Tuesday, April 28, 1931: Dow 149.78 -2.20 (1.4%)

Assorted historical stuff:

Letter from an Oklahoman to his banker: "It is impossible for me to send you a check in response to your request. My present financial condition is due to the effects of federal laws, state laws, county laws, corporation laws, by-laws, brother-in-laws, mother-in-laws, and outlaws ... These laws compel me to pay a merchant's tax, capital stock tax, income tax, real estate tax, property tax, auto tax, gas tax, water tax, light tax, cigar tax, street tax, school tax, syntax, and carpet tax. The government has so governed my business that I do not know who owns it. I am suspected, expected, inspected, disrespected, examined, reexamined ... boycotted, ... held up, held down, and robbed until I am nearly ruined; so the only reason I am clinging to life is to see what the hell is coming next."

Ford Motor, thanks to absolute stand by Henry Ford, has refused to consider any wage rate cuts either in their own plants or in any of the roughly 3,500 manufacturers that regularly supply them. Ford wage scales continue at just over $1/hour vs. about 92 cents in 1929, highest in company history. Employment and days worked at the large Rouge and Highland Park plants have been gradually increasing in recent weeks. The Fords are also spending huge sums to sponsor scientific, educational, and charitable enterprises employing several thousand, including the Edison Institute of Technology investigating use of agricultural products as industrial materials, an experimental farm, and various historical projects.

Col. A. Woods, resigning chair. of President's Emergency Employment Committee, will leave for two-month trip to Europe soon. Says "there has been a perceptible improvement in conditions, not enough, however, for the discontinuance of the emergency committee." Much of the committee's personnel, on loan from outside organizations, will also be leaving, though they'll continue to assist in an advisory capacity. President's Emergency Committee on Expenditures reports on survey of major family relief agencies in 100 cities; need for relief lower; most improvement in North and South Central states, most need for continued relief in mid-Atlantic and West Coast. Sen. Moses (R, NH) tells Pