Monday, January 19, 1931: Dow 162.89 -2.05 (1.2%)

A brief blather: I've seen some commentary that the stock market rally today may reflect the astonishing possibility that Mass. may elect a Republican Senator to Ted Kennedy's former seat - the idea being, this would prevent Congress from doing anything in the near future, which would be an improvement. I'm strongly reminded of the almost comical degree of concern shown in the 1930-31 WSJ about the eternally looming menace of an extra session of Congress ...

Assorted historical stuff:

Destruction of war material is still costing Germany large sums of money 12 years after the War. The 1930 budget contains increased spending for disposing of hidden ammunition dumps in recently evacuated occupied territories. Particular areas needing work include buried stores of deadly "blue cross" poison near Cologne, dumps of hand grenades and gas material near Coblenz, gas material and phosgen projectors near Kreuznach, and ammunition dumps in Westphalia.

Washington report: Sen. Robinson (D, Ark.) continues to introduce his food loan fund proposal with every appropriations bill; it was passed twice by the Senate, only to have House leaders block it without a vote. Robinson is apparently influenced by grim reports from his home state of farmers with failed crops, and merchants unable to extend further credit. The Administration feels direct relief by the Treasury would set a very bad precedent, but if Robinson continues his activities this may result in the dreaded extra session. Possible compromise would be a loan to the Red Cross. While House denied reports Treasury Sec. Mellon would retire March 4. Some Southern Democratic opposition seen emerging to party leader Raskob; with prospects for 1932 looking bright, a struggle for party control is seen likely. Fish Committee investigating Communist activities in US finds Russian govt. didn't sell wheat short to depress prices; committee recommendations seen unlikely to lead to any future legislation.

Editorial by T. Woodlock: Gov. Roosevelt is reportedly dissatisfied with the report of his St. Lawrence Power Commission recommending distributing power generated through existing utilities; other politicians have weighed in against this. The Commission decided this would be the most economic way to use the power generated; the state must now decide if it wants a development that makes economic sense, or one that subsidizes some communities at the taxpayers' expense and to the detriment of existing private utilities.

Editorial: A survey by the Amer. Agric. Chemical Co. concludes farmers will use 10%-30% less fertilizer this year. This would be a bad outcome; it would increase production costs and reduce farm income. Banks should encourage use of more, not less, fertilizer.

Editorial: Rails are complaining about unregulated and subsidized competition from waterways and trucks; they want these forms of transport to be regulated in the same way they are. It would make more sense to relax the regulations on rails to account for the new competition for their former monopoly. They should be allowed to lower rates to compete, abandon routes made uneconomic by competition, and operate their own trucks.

Traveler's Insurance reports motor vehicle accidents up 12% in 1930, deaths up 4%, and injuries up 13%.

Helena, Ark. has turned to Postal money orders and savings to transact business after last bank in town closed.

First airline between Russia and Scandinavia to start in summer; plans call for nonstop route from Stockholm to Leningrad, operated by Russian interests.

C. De Forest, Amer. Provident Society dir., urges all to spend as much as possible, but to distinguish between spending "as much as we can" and "as fast as we can."

Amer. Engineering Council advocates establishment of agency "to balance the forces of consumption, production and distribution in order that ultimately control may be imposed upon the nation's economic life."

Sir Thomas Beecham, British orchestra conductor and once one of England's richest men, now owes $700,000; much of fortune spent in 20-year struggle to establish permanent opera in England. Once large personal fortune of former French Pres. Poincare said to have "dwindled appreciably."

Market commentary:

Market wrap: Stocks were irregular through a very quiet weekend session; prices opened weak, recovered somewhat toward 11 o'clock, then sagged again in the last hour. Bonds generally strong, particularly high-grade. Commodities quiet; grains down slightly.

Week in review: Stocks generally moved lower, though encouraging resistance was seen on declines, with bears only able to force drastic breaks in isolated high-priced stocks. Higher grade bonds were generally up in spite of heavy new offerings, while there were weak spots in foreign and speculative issues. Credit markets continued very easy, with all rates in the money market working lower except call money, which held at 1.5% officially though 1% was available. Money ease accentuated by unseasonal liquidation of security loans, gold imports, and Fed. policy; encouraging signs seen ease is spreading to longer term bonds and loans. Gradual steel improvement continued. Grains fluctuated sharply, while cotton moved narrowly in spite of some bearish news. German marks down after budget deficit announcement; silver rallied but returned to record low at week-end, with Far Eastern currencies following.

Stock trading has recently become less active, reflecting reduced interest and mostly professional activity. Observers believe technical position has been strengthened due to increased short position.

Odd-lot (small) buying has reportedly been consistent on reactions; a considerable amount has been for cash, with the stocks taken out of the Street; believed to represent long-term investment.

Time money is at lowest rates in 37 years; this should make high-grade stocks attractive on yields, though immediate outlook is obscured by economic troubles.

