March 10, 2010

Tuesday, March 10, 1931: Dow 185.38 +1.53 (0.8%)

Assorted historical stuff:

Washington report: Democrats seen likely to nominate wet candidate in 1932; strategy will be to hold the "solid South" and add large Eastern states, where wet stand would appeal; South is likely to accept wet position in spite of protests. Greater problems may arise with economic program; "wiser heads" in the party believe it would be unwise to put forth a candidate or platform "full of untried economic theories and new 'isms'" but "it remains to be seen whether their effort to swing the party clear of those things can succeed." Dry liberals are unlikely to also give in on economic issues; for example, J. Raskob's economic proposals have drawn protests, including editorial comment that the party "is to be turned over to Wall Street." Historically the more conservative Eastern states have rejected liberal economic measures, and this is likely to happen again in 1932 since "the country should be well out of depression" by then; this explains party leaders lack of enthusiasm for the admittedly popular Gov. Roosevelt. Progressive conference meeting this week seen unlikely to form third party, since "they would have to harmonize almost as many political ideas" as conference members. Sen. Watson (R, Ind.) predicts Republicans in 1932 will run on comprehensive economic program opposed to govt. ownership schemes, and will remain dry. Sees insurgents of both parties out of step, likely to form third party in 1932.

S. McGowan, Navy Paymaster General during the World War, advocates Constitutional amendment requiring popular referendum before Congress can declare war, except in case of threatened invasion.

Editorial: Whether the Gandhi-Irwin agreement will succeed in improving the lot of India's 350M population will be determined in the next two weeks. Approval by Parliament seems certain, while the National Congress' vote is in more doubt; in both cases, opposition is coming from quarters that only confirm the wisdom of the compromise. If approved, a second conference must be held to draft a Constitution. While Gandhi unquestionably gave up much of his previous program, in particular granting Britain "reservations" in respect to "defense, external affairs, the position of minorities," and financial obligations, these were not so much concessions as recognition of the practical impossibility of literal Indian independence, "a gift which India could no more accept than Great Britain could grant." Indian population estimated at 348M, up 30M in past decade; Madras pop. 51.6M, up 22%.

Members of Brazil's special revolutionary tribunal resign after disagreements with govt.; Pres. Vargas undecided on accepting resignations.

Several revolutionary factions in Peru agree military junta that siezed power Thursday will name D.S. Ocampo as President.

Gramophone Co. announces development of new television system based on known principles; pictures are projected onto 24 by 20 inch screen, and definition is so good even the finest details are visible, such as license plate numbers in street scenes. Officials stress production isn't planned now.

K. Hogate, Dow Jones & Co. GM, describes operation of their vast news organization. Financial news tickers operate constantly while markets are open; a worldwide organization of hundreds of correspondents feeds information to it over leased wires, often within seconds of events. Supplementing this is a corps of expert reporter-analysts, whose work appears in the Wall Street Journal and in bulletins delivered by messenger every 20 minutes through the day. Many of these analysts are more experienced in their industries than the executives they cover, and are often looked to for advice by those executives.

Rainfall in NY City watershed has partially relieved water shortage, though summer rationing is still possible.

NY Police Inspector McNeill says Harlem policy [numbers] "racket" has fallen 90% since Stock Exchange began issuing volume figures in round numbers.

One of London's most powerful transit officials is the "fresh air dictator." Each morning he sticks his head out the window, takes a deep breath, and decides whether all the streetcars that day will have their windows locked shut, halfway open, or fully open.

[Opposite of double indemnity dept.] Unusual insurance case took place in Germany recently. S. Meister, prominent business man, took out a $250,000 insurance policy and paid a higher premium to have a special clause inserted to pay off in event of suicide. A year later, his company went bankrupt. In desperation, Herr Meister came up with a brilliant idea: he went back to the insurance company and demanded $125,000 or he would kill himself and make them pay the full amount. The manager, who knew Meister to be a man of his word, thought it over for a day and then paid out.

Market commentary:

Market wrap: Stock market opened with oils under pressure; however, bear attempts to extend reaction to general list met stubborn resistance. Rallying spread slowly through the list; motor shares were in demand, with Chrysler and GM hitting 1931 highs; GE was also strong, while trading favorites scored sharp gains. Rally picked up steam in late afternoon, with utilities showing outstanding strength. Bond trading less active, prices mixed; US govts. dull, steady; foreign slightly irregular but S. American up sharply; corp. high-grade steady, speculative unsettled on sharp break in movie co. bonds. Commodities weak; grains off slightly; cotton down substantially. Copper now selling at 10 1/4 - 10 1/2 cents, with larger producers holding at the higher price. Silver continued up to 29 cents; Chinese and Indian currencies rose.

Market observers cautious; most advise against going short, but on the long side recommend buying only standard stocks on reactions, and using stop-loss orders. Conservative observers believe stocks may have recently been passing from strong hands that bought during liquidation late last year, to weaker speculative holders; advise caution.

Bulls encouraged by reports of improving business, particularly in New England and Southeast, relayed by Col. A. Woods, chairman of President's Employment Committee. Favorable reports received from New England textile, leather, and shoe industries. Hide market has strengthened, which historically has foreshadowed general business revival. Sharp rally in silver seen as hopeful for world trade, due to strong effect on buying power of India and China.

Stock movements in the next few days should indicate whether the setbacks since Feb. 24 have been a period of consolidation before further gains; it's encouraging that support seems to have developed for industrials about the 180 level; it would be favorable if rails can hold support at current levels, which are still in the range of a technical setback from the Feb. 24 highs.

