February 14, 2010

Saturday, February 14, 1931: Dow 180.99 -0.89 (0.5%)

Assorted historical stuff:

Reichstag passes resolutions calling for early revision of reparations payment, attacking "war guilt lie," and calling for impartial international investigation into causes of the war, but defeats more drastic measures calling for immediate ending of payments or use of reparations revision clause.

Pres. Hoover's Lincoln Day speech: “The moment responsibilities on any community ... are shifted ... to Washington, then that community has subjected itself to a remote bureaucracy with its minimum of understanding and of sympathy.” The speech was considered particularly relevant, since “there has not been a time within memory ... when so many people wanted the federal government to do so many things,” including drought relief, electric power, prohibition, and oil conservation. House Ways and Means Committee approves compromise veterans' bonus plan increasing amount veterans can borrow against certificates to 50% and lowering interest rate to 4 1/2%; outlay estimated at $700M, new bond issue not required. Whatever measure is eventually passed will need to override a Presidential veto.

Editorial: Bank failures are human tragedies, tying up the life savings of many people for indefinite periods. However, a less frequently considered side of the tragedy is the ruin that sometimes comes to bankers who, through no fault of their own, are victim of mob psychology. One small Mississipi bank recently fought successfully against a run by refusing to let deposits be withdrawn until conditions righted themselves. “Where a bank management has been honest and reasonably prudent, it has a right to remind depositors that they also have their responsibilities.”

Washington report: Agriculture Sec. Hyde tells Senate loans based on the $20M drought relief amendment may be used for food and supplies if needed for farm rehabilitation. Rep. Stone (R, Okla.) asks $50M to finance frozen assets of farm district banks caused by farmers' inability to pay notes due to drought and other problems. Rep.Garner (D, Tex., House Minority Leader) suggests Congressional investigation of oil industry. Rep. Garber (R, Okla.) says independent producers and authors of alternative tariff and embargo bills have joined in support of his bill to restrict oil imports to 16M barrels/year for next 3 years; some question whether this would violate existing treaties. Senate and House conferees fail to reach agreement on Muscle Shoals. J. Raskob's call to the Democratic Nat'l Committee to gather in Washington and thrash out party policies seen as his idea rather than his advisors, since “no seasoned politician goes out to meet quarrels and differences if he can avoid or postpone the meeting.”

Australian PM Scullin negotiating with Britain for reduction of rate on war debt to Britain and extension of time to pay, to match terms of British war debt to US.

British Chancellor of the Exchequer Snowden attacks British debt settlement with US as curse of future. Editorial: Recent outbursts by Chancellor Snowden and other British public figures regarding US debts must be considered against the current British political background. Mr Snowden must ask Parliament for a tax increase to cover a current deficit, while also demanding spending cuts; little wonder he looked "across the Atlantic for convenient whipping-boys." Debt relief will undoubtedly come in time, but the suggested relief of $82.5M annually doesn't amount to much compared to a $3.6B budget, an estimated $250M deficit in the coming year, and public unemployment relief spending of $275M.

Head of Cotton Textile Institute tells Pres. Hoover voluntary agreements will practically assure end of night work for women and children in Southern cotton mills.

Curtiss-Wright delivers plane to Navy said to have top speed over 300 mph.

World's shortest railroad, running between docks and warehouses on Governor's Island, ordered scrapped by US Army.

Indicating the level of supervision the ICC exerts over the railroads, one rail recently submitted a supplemental application asking ICC permission to use the sum of $65.39, left over from proceeds of a recent bond issue, to partially reimburse the company treasury for a previous outlay of $100.

J.C. Penney's summary of his life's experience: “Luck is a crook. Work alone is not enough. It is necessary to be active while the sun shines, and to accumulate partners who will spring along.”

Market commentary:

Market wrap: Stocks opened down slightly after the holiday, then resumed rallying across the list, with "vigorous demonstrations" in coppers, amusements, and some trading favorites. Upswing met increasing resistance in afternoon on extensive profit-taking; leaders declined substantially from the day's highs, but good demand appeared on setbacks. Bond trading dull; US govts. irregular in narrow range; European govts. firm, S. American irregular; corp. high grade steady, speculative and convertibles irregular. Commodities mixed; grains down sharply; cotton barely changed. Copper held at 10 cents. Silver declined 1 1/2 cents, back to record low of 26 1/8 cents.

Conservative observers believe leading stocks can be bought on reactions, but advise sticking to those with good outlooks and avoiding pool stocks.

Considerable outside (public) buying was reported on reactions; extensive orders were ready to take advantage of price declines. Many brokers report much more active business in recent days. In view of recent broad market strength, most observers expected reactions to be confined to technical proportions. Business sentiment is reportedly improving, based on reports from Pittsburgh steel areas and Detroit motor centers. Oil shares rallied in midday on improved prospects for bill restricting imports. Westinghouse was another strong point.