Bank of France rate cut to 2% on Jan. 2 unlikely to cause desired outflow of capital from France until return of confidence in world political and industrial outlook.

Stock market has recently rallied intermittently, but overall trend has been down, and volume on rallies has been lower than on weak days.

Observers encouraged by greater stability in steel prices, and recent small rise in Dow steel average; the more conservative advise waiting to see if gradual uptrend develops in coming months.

Broad Street Gossip: "'It's a trader's market,' commented a trader ... 'As long as I have been down there, I haven't known it to be anything else,' replied another trader." Rumors have returned to the Street along with the recent decline; bears are growing increasingly bold, as seen in their attacks on the highest grade stocks including Amer. Can, US Steel, GE, Allied Chemical, Nat'l Biscuit, etc.

Procter & Gamble appears to be in "depression-proof" class; seen benefitting from drop in raw material prices while finished product prices have been stable. Vanadium probably under heaviest bear pressure of any stock recently; important bears have maintained positions in spite of announcement $3 dividend will be maintained. US Steel attractive to "world's canniest investors": Scottish shareholders increased position from 2,809 shares to 2,814 in the last quarter.

M. Taylor, US Steel finance committee chair., waxes philosophical on causes of the current depression. Modern innovations have expanded material goods and entertainment available; “so great has become the variety ... that if one were to enjoy the use of all of them it would call for a further quickening of the pace and of all the sensibilities ... and a certain wear and tear upon the individual ... Consequently, life has necessarily become one of high speed.” We've reached a point where productive capacity exceeds consumption demands. The measures to correct this aren't yet clear, but “like evolution in all other cosmic facts, ... these conditions in due time will be clearly appraised and new courses will be laid.”

Economic news and individual company reports:

Ford seems to be approaching 1931 conservatively; production schedule for first quarter is 40%-50% below 1930 level, which was unusually high starting up production of new model A. 1931 price cuts are only $5-$10 on standard models, vs. $20-$40 cuts by Chevrolet. Edsel Ford, pres., says worldwide reports from branches and dealers indicate steady improvement. New assembly plants set up in India at Bombay, Calcutta, and Madras, with parts to be shipped from Canada.

Fisher's wholesale commodity index declines for 6th week in a row, to 77.9 for week of Jan. 16, vs. 80.7 for week of Dec. 5.

US Dec. exports about $273M vs. $426.6M in 1929; imports $209M vs. $310.6M. Imports for the year fell about 30% in value but only 15% in volume.

New NYSE-listed securities (stocks and bonds) in Dec. were $212.0M vs. $141.7M in Nov. and $1.193B in Dec. 1929; full year was $7.813B vs. $15.668B in 1929, $7.762B in 1928, and $5.548B in 1927.

Butler Bros. survey of 2,000 US merchants finds them in strong position; inventories lowest in many years, finances liquid.

Youngstown district steel operations to rise 4% this week to 48%, fourth consecutive increase since late Dec. low.

Oil development reportedly being curtailed in Oklahoma and Texas; present fields seen able to supply market demand for months. Natural gas in wide oversupply in California, selling at relatively low rates.

F. Brownell, Amer. Smelting & Refining chair. (world's largest silver refiner), presents plan for stabilizing silver price through “gentleman's agreement” between governments on when to sell and buy.

German govt. acts to hasten price reductions by cancelling all price-fixing agreements on trademarked items that haven't been cut 10% since July 1.

French Chamber of Deputies unanimously approves first installment of $200M national development program to combat unemployment. Min. V. Boret says intends to fix price of wheat at about $7 per 180 pounds to protect French farmers.

Wall Street firms have been cracking down on employees' personal use of stationery, stamps, telephone calls, and telegrams; one firm reports saving $3,000/month.

Charles V. Bob, bankrupt runaway former stock promoter, enjoined from future stock sales after surrendering.

Companies reporting decent earnings: Peoples Gas, Light & Coke.

Theater:

Broadway is faring about as well as "might be expected, the theatre being able to carry the art of make-believe only so far." More theaters than usual are empty; many playwrights will now confess that bulge in their pocket is a rejected script. League of NY Theatres has apparently given up on controlling "ticketeers" (ticket speculators). Max Gordon announces Tilly Losch, along with Fred and Adele Astaire, have been signed for his spring revue. A couple of interesting imports opening soon: Private Lives, starring Noel Coward and Gertrude Lawrence, and Pirandello's As You Desire Me.

Joke:

"Bus Driver - Madam, that child will have to pay full fare. He is five years of age. Madam - But he can't be. I have only been married four years. Bus Driver - Never mind the true confessions; let's have the money."

"'Is the world round?' a school ma'am asked. 'No, ma'am.' 'It isn't, eh? Is it flat, then?' 'No, ma'am.' 'Are you crazy, child? If the world isn't round and it isn't flat, what is it?' 'Pop says it's crooked.'"