Starting today, the Journal consolidated its two market analysis/rumor/gossip columns, “Abreast of the Market” and “Broad Street Gossip,” into one. Possibly a telling indicator that people were getting so discouraged about the market there was no longer enough scuttlebutt to support two columns ...
Assorted historical stuff:
Millard Pryor returns from year-long trip around the world as special Journal correspondent. In Japan, observed "typical citizen lives in a fragile house of meager value ... and feels contented if he has enough food to keep alive his voluminous family." In China, hunger is accepted as "typical state of affairs"; in the tropics, "acquiring of wealth seems to occupy little of their thought and effort. Coming from a sphere ... where such a behavior would be ... next to criminal, at first I was shocked." However, upon observation concluded "these people were just as happy, on the whole, as my friends and fellow citizens ... the distinct impression prevails that human happiness is independent of economic well-being. ... It would be foolish to ask that business forget that it is essentially a profit producing enterprise, yet a shifting of emphasis, even though slight, might easily result in far-reaching effects."
New Spanish Finance Min. Prieto says will observe all govt. obligations but "Spain wants no tutelage." Believes stabilization of peseta not urgent; if country is well-administered, it should naturally return to "parity" value. Peseta fluctuated, closing lower. US will await definite information before deciding on recognition.
Editorial: Bank of England Gov. Norman, on returning from the US, is likely to report "American opinion is more open to the idea of world financial cooperation than at any previous time since the war." Opinion has changed significantly on war debts and use of gold holdings, although Col. Ayres might still come in for Congressional scorn for pointing out that Britain, after repaying a total amounting to a third of its original $4.6M war debt, now owes the US about twice as much measured in commodity value. While US attitude is unpredictable, a world conference on war debts with real US participation is starting to seem more possible.
Rep. Johnson (R, S. Dakota) proposes naming ex-Pres. Coolidge, or other prominent figure outside House, as Speaker in event of deadlock between parties.
Washington report: Oil industry is "at cross-purposes"; while there's an attempt to deal with problems of overproduction, other interests are suing the govt. to be allowed to prospect and drill on public land. Oversupply of oil must be dealt with at the source (drilling), either by economic forces or by law. If there is legislative action, consumers as well as producers must be protected, and this may lead to considerable govt. control of the industry. Many candidates are mentioned for the House Speaker's post. While legal, it's considered unlikely that the House will go outside its membership for a Speaker. Some have speculated that since the House is so closely divided, both parties would prefer not to organize it, preferring to let the other have "responsibility without authority." However, sounder Republicans have refused to listen to this talk, believing it would be "fatal for the party to attempt to dodge its clear duty."
Pres. Hoover may not take vacation this summer; he's currently making a review of the different departments of the govt., and won't be done for some time.
Britain announces will reduce interest paid by Australia on war debts $8M annually for 3 years and extend principal payments 2 years. British Liberal party attitude uncertain regarding Conservative vote of censure on Labor govt., but it's believed govt. will survive by small majority.
Radicals gain in Argentine elections; Gen. Uriburu's provisional cabinet resigns; peso down sharply as central bank suspends support. However, banking circles are pleased with Uriburu's record so far and informed observers believe he can form a coalition govt.
J. Schurman, former US Ambassador to Germany, says German govt. will be in safe hands for many years, and German Fascist party is already disintegrating.
W. Glover, Asst. Postmaster, invites bids for carrying mail on first transatlantic airline; route will be from Charlston, SC to London via Bermuda and the Azores.
Diesel-powered plane demonstrated at Detroit air show; engine has only 1,500 parts vs. 5,000-6,000 in gasoline engine.
Eastman Kodak announces new verichrome film with double silver coating, “greatest invention in snapshot film since 1903.”
After experimenting with an all-glass building, Chicago architects plan an all metal apartment house. Outer walls will be of "silver toned rustless Alleghany metal" backed with cork board and rock wool, and no more than 3.5 inches thick vs. 14 inches for brick walls. Floors will be of insulated ship deck construction. This method will provide 14% more rentable space and cost less to build. Heating will be electric, taking advantage of heat retention capacity of the walls.
Vote counting in the French Chamber of Deputies will henceforth be "mechanical and correct" due to a newly installed electric counting machine. There have been numerous inaccuracies in the past, some for important votes; it took 3 days in Feb. of 1930 to determine the final vote by which the Tardieu cabinet was defeated.
New radium deposits found near Edmonton, Alberta valued at $8,600/ton of ore.
