February 4, 2010

Wednesday, February 4, 1931: Dow 169.71 +1.00 (0.6%)

Assorted historical stuff:

Washington report: Pres. Hoover issues long statement on the $25M Federal food relief bill. Says Red Cross has assured him no one would be cold or hungry in drought area or among unemployed; believes Federal aid would be disastrous precedent; however, willing to accept it in unlikely case combined local govt. and charitable relief is inadequate. Sen. majority floor leader Watson visits Pres. Hoover; believed to have discussed compromise on the issue. Extra session of Congress seen increasingly likely; Wall Street not likely to welcome it. Democrats may be unhappy at the prospect; failure to reach compromise may hurt chances in 1932. Veterans' bonus now subject of intense controversy, with increasing pressure by veterans' groups, protests from business, banks, and important newspapers. Sen. Finance Committee hears testimony against bonus from Gen. Hines of the Veterans' Administration, and E. Duffield, Prudential Life Ins. pres.

Editorial: Veterans' bonus is the most harmful uncertainty facing business. Oblivious advocates "are likely to make 1931 a worse year for unemployment than 1930." Issue is not one of rich against poor, or protecting banks at the expense of suffering veterans; passage would inflict widespread damage on business of nearly every kind. Large new issue of bonds would displace offerings by local govts. and corporations; "this interference with the slow process of industrial recovery would more than offset and last longer than whatever upturn in trade might be realized from the spending of their windfall by the veterans."

Income tax facts: Return required for single persons with net income over $1,500, married over $3,500; personal exemptions are also $1,500 and $3,500, resp.

Editorial by T. Woodlock: Recent rhetoric by Gov. Pinchot and Sen. Capper against public utilities and other big interests recalls the muck raking that came into fashion about the turn of the century, with its talk of "The System," "The Interests," and "The Invisible Government." This is an emotional reaction to a fundamental change in the economy over the past two generations - the rise of management to a role of the highest importance in an interdependent world economy. The "social control" movement seeks to put management in the hands of "the people," i.e. the govt. Whatever its other merits, this would substantially lower living standards.

Farm Board chair. Legge says last years drought has not yet been broken; soil moisture remains below normal in much of country. Believes Congress "should put a stop to all the imports of farm products that are climbing in over the tariff." No comment on reports he will resign soon.

Editorial: Mexico has again received relief on payment of her defaulted debts; since the original debt agreement in 1922, there have been three interruptions to the scheduled payments. There may be grounds for this latest concession in the drastic recent decline in silver. However, this accommodation by the committee of international bankers "stands out in bold relief" considering Mexico's past treatment of US and European investors; "she has flouted their rights and confiscated their property, with little or no redress."

Australia has experimented with public ownership more than most nations; it has gone in for govt. operated mines, butcher shops, fish markets, bakeries, hotels, brick works, clothing factories, and other enterprises. Many have had to be abandoned as failures, and Australian debt now exceeds $5B, or an astonishing $850 per capita.

Cuban Senate grants Pres. Machado power to suspend constitutional guarantees for the third time in four months.

Agreement published by govt. in Jerusalem for transit of oil from Mosul oil fields in Iraq through Palestine to the Mediterranean.

Swiss Glacier Commission has started an experiment to measure speed of glacier movement, which is only a few inches a year. Results of the experiment not expected to be known for 8 generations.

Postmaster Gen. Brown disagrees with bill designed to give air mail contracts to dirigibles, predicts future trans-oceanic mail will be delivered by planes.

People on the Red River in Manitoba last summer reported strange behavior of fish, swimming to the top of the water, rolling on their backs, and performing other peculiar antics. Cause was discovered to be dumping of homebrew liquor confiscated during police raids.

NY State Assemblyman M. Alterman introduces bill making short selling of stock punishable by minimum of 6 months in jail.

Market commentary:

Market wrap: Stock trading remained very dull for first four hours; significant movement was confined to trading favorites, in which some bull pools resumed activities. Trading increased somewhat late in the session, with the general list moving up. Bond trading more active but still below normal, prices mixed; US govts. rally for first time in past week on bank buying; foreign bonds mixed with European firm but S. American mixed; corp. irregular, little change in averages. Commodities firm; grains strong on reports of continued drought in US; cotton up slightly. Silver again hits record low, down one cent to 27 1/8 cents/ounce.

Conservative observers continue to advise remaining on sidelines. Unusually small volume in recent sessions seen reflecting waiting attitude by both professionals and outsiders.

Amusements rallied on reports business had been better since start of year. Late-session upswing in stocks attributed to stronger tone in grain markets. Bear and bull groups said to be currently operating in Vanadium.

Market observers note encouraging business conditions so far this year, but as yet unsure if they are more than a seasonal spurt anticipating spring buying.

