw for offenses not fully specified. "Compare his technique with that of our own Mr. Mencken and see the difference between a real professional and a fairly good amateur. It is, perhaps, only fair to say that Mr. Mencken is handicapped by the possession of a conscience - warped, no doubt, but still live enough ... while Mr. Shaw suffers from no such disability ..."

NYSE volume Tuesday was 500,000 shares, the smallest 5-hour (full day) session since Oct. 1924. Tuesday's total also was only nine minutes worth of trading on the record-setting day of Oct. 29, 1929, when 16.410M shares traded. [Note: That day was later known as Black Tuesday; the volume record set then stood until 1968] .

Market commentary:

Market wrap: Stock trading "practically ... featureless," with most stocks moving within narrow limits; most trading was professional, "representing the efforts of the ... operators to scalp small profits on either side." Public participation was at a minimum, and brokers continued to complain of a lack of orders on either side; volume was around the lowest levels since start of the Coolidge bull market 7 years ago. Bonds generally higher in more active market. Domestic corp. issues strong, with the Dow 40-bond average rising for the 6th consecutive day. Second-grade rails continued to advance, only temporarily unsettled by default of the Florida East Coast Rwy. US govts. fairly active and slightly higher. German bonds lower; Italian firm on success of economic program. S. American mostly lower; some Brazilian issues hit record lows. Grains moved higher, with particular strength in Sept. futures. Copper remained at 7 1/2 - 7 3/4 cents with buying quiet. However, current overproduction is estimated at 40M pounds/month; together with already large inventories, situation is seen leading to drastic curtailment or further price declines.

Conservative observers continue recommending sidelines, believe "market could break out of its rut on either side on any new incentive."

"With the outstanding bull leader departing for the air races in Cleveland, and the principal bear absent on an extensive tour," traders were left without aggressive leadership; Wall Street appeared resigned to the prospect of "little action ... until after Labor Day," when "tradition calls for the market to assume definite form." Stocks continued to resist declines, with selling drying up on reactions. Sentiment improved on firmer tone in grain markets and better feeling regarding foreign conditions.

Rail earnings over the next 8 weeks will be watched closely. Normally the rails show increasing earnings from the beginning of July to mid-Oct.; this year has proved disappointing so far, though there's still time for some gains to be shown in Sept. - Oct.

Current market favorites include Woolworth, J.C. Penney, and Coca-Cola; they have shown higher earnings this year.

North Amer. Light & Power has plunged 18 points since Saturday's close, to 48; co. controlled by Middle West Utilities along with Clement Studebaker, Jr.

Weakness in commodity prices seen as increasingly important stock market factor due to effect on buying power and conditions in agricultural districts.

"Comments heard in the financial district indicate conclusively that opinions on the business outlook are mixed." However, some still hope for fall improvement in conditions, while admitting it may be below the usual seasonal increase and may not last through the winter.

Baar, Cohen & Co. see stocks clearly in a period of accumulation [note: that's the good one.] "On all reactions we find the buying to be of infinitely better character than the selling but there is no disposition to follow up the rallies." Picture "clearer than in many months"; forces worldwide "working for order, stabilization and intelligent financing ... foreign countries putting their house in order. We are entering an era of economic sanity and of fair administration of national finances ..."

Economic news and individual company reports:

Ohio Att'y. Gen. G. Bettman arrived in Toledo; will, together with "practically his entire staff," take personal charge of investigation of the bank closings there. Bettman will reportedly investigate for Gov. White the "many rumors that one or more directors of the closed institutions withdrew large deposits and obtained large loans shortly before they closed their doors." Assets of the Security-Home Trust Co. will be less than expected due to holdings of German bonds and common stocks. Two more small banks in the Toledo area closed over the weekend. NY Supreme Court Justice Carew will probably decide this week on NY Banking Supt. Broderick's application to declare a dividend of 30% of assets of the Bank of US. A protest was filed by Bank of US Depositors' and Stockholders' Assoc., stating such action would endanger its plan of reorganization.

Fairman R. Dick, testifying before the ICC in favor of the 15% rail rate increase, says rail credit situation has become more serious due to declines in bond prices "which have extended into bonds formerly beyond question. These rails have been the favorite medium for investment of secondary reserves" at banks.

Florida East Coast Rwy. defaulted on interest on $45M in bonds, and was placed into receivership.

Reichsbank cut discount rate to 8% from 10%; measure seen as preparation for reopening of stock exchange Thursday. Reichsbank position believed satisfactory considering earlier strain; reserve ratio steadily climbing; gold reserves kept intact since mid-July; no evidence of "hoarding of currency." When stock exchange does reopen, it "will be under the strictest supervision, since artificial support will not be possible; quotations may be suspended at any time when trading gets out of hand."

Huge Australian internal bond conversion [to lower rate, voluntarily] apparently successful; large majority agrees to convert, though final figures not yet available.

Stocks in Switzerland suffered a spectacular slump Friday; large Swiss banks have formed a "consortium" to support prices. Swiss francs remained firm against other currencies. Stocks in Paris slumped due to selling from Switzerland and "various adverse rumors." Sterling is showing slow improvement against francs, though there have been no support operations since Monday.

Texas Gov. Sterling was dissatisfied with the proposed order of the Texas Railroad Commission setting East Texas production at 340,000 barrels/day. He immediately ordered Gen. J. Wolters that no well in the field was to be allowed to reopen until further instructions, and held a "private consultation" with the commission; the commission "set about redrafting its order."

Rail freight loadings for week ended Aug. 22 were 748,711, up 5,975 from prev. week, down 20.3% from 1930 week, and down 34.2% from 1929.

Youngstown sheet and tin mill workers agree to wage cut of 3% for two months.

Hog prices at Chicago hit a new yearly low of $5.61 per 100 lb., vs. $5.81 in prev. week and $10.03 a year ago.

Chevrolet output of cars and trucks in Aug. was 54,958 vs. 51,622 in Aug. 1930; fourth consecutive month to show increase over 1930.

Pure Oil Co. has begun selling a new discount "third-grade" gasoline, colored blue; its regular-priced Purol-Pep gasoline, formerly colored blue, "has been changed to a golden color."

Remington Rand sees encouraging response to introduction of new "noiseless portable" typewriter; the company's 2,000 sales representatives demonstrated it in 50,000 offices during a single day last week. "These demonstrations revealed that preparations are being made for an early resumption of normal business conditions, and that sentiment was particularly optimistic in the shoe, hat and textile lines."