Market commentary:
Market wrap: Pressure on leading shares continued, producing a new low since 1927 in US Steel and new 1931 lows in leaders including National Biscuit and Western Union and in many other shares; market ended generally lower. However, pace of decline slowed, and some resistance appeared, with general list showing some ability to break away from downtrend in the leaders. Bonds more active, irregular; US govts. quiet, steady; foreign mixed - European firm, Brazilian weak, Australian rallied sharply, Argentine rallied after early weakness; corp. highly irregular - high grade firm but several parts of the list reactionary. Commodities quiet; grains narrowly mixed; cotton barely changed. Copper buying quiet again; some metal sold at 9 3/4 cents while most producers held at 10. Silver up 1/2 cent to 28 7/8. Zinc at new low of 3.75 cents. Rio coffee futures on the NY Coffee & Sugar Exchange sold off to 4.35 cents/pound, lowest level since 1903; attributed to weakness in Brazilian currency.
Bear traders apparently took advantage of recent popularity of stop-loss orders, concentrating pressure to move stocks below resistance levels and trigger selling.
Insurance shares, after being relatively inactive for many weeks, sold off sharply along with the general list; banks and trusts were somewhat better supported. West Coast utilities said gaining from recent increase in electric output there.
GM remains one of the few stocks that's favorably mentioned; earnings are reportedly improving, and a bull pool is said to be operating in it, though its operations have been disrupted by declines in the general list. The usually resilient National Biscuit, which has continued to report record earnings, was weak on reports of a decline in current business. Western Union was weak after reporting Q1 earnings of $1.22/share, lowest in 15 years. Gillette was strong on reports of improving finances and earnings. National Steel Q1 earnings repeated Q4 performance as one of very few companies in the industry to cover dividends.
Brokers report recent market action has been discouraging to “outside” (public) who recently bought on recovery hopes; in many cases, they are taking losses and leaving the market. Short interest has again increased in past few days; some brokerage customers have gone short in spite of cautionary advice against it.
Divergence of the general list from leading stocks seen as hopeful sign many stocks have been "thoroughly liquidated," reverse of summer 1929 when the general list started declining even as leaders "were completing the bull swing." Analogy seen between present selloff in high-grade rail stocks, and ill-advised liquidation in AT&T stock during 1920-21 bear market on fears of wireless competition.
Editorial by T. Woodlock: Investigation on rail price-fixing by steel cos. could more effectively be carried out by the ICC than by the Justice Dept.; using subpoenas to gather facts, it could compel the rails to act together even if the steel cos. aren't in technical violation of antitrust law. Lesson, as in many other cases in rail industry, is need for “common action for the common good.”
M. Alexander, Nat'l Industrial Conf. Bd. Of NY chair., says economic readjustment necessary during depression can't be warded off by "building a Chinese wall around wages"; wage cuts proportional to decline in cost of living might allow increase in total wages.
Sir A. Geddes, chair.of Rio Tinto (lowest-cost copper producer), says immediate outlook not good; present economic distress likely to last at least through 1931.
R. Broomfield, Barnsdall VP, says oil industry in new phase; “days of large profits are gone”; industry now in category of low-margin manufacturer.
Grain special:
Editorial: Report that a Farm Board subsidiary has started buying grain elevators indicates it plans to start a large system of wheat marketing through cooperatives. Far from being "farmer-owned and farmer-controlled," this system would therefore be under Farm Board domination. It's the farmers right to market wheat however he chooses, but the govt. shouldn't engage in the business in competition with private marketers. While the public doesn't seem to realize it, the huge farm surpluses the govt. holds are only part of its agricultural operations, and it seems to be getting in deeper and deeper.
Yet another opinion piece on the Farm Board: Created to raise agriculture to parity with industry, it has violated the fundamental principles Pres. Hoover laid down at the April 1929 special session of Congress that led to its formation (no trading or price fixing in commodities, no activities resulting in increased surplus production, no duplication of working private systems, etc). Its current plan to replace the current private marketing system with cooperative marketing under govt. intervention will fail, leaving agriculture worse off and taxpayers to pay the bill.
Jules Fribourg, pres. of one of world's largest grain concerns, predicts world grain situation, though depressed by oversupply and complicated by Russian shipments, will correct itself through normal working of economic forces.
A large broker, catering to the grain trade, quotes from Proverbs 11:26 "He that withholdeth corn the people shall curse him, but blessings shall be on the head of him that selleth it." Or, in more modern parlance, "We advise selling July wheat."
Economic news and individual company reports:
Strike against Philadelphia & Reading Coal & Iron Co. spreads to 10 operations, involving 8,000 workers.