Broad Street Gossip: Due to the depression, fortunes of the 10 wealthiest men in the US now total less than $3B, or less than 1% of total estimated US wealth. Over the last week or so, companies reporting earnings up over 1929 have been going down, while those reporting lower earnings have been going up. From reading "the scores of weekly trade reviews," it seems business is better, if only slightly. "But one must remember that in previous periods of depression business never recovered with a rush. The upturn was gradual, normal conditions returning before many became aware of the fact."

Lima Locomotive stock is about $30; co. has no bonds or bank loans, and about $30/share in cash; working capital is about $40/share; earnings were $2.37/share in 1929 and $6.55 in 1930.

Col. A. Woods, chair. of Pres. Hoover's emergency employment committee, says believes country will recover from depression with high standard of living unimpaired. Says proposed $25M Federal unemployment relief would be against traditional American method of handling charity.

P. LeBoutillier, Best & Co. pres., says depression would be over by now if it had been allowed to run its course without "official meddling."

E. Walker, Transamerica chair., acknowledges length of depression so far has induced caution on recovery prospects, but feels the number of prominent business people who have recently said we've passed the worst stage "does entitle this widespread conviction ... to much more than casual consideration."

Economic news and individual company reports:

Internal revenue collections in Jan. were $72.8M vs. $82.7M in 1930.

Rail freight loadings for week ended Jan. 24 were 715,690 cars, down 10,248 from prev. week, down 17% from 1930 week, and down 22.7% from 1929.

Van Sweringen interests propose plan for solving New England's transportation problems; would allocate several New England rails to the Van Sweringen-controlled Chesapeake & Ohio - Nickel Plate system.

Fed. Reserve reports Jan. surplus of funds in the NY money market was larger and more continuous than at any time in a number of years.

Rates on bankers' acceptances reduced 1/8% on all maturities, reversing recent rise.

Glass committee hears suggestion for revolving fund to partially pay depositors of closed banks; would not be guaranty fund, but would pay out immediately the part found to be justified by audit, thus avoiding much of the disaster typically following a bank closing.

M. Steuer makes first implication of criminality in Bank of US hearings; asks bank chair. Mitchell about approximately $70M in “slow and doubtful” loans, in particular about whether $250,000 of it was used for graft. Mitchell denied knowledge.

E. Meyer completes testimony before Senate committee investigating his nomination as Fed. Reserve gov.

Net US gold imports in Jan. were $43.4M vs. $1.8M in Jan. 1930.

Dun's reports Jan. business failures were a record 3,316 vs. 2,525 in Dec. and 2,759 in Jan. 1930; liabilities were $94.6M vs. $83.7M and $61.2M.

Refineries ran at 62.1% in week ended Jan. 31; stocks of gasoline increased 162,000 barrels to 41.657M; oil production was 2.086M vs. 2.111M prev. week, but down 509,000 from a year ago.

European unemployment estimated at 9M; total of $4B, or 3%-10% of total state budgets, to be spent in unemployment relief by various govts. European businesses face difficult problem of lowering wages in ways acceptable to strong unions and “paternalistic” govts. British PM McDonald says unemployment insurance fund depleted, govt. will need to ask Parliament for extra borrowing power this month; fund now owes $350M.

4,000 department store executives attending convention of National Retail Dry Goods Assoc. urged to fight impending nationwide sales tax campaign.

US textile exports in 1930 were $639.9M vs. $979.2M in 1929; imports were $600.7M vs. $1.002B.

Plate and window glass makers will show sharply lower earnings in 1930; suffering from lower demand, overcapacity, and foreign competition.

Travel on NY City mass transit lines in Q3 1930 was 752.1M passengers, down 3.8% from 1929. Holland Tunnel traffic in 1930 was 12.067M vehicles vs. 10.978M in 1929.

Chicago Rock Island and St. Louis San Francisco railways likely to postpone action on dividends to March meeting; stocks decline.

Montgomery Ward and Sears Roebuck reported Jan. sales declines of 9.3% and 14.1% vs. 1930; however, volume of goods sold was larger; fall in sales was entirely due to price declines.

Companies reporting decent earnings: Commonwealth Edison, Tampa Electric, So. New England Tel., Parke Davis, Missouri Portland Cement, US Gypsum, McCall (magazines), International Safety Razor, United Piece Dye Works, Viking Pump, International Match [Ivar Kreuger-affiliated].

At the galleries:

Georgia O'Keefe is showing her newest canvases at An American Place. Exhibit of El Greco works at the Albright Art Gallery in Buffalo. Jules Bouy, well known interior designer, is exhibiting an ingenious solution to the problem of installing panelled rooms in modern houses and apartments: a modern portable panelled dining room that can be erected over the present walls of any room in three hours, vs. the months required for old-fashioned panelling. "In solidity of appearance, it is comparable with the finest of built-in panellings"; it's also easily removable when moving.


"Defendant (in loud voice) - Justice! Justice! I demand justice. Judge (rapping for order) - The defendant will please remember he is in a courtroom."

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