March 17, 2010

Tuesday, March 17, 1931: Dow 183.61 +2.85 (1.6%)

Assorted historical stuff:

"Indian Potentate Premier Plutocrat" - World's richest man is the Nizam of Hyderabad, 45-year old monarch of 13M Indian Muslims. Fortune is estimated at over $2B; during the war he contributed over $50M to the British govt. He is said to have over $500M in gold in his treasury. On a visit to New Delhi two years ago, he traveled in a special train of 22 Pullman cars; his luggage was sent ahead in four special trains, one devoted to carrying part of his collection of 400 cars.

Editorial by T. Woodlock: Stockholders agitating against Bethlehem Steel's executive bonus system are giving every reason but the real one, even if they don't consciously recognize it: “a strong feeling on the part of most of us ordinary folk that a million dollars is too much for anyone.” The executives involved have clearly done a good job; Bethlehem's expenses are proportionally lower than US Steel's, bonuses included. Perhaps when they realize their true motivation is envy of others' riches, the Bethlehem stockholders who are to vote on the bonuses may be released from this “neurosis” and cast a fair vote. This problem is also apparent in the agitation for public control of electric utilities, which is motivated less by desire for low rates than by anger over the other fellow's profits.

Washington report: In the past few days many realized that their 1930 taxes would be substantially higher even though incomes were lower, due to the expiration of the 1929 1% tax cut; this hit the lowest 1 1/2% bracket hardest. The US, however, faces even higher taxes and a rise in debt; the current year will show a $500M deficit, and even with a business recovery it's hard to see revenues rising enough to avoid tax increases, since much of 1928-29 revenues came from capital gains and corporate taxes. In addition, spending may rise for the Farm Board, veterans, and unemployment relief measures. Public reaction to a tax hike is uncertain; this would be the first peacetime increase in income taxes. Political parties have been exchanging mimeographs, which are “the only known combination of words” containing a “higher percentage of pure buncombe than Senate oratory. ... But the really ridiculous aspect is that newspapers print these things and offer them to their readers as news.” The statements, though sponsored by Congressmen, are mostly written by “publicity men in party headquarters,” as the newspapers well know. Another ridiculous spectacle is that of Republican and Democratic Senators trading charges on who is responsible for record peacetime spending; “It so happens that both of them are right.”

Assoc. Against the Prohibition Amendment estimates repeal would raise $882M this year from taxes on liquor sales.

Henry Ford, in AP interview, sees prosperity in present low-price era rather than false prosperity that speculation begets; wages not cut in Ford plants; predicts reelection of Pres. Hoover, advises against govt. ownership of utilities.

Russia outlines plans for reorganizing collective farms along capitalist lines; equality of wages will be ended and farmers paid according to production.

Editorial: Railroads and shippers are locked in a battle over whether truck transport should be regulated as rails are. This involves some complex questions of whether trucks are paying their full costs and whether competition is in this case ineffective to determine reasonable charges. However, it's worth noting that shippers were just as fervent for rail regulation 20-30 years ago as they are against truck regulation now - could they be trying to have it both ways?

G. H. Hall, Civil Lord of the Admiralty, predicts new life for Britain's coal industry since fuel oil can now be produced cheaply and practically from coal.

Union Carbide has developed plastic Vinylite, which can be used for furniture, window frames, and many industrial purposes. "Experts believe the development of plastics will be among the most important factors in the next few years."

War Dept. to order 388 airplanes at cost of $18M; will bring total plane strength to 1,800. US Navy to order 12 high-speed (300mph) bombers for $525,000.

NY City taxicabs travel about 900M miles/year vs. 1.347B miles by mass transit vehicles; drivers declared about $26M annually in tips received.

In first 9 weeks of the year, 213 people were killed by cars in NY City, increase of 13% over 1930.

NY State Industrial Commissioner F. Perkins reports deaths in industrial accidents in Feb. were 122, down 43 from Jan. and down 24 from the 5-year Feb. average. Causes included 31 vehicle accidents (24 cars, 5 trains, and 2 horse drawn), 24 falls from elevators, 13 falling objects, and 6 “strains.”

J.P. Morgan to build NY City's only bronze subway entrance, on corner of Wall and Broad Streets.

Market commentary:

Market wrap: Stocks opened under bear pressure, but resistance soon developed; rallying began, with utilities particularly strong and leading industrials pushing ahead; advances were extended in the afternoon. Bond trading dull; US govts slightly lower; foreign mostly firm; corp. irregular, rails in good demand.

Commodities strong; grains firm, corn up sharply; cotton up very sharply on short covering. Copper remains at 10 - 10 1/4 cents, with buying small. Silver continued sharp rally, up to new 1931 high of 31 3/8 cents vs. Feb 16 record low of 25 3/4.

Conservative observers still favor sidelines; ability of stocks to move ahead for several days would be good indication.

Bulls encouraged by trade reports of continued gradual improvement, rally in silver, and on the technical side by recent effective support for leading stocks in face of discouraging developments, and large short position as reflected in heavy borrowing demand in the loan market.

Recent stock market irregularity seen accurately reflecting a very mixed business picture, with moderate improvement in some lines including autos, steel, and textiles, but disappointing progress in others including rail loadings, copper, oil, and retail trade. Inconclusive bear-bull contest and technical market seen likely to continue while conditions are so indefinite. A number of nimble operators in leading houses have made profits recently by looking for stocks in which a heavy short position has developed, and going long; this has touched off many minor rallies in individual stocks over the past week.