Contrary to predictions that dividend cuts had been largely discounted, some recent dividend cut announcements have caused considerable liquidation; brokers now advise avoiding stocks whose dividends are in doubt.

Success of Treasury and NY City bond issues likely to lead to bond offerings by many corporations that have been waiting for favorable conditions. Some signs reported of increased activity in commercial paper market; seen as forerunner of industrial recovery;.

Broad Street Gossip: Natural gas industry now represents $4B of investment and growing. Within memory, Pennsylvania steel mills were forced to abandon natural gas because fields in the area “were playing out.” At that time, there were a few hundred miles of pipeline in use; now there are 94,162 miles. Estimates of the remaining life of copper mines have fluctuated drastically. “Yet, production ... has been growing year after year, and engineers have quit estimating.” About 30 years ago, scrap iron was hardly used; now, it contributes about as much as iron ore to manufacture of steel.

London Times financial editor argues US not doing its share of foreign lending; only 15% of capital raised in last 10 years loaned abroad vs. 48% by Britain.

Editorial: New Farm Board chair. Stone's declaration of unchanged policy, while it has the virtue of frankness, confirms the Board will continue its hugely expensive and misguided efforts. In addition to well-documented blunders in trying to fix prices, the Board now is trying to impose an untested system of cooperative marketing on the fallacious assumption this will reduce costs compared to the current private, competitive system.

Nebraska bankers say livestock farmers in good financial shape in spite of lower prices, since price of feed declined more drastically.

H. MacLean, US rep. of Int'l Chamber of Commerce, says Italy's condition fundamentally sound; depression has caused severe strain, but conditions compare favorably to other countries.

J. McLeod, Bank of Nova Scotia GM, says in 5 years up to 1929 US and Canada workers attained living standard unequaled by mass of citizens in any country.

Economic news and individual company reports:

Treasury Dept. report bank failures sharply lower since record 344 with deposits of $407.3M in Dec.; Jan. failures were 197 with deposits of $91.4M, and Feb. will show less than 80, with deposits less than $45M. Record bank failures in 1930 have caused trend of moving deposits to larger banks.

J. Broderick issues statement on Rosoff plan for Bank of US reorganization with aim of repaying depositors in full: has communicated with plan organizers, emphasized importance of depositors' safety; if requirement can be met, reorganization would be best outcome; in meantime, orderly liquidation will continue.

Over $170M of bond offerings will be made today, including long-awaited $70M NY Central RR, $66M Port of NY Authority, and $50M Pennsylvania RR.

Firms participating in most bond offerings 1927-1930: National City $4.9B; Harris, Forbes $4.7B; Guaranty $4.1B; Halsey, Stuart $3.5B; Lee, Higginson $3.3B.

Large increase in short-term loans from US to foreigners reported in 1930; net export of short-term capital was $433M vs. previous record of $226M in 1928.

Dec. operating income of 103 telephone cos. was $20.9M vs. $24.2M in 1929.

Cotton textile prices have shown slow but distinct firming since start of year, finally responding to yearlong curtailment program. Industry optimistic on continued improvement, though profit margins generally haven't benefitted yet due to rise in raw cotton.

Fed. Reserve's recommendations for banking reform probably won't be publicized until Glass committee reconvenes.

Bank for Internat'l Settlements says European conditions demand restarting market for long-term bonds, setting up facilities for conversion of short-term to long-term debt as well as transfer of capital from centers where it's abundant to those where it's scarce. Approves Spanish stabilization plans. German stocks gain on anticipation of increased German access to long-term credit. England seen in favor of starting new bank to sponsor long-term int'l credits; France lukewarm.

Sweden takes lead in loans to Germany, passing US with $124.5M.

Since prewar year of 1913, British imports rose 30.3% to 1.002B pounds, while exports rose only 2% to 536.1M pounds.

Canada report: S. Logan, Canadian Bank of Commerce GM, reports industrial operations in Canada expanding slowly and irregularly. Jan. power output averaged 47.9 GWHr daily, vs. 50.2 in Jan. 1930 and 48.6 in Jan. 1929. Mineral production in 1930 estimated at $278.5M, down 10.4% from 1929 record high.

Irish sweepstakes, organized by govt. for charitable purposes, proving enormous financial success with money flowing in at $750,000/week.

Texas Corp. wins far-reaching ruling allowing cos. that lease oil-producing property to curtail production even though it reduces owner's income.

Grand Union Feb. sales $2.635M, down 4.2% vs. 1930; Interstate Dept. Stores $1.347M, up 2.9%; Safeway $15.782M, down 7.2%.

Motor boats registered in US as of Jan. 1 were 248,448 vs. 241,040 prev. year and 130,826 in 1920.

Companies reporting decent earnings: Sierra-Pacific Electric, Nat'l Dairy Products, Mesta Machine (steel industry equipment), Grangeberg (iron ore, Kreuger & Toll holding).


The war drama has been in fashion in both US and Europe cinemas for years, though not on Broadway. First US success was The Big Parade, leading studios to order “anything that has a war angle.” Now, however, the war film is waning in Europe. While film sponsors blame this on politics, and many films have in fact been subject of protests and banning in various countries, popular taste has also shifted. “European cinema, which once took itself so seriously, now wants to laugh. Antiquated Chaplin films are now being revived ... and the latest French talkies are going in for smart comedy and romance.”


'Come and have a round of golf.' 'I'm afraid I can't. You see, I'm in half-mourning.' 'Oh ... well, how about nine holes?'

Innkeeper - Game of billiards, gentlemen? Guest - I don't know. These balls are so dirty I can't tell the reds and whites apart. Innkeeper - Oh, that's easy. You soon get to know 'em by the shape.

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