Short interest is down substantially in past few days, weakening the market technically; however, it's believed outside buying is ready to come in on reactions.

After a prolonged depression, the man who thinks ahead is more likely to fare better in the long run than the man who continues to indulge in post mortems.”

Broad Street Gossip: Recent rise in the market has done more than anything to help business and public confidence; it has added billions to public wealth, and stimulated metal and grain prices. However, public shouldn't count on uninterrupted uptrend; although we may be in a major bull market, severe reactions will come. Increased US Steel backlog considered encouraging. Greater confidence in the market is reflected in active bull pool operations in a number of NYSE and Curb stocks. A Broadway broker reports one trader has been waiting in his customers' room for a year and a half, and hasn't bought a share of stock yet.

G. McGarrah, Bank for Int'l Settlements pres., urges reopening of great capital markets like Paris to foreign financing, especially intermediate and long-term.

B. Moody, First Nat'l Bank of Amherst VP, sees key to revival in corporations' distributing the large amount of cash they're now holding in excess of reasonable possible needs; estimates $1B or more could be released.

Thomas Edison, on occasion of 84th birthday, predicts 3-year uptrend in business toward pre-depression levels.

Economic news and individual company reports:

Bradstreet's and Dun's weekly trade reviews report continued slow and uneven progress in business expansion; volume of retail trade still running behing 1930.

Steel production in week ended Monday was at 49%-50% vs. 47% prev. week, 46% two weeks ago, 79%-80% in 1930, and 86% in 1929. Finished product prices remained mostly steady; scrap prices showed some weakness.

Fed. Reserve reports money in circulation Feb. 11 up $18M to $4.594B, total Reserve Bank credit outstanding down $20M to $929M. Member banks in NY City report brokers' loans up $33M to $1.749B; loans on securities to non-brokers down $12M to $1.903B.

Standard Oil of Indiana cuts gasoline prices 2 cents/gallon in Chicago territory, to 15 cents at retail; lowest price in 10 years; cut considered significant, likely to weaken crude oil prices.

Times reports indicted Bank of US directors may seek change of venue on grounds fair trial would be impossible in NY City.

British and European currencies and stocks down after Chancellor Snowden's speech on serious position of British finances and need for heavy sacrifices by those best able to bear them; this was interpreted as calling for a rise in already heavy taxes. Flow of funds from NY to London almost stops. Bank of England's gold holdings had slowly increased from 140.141M pounds on Jan. 29 to 141.237M now.

Manchester cotton dispute ends with victory for Weavers' Union.

French official says unemployment relatively mild at 350,000 vs. normal 250,000; those receiving govt. aid total only 30,000; about 1M are partially employed.

Chinese Finance Min. Soong denies reports Nanking govt. contemplating moratorium on foreign gold obligations due to drop in silver.

Australian State Premiers adopt Three Year Plan for economy after weeks of debate; includes budget cuts, cooperation of govt. banks in rehabilitation of industry and unemployment relief.

Banco Nacional Ultramarino, second largest nat'l bank in Portugal, taken over by govt. after directors resign.

NYSE seat sold for $275,000, up $50,000 from prev. sale.

T. Watson, IBM pres., reports both sales and earnings in 1930 were up 10% over 1929; 1930 net was about $7.3M or $11.50/share (stock is about 165); attributes sales increase to expanded sales force and new products; believes bottom of depression reached, looks to another record year in 1931.

Encouraging signs seen that Chrysler has turned corner after difficult 1930; since Jan. 1 sales, production, and employment have steadily increased, and field inventories are at record low.

American Express 1930 net was $7.21/share vs. $14.10 in 1929. Hupp Motor Car 1930 net loss was $922,765, vs. profit of $3.469M in 1929.

Company reports since Jan. 1: 118 companies reported higher earnings vs. 1930 and 389 lower; 537 dividends unchanged, 28 increased, 87 cut.

Companies reporting decent earnings: IBM, United Engineering & Foundry, First National Stores, Lily-Tulip Cup, Nat'l Oil Products, Western Auto Supply.


She Lived Next to the Firehouse - A farce of the gay '90s. Delilah Smith is married to a travelling salesman; while her husband is away, she "courts the superficial attentions of the boys in the firehouse" next door; each time a fresh knock comes at the door, another fireman is sent into an adjoining room with a home repair to keep him occupied. Climax comes at end of second act, when Delilah's husband and the firemen's wives all arrive unexpectedly, as every available room is filled with an exasperated suitor. Farce is periodically hilarious, but may be criticized for occasionally awkward double entendre and "a preoccupation with the undergarment styles of the period."


"'Are you in favor of women taking part in public affairs?' 'It's all right if you really want the affairs public.'"

'Will you name the mine after me, dear?' asked the prospector's wife. 'Yes, darling. I'll name it in your honor,' said the prospector. And, gentlemen, from that day forward one of the richest gold mines in South Dakota has been known as the Holy Terror.

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