Kreuger & Toll US certificates and Internat'l Match preferred hit new 1931 highs; strength attributed to rally in silver. Woolworth in demand on reports of better March business. Gillette has broken out to the upside after a bear-bull contest last week. Internat'l Cement weak on rumors of price cut; Feb. production and shipments are down sharply from 1930. Oil shares slightly firmer in spite of another crude oil price cut by Union Oil of Calif.

A substantial part of recent high grade bond demand is reportedly coming from investment trusts [similar to mutual funds].

J. Oliphant & Co. see a market advantage for car stocks in that they've already been deflated for about 2 years vs. 1 1/2 years for rest of the market; major carmakers stocks peaked early in 1929.

Berlin stocks and currency continued firm; financial circles optimistic on apparent return of funds sent out of country last fall, turn for the better in employment.

Broad Street Gossip: Notes willingness of “master minds of business” including Pennsylvania RR, NY Central, Rockefeller, and AT&T, to spend large sums on expansion; they have earned vast sums “through their ability to see into the future. In the long run, they always add to their wealth, as well as ... their shareholders, and usually profit from depression.” Ability of market to absorb $2.5B in recent financing without a ripple indicates we're truly “in an age of big business”; veteran traders can remember when bear drives were launched based on $200M in new financing.

Editorial: World cotton consumption figures are grim, indicating world depression in cotton manufacturing and increased consumption of Indian cotton. Remedy could start with scrapping of Farm Board, with "its dangerous theory of 'orderly marketing,' stabilization, and throwing of monkey wrenches into the market machinery" and return to business principles of reducing costs of production, avoiding heavy surpluses, and letting markets function.

S. McKelvie, Farm Board member, denies the Board's sales of wheat abroad constitute “dumping.”

Col. A. Woods of the President's employment committee says employment situation throughout US is somewhat better than a week ago, based on encouraging reports from regional agents.

J. Campbell, Youngstown Sheet & Tube chair., says depression one of the severest ever experienced, but sees indications bottom has been reached, “outlook is encouraging for a gradual increase in volume through the year.”

Economic news and individual company reports:

Texas Railroad Commission hit back after Gov. Sterling accused them of failing to enforce oil curtailment: “It seems Pres. Hoover would like to shift the responsibility upon the Railroad Commission of Texas for his own dereliction in failing ... to stop importation of foreign oil ...”

NY State Banking Dept. takes possession of business and property of some Bank of US affiliates to continue liquidation process. Motion granted for trial of five Bank of US officers. H. Satterlee to confer with Gov. Roosevelt on Rosoff plan for reorganization.

Banks are now in position to buy about $2B in non-govt. bonds, while remaining quite liquid compared to the past; this would substantially help business recovery. Since Oct. 1930, banks have shown no inclination to buy non-govt. bonds, possibly due to bank failures and concern over the economy. However, this may change due to current very high liquidity and pressure of low earnings.

US Feb. exports $226M vs. $349M in 1930 and lowest since 1914; imports $175M vs. $282M and lowest since 1916. While Feb. is a seasonally slower month, observers had expected a better showing due to drastic decline in the previous few months.

NY State Railroad Trainmen's union seeks to cooperate with NY rails in promoting placing of all transportation, including buses, trucks, water carriers, pipelines, and air transport, under the same regulatory restrictions governing rails.

Since organization of US Steel in 1901, receipts have totalled over $30B; dividends paid on common totalled $891M or 160%, while $1.453B was reinvested.

US automotive exports in Jan. were $15.5M vs. $16.4M in Dec. and $31.2M in Jan. 1930; Denmark became leading buyer of US passenger cars with 121% unit gain, followed by Canada and India.

Light weekend rain or snow fell in some US areas, but still no general relief for areas suffering from winter drought.

British rail workers refuse to accept wage cuts decreed by Nat'l. Wages Board; union leaders had urged acceptance of the cuts.

Canadian report: In 11 months ended Feb., govt. revenue was $322.7M vs. $402.1M; expenditures were $331.2M vs. $310.1M. Govt. net debt on Feb. 28 was $2.208B vs. $2.156B a year earlier. Rail car loadings for the year up to Mar. 7 were 460,501 vs. 563,139.

Industrial Rayon announces it will guarantee prices to customers against declines for 60 days.

International Nickel 1930 net was $0.67/share vs. $1.47; world consumption of nickel 88M pounds vs. 130M and 117M; sales declined rapidly in second half. Vanadium 1930 net $3.04/share vs. $5.26. Caterpillar sales kept at "encouraging pace" so far this year by govt. road machinery and tractor orders; sizeable business expected from Hoover Dam project.


River's End - The Canadian Mounties, "favorite subject of silent films," finally have their day in the talkies. Plot "presents the familiar movie theme of the supposed criminal who looks exactly like the officer of the law."


Two middle-aged businessmen sat in the smoking room of a club criticizing the young men of today. Said one: "Look how reluctant the young men are to marry and settle down." "That's so," said the other. "They seem to fear marriage. Why, before I was married I didn't know the meaning of fear."

Theological lecturer - Some admire Moses, who brought the old law; some Paul, who spread the new. But after all, which character in the Bible has had the largest following? Voice From the Back - Ananias. [Lied to Peter concerning financial matter, was struck dead on the spot - Acts 5.]

1 comment:

  1. paragraph two, Editorial... is just classic. history ALWAYS repeats, no?