Brazilian situation appears to be “growing acute.” Bond investors have been selling off Brazilian federal and local issues, and coffee prices, upon which Brazil's foreign currency earnings largely depend, are very weak. Brazil appears unable to secure new foreign capital to service debt as it did prior to 1929. Total foreign investment in Brazil is about $3.3B, of which Britain accounts for about $1.5B and the US $500M.
Connecticut passes new laws requiring brokers and security salesman to register; Investment Bankers' Assoc. describes new law as "model measure"; seen putting "teeth" into the fraud law adopted two years ago.
Agriculture Dept. reports plowing for corn well advanced in much of Iowa, though the violent dust storm last week, worst in 40 years, did some damage to oat and barley seedings. Farm Board chair. Stone "expressed some interest in the dryness in the spring wheat belt"; believes production will be affected but it's too soon to tell if crop from that area will be short. Also recommends cotton farmers reduce 1931 acreage 25% below last year.
Commerce Dept. reports March exports $237M vs. $224.4M in Feb. and $369.6M in Mar. 1930; imports $211M vs. $175.1M and $300.5M.
BLS reports Mar. employment in 15 industrial groups almost unchanged from Feb., but payrolls up 0.7%. For manufacturing industries alone, employment rose 0.9% from Feb., and payrolls rose 2.2%.
Fed. Reserve reports money in circulation Apr. 15 up $15M to $4.629B, total Reserve Bank credit outstanding down $34M to $895M. Member banks in NY City report brokers' loans up $27M to $1.849B; loans on securities to non-brokers down $30M to $1.759B. Bank deposits in NY City were down over $1B in the year up to Mar. 25. While dramatic, this followed a usual seasonal pattern in which out-of-town banks withdraw deposits during the first quarter; banks outside the financial centers mostly reported higher deposits.
Dow average of 8 iron and steel products was unchanged at $44.23, low for 1931. Scrap prices dropped substantially at several important centers.
Several rails are experimenting with excursion fares as low as 1 cent/mile [vs. normal fares of about 2 cents/mile] to boost passenger traffic.
Bank of England lost 821,000 pounds in gold, reducing holdings to 146.2M; however, reduction is believed temporary due to Argentine situation.
Suez Canal Q1 revenues declined 6.8% to $15.1M, relatively better than the Panama Canal's 11.2% decline to $6.0M.
NY State tax officials expect drop of 20% in income tax returns from $40.2M total last year.
NY City borrows $41M short-term at 1 7/8%; their long-term bonds yield slightly under 4%.
Detroit reports applications for public relief in March were 4,085 vs. 9,043 in Feb. and 5,488 in Mar. 1930; applications so far in April are about 100/day.
Chevrolet reports March domestic sales of 73,628 cars and trucks, up 48% from Feb.; sales showed strong gains in each 10-day period, and dealer reports indicate continued gains in April.
Companies reporting decent earnings: Waldorf System (restaurants), Lambert (toiletries and medicinals).
Theatre:
Six Characters in Search of an Author - by Luigi Pirandello, translated from Italian, at the Bijou Theatre, starring Walter Connolly and Paul Guilfoyle. Abandoned by their author, a forlorn family of imaginary characters, father, mother and four children, wander unannounced into a theatre where a rehearsal is in progress. The question of the differences and similarities between acting and being, between characterization and character become bitter points of contention between the imaginary family and the 'real' director and his company. These questions, used to suggest more universal questions regarding reality and pretense outside the theatre, no longer seem as profound and disturbing as they once did but this makes the play more enjoyable and accessible. Treatment of the play is heavier than it should be but leading parts are acted well "and the more important passages .. are usually impressive."
Report from France:
Paris theatre has split into two camps on the question of censorship. Unlike in the US, where censorship is usually on moral grounds and is a reliable box office stimulant until litigation is complete, on the Continent it's often on political grounds, as in Austria and Germany's recent ban of the US-made All Quiet on the Western Front. Just days ago, French police ordered closing of a German play concerning the Dreyfus affair, a political scandal that bitterly divided French society at the turn of the century, saying the play provoked disorder. Few who were in Paris at the time can forget the “seething hatred” caused by the affair, in which a young Jewish officer in the French army, Captain Dreyfus, was convicted of selling military secrets to Germany. Street riots were frequent, and the mere mention of the name drew scowls and violent words. (An article by Emile Zola later inspired a controversial reopening of the case, and Dreyfus was exonerated). Proponents of the play now demand the same freedom accorded the press, while opponents contend "the theatre because of its more intimate and personal appeal,” is a more powerful medium with a greater responsibility and "that its potentialities as a propagandist for causes far exceeds the fleeting message of the press."
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