January 1, 2010

Thursday, January 1, 1931: Dow 164.58 +1.49 (0.9%)

[Note: Forecasts made by assorted authorities and business leaders for 1931 will be in the year-in-review post tomorrow.]

Assorted historical stuff:

Wall Street closes 1930 with "an expectancy of better times in the air." While not predicting immediate return to prosperity, general mood was the most optimistic since midyear slump dashed hopes of early business revival. General belief that "factors of long-range bullish import" are steadily increasing, while vast bulk of necessary deflation has been accomplished.

Editorial: Pres. Hoover's actions to bring about Eastern rail consolidation were "statesmanship of the highest order"; assuming the plan is carried out, it would be the "outstanding constructive achievement of 1930" and could easily be the "one thing needful to turn finance and business away from its recently too pessimistic mood." It would enable far-reaching improvements and services to innumerable communities. In sum, it would release resources and energies of more than 50,000 miles of railroad from "narrow private hostilities" and apply them to "manifold works of real progress." Preliminary ICC nose count indicates 6 members approve of plan, constituting a majority. Sen. Couzens continues criticism, calling Pres. Hoover's public support "most unethical" since ICC members owe their position to him.

Pres. Hoover seen opposing veterans' bonus payment; bonus supporters apparently want a showdown to make Mr. Hoover less popular with veterans. "Congress still has the idea that it is dangerous politically for the President to oppose legislation granting favors for special groups." However, this is doubtful; Pres. Coolidge opposed the veterans' bonus and some aid to farmers without suffering politically.

[Strangely wholesome.] Various exchanges celebrated the New Year in raucous style. NYSE held gala in final hour of trading with R.K.O. orchestra playing the latest tunes and pages demonstrating the latest dance steps; "Wait 'Til the Sun Shines, Nelly" was played at the closing gong. Curb Exchange held celebration after trading, with two orchestras and trading floor decorated with evergreens and tinsel. Cotton Exchange members dressed in grotesque clown costumes and paraded around the exchange floor playing music through a maze of confetti, colored tape, and balloons.

Berlin authorities are concerned about the lure of the big city; Berlin's population increased by 80,000 last year to almost 5M, even though prospects of finding a job or apartment in the city are slim. In most cases, public welfare organizations must help the stranded newcomers.

International Stadium Co. to erect stadium in Jersey City seating 110,000 at cost of $2.5M.

Number of stars that can be photographed with the 100-inch reflecting telescope on Mt Wilson, Calif. is probably well over a billion; however, astronomers believe our own Milky Way galaxy alone contains 30 or 40 billion stars.

[Hemp??] Materials going into the telephone include copper, lead, tin, zinc, iron, aluminum, gold, silver, platinum, wool, cotton, hemp, silk, carbon, rubber, asphalt, mica.

William Tilden II resigns as amateur tennis player to make series of movies at M.G.M.

Market commentary:

Market wrap: Stocks advanced early and maintained gradual uptrend for most of the day, spreading through the general list; some profit-taking came in late. Bond market active, generally strong; US govts. firm, slightly under year's highs; foreign irregular; corp. strong. Commodity trading quiet, prices mixed in narrow range.

Sharp rallies in some utilities and trading favorites including Auburn, J. I. Case, and Coca-Cola; strength in US Steel, Eastern rails, motor shares, coppers.

Conservative observers will study market action closely in the next week to ten days for trends; most favor the long side but are still on the sidelines.

Short interest is up sharply in the past week, based on demand in the loan market and heavy borrowing between brokers; both professionals and outsiders said active on the short side.

Odd-lot (small) buying of standard stocks for cash said continuing during recent declines.

Some tax selling may persist into the new year from investors who took enough losses to offset their 1930 income but still had losses to spare.

[Interesting - that whole long cycle-short cycle thing again.] Broad Street Gossip: One market observer notes most of the bears are now young, with veteran traders mostly long or on the sidelines. Young traders, having been through only one cycle, can see nothing encouraging ahead, whereas “the veteran trader has been through numerous depressions and bull markets and knows that the market has always come back to make new highs.”

Broad Street Gossip: In spite of all the depression talk, US Steel just reported its number of shareholders grew 6,403 to a new high of 141,907 in the last 3 months; this number has gained 30% through the whole depression period. “It is a very rich country that can make a showing like that.” This gain indicates passing of stock from weak to strong hands; this may later be reflected in the stock action.

Chicago Board of Trade VP P. Carey says CBOT will consider closing if Farm Board continues price support operations into next crop year; "traders are tired of the continued political attempts to hamper the board with ridiculous and unsound restrictions for purely political purposes." Farm Board chair. Legge calls Carey statement "petulant," says doesn't want CBOT closed but it may be necessary to eliminate short selling to prevent manipulation of grain markets. Canadian grain interests generally react unfavorably to Premier Bennett's plan for aiding farmers.

Editorial: After two futile and very costly years, Premier Bennett has announced Canada will now take no steps to fix the price of wheat. During those two years, the wheat price at Winnipeg went from $1.40 to 50 cents, while the carryover greatly increased. Mr. Bennett says Canada can't hope to fix domestic wheat prices since it can't consume all its production domestically. The same could be said for the US; Canada's bitter experience condemns the Farm Board plan as well.

Economic news and individual company reports:

Fed. Reserve notes unusual demand for currency in past month, partly caused by Bank of U.S. closing; first important bank to fail in this district in some years; followed by heavy withdrawals at some other banks, possibly aggravated by false rumors; Fed. Reserve mechanism adequate to meet demand, with little tightening in money markets; currency withdrawals returned to normal after a few days, only one other sizeable NY bank failed (Chelsea bank, not a Fed. Reserve member).

Bank of U.S. stockholders file suit charging officers and directors with negligence, and asking judgment for losses exceeding $50M. Suit names bank pres. B. Marcus, charges bank subsidiary made large profits manipulating the bank's stock.

Fed. Reserve reports seasonally adjusted index of department store sales hit new yearly low of 98 in Nov. vs. 102 in Oct. and 108 in Nov. 1929; first 11 months sales declined 7% vs. 1929.

Auto financing by 492 cos. in Oct. was $81.5M vs. $126.6M in 1929; of this, $45.8M was advanced on new cars vs. $80.4M in 1929, and $33.9M on used cars vs. $41.7M in 1929.

Employment in week of Nov. 15 by 1,830 Midwest mfg. firms was 348,546, down 2.8% from Oct. 15 week; payrolls were $8.424M, down 7.6%; payroll decrease was much larger than in 1929.

Call money eased again to 3%. Most observers undisturbed by flurry in call money, believe it's due to year-end factors and will return to normal in about a week.

Commerce Dept. revised Nov. trade figures: exports $285.4M vs. $442.3M; imports $203.7M vs. $338.6M.

Fast freight” rail shipments from Chicago hit a new on-time record of 96.59% in Nov.

Revenues of 95 public utilities in Oct. were $205.1M vs. $197.5M in 1929; net earnings $84.1M vs. $83.0M.

Leaf tobacco exports in first 10 months were 459.6M pounds valued at $110.0M vs. 426.8M valued at $108.0M in 1929.

Brazil govt. says will buy coffee now in storage, undertake “propaganda” abroad to increase consumption. Next world coffee crop estimated at 32M bags; highest yearly consumption ever was 25M bags.

French rail revenues in year up to Sept. 23 were down only 0.5% from 1929; recent months have trended down.

Canadian Premier Bennett's plan to aid farmers will involve formation of a "colossal" private financial corporation to extend credit and avoid liquidation of 1930 crop; govt. will also assist needy farmers, but will not attempt to fix wheat price.

[Eventually became Citigroup after 71.4 subsequent mergers.] National City Bank to lend $15M to Mexico to stabilize currency.

Companies reporting decent earnings: Pacific Lighting, Engineers Public Service, British-American Tobacco, Gulf Coast Lines.


Ruth Draper [did multi-character one-woman shows; fans included Henry James, Edith Wharton, George Bernard Shaw, Katharine Hepburn, John Gielgud, and many others; credited with influencing modern figures including Lily Tomlin, David Mamet, Emma Thompson, etc.] maintains her “dominating and unique” position in theater with current show at the Comedy Theatre that ranges from “subtle satire ... to deep pathos.” Characters include the wife, secretary, and lover of Mr. Clifford, a captain of industry; a “Dalmatian peasant” in a New York hospital; and a throng of art-lovers and tourists in a Florentine cathedral.


“'Yes, I heard a noise and got up, and there, under the bed, I saw a man's leg.' 'Good heavens! The burglar's?' 'No; my husband's. He'd heard the noise too.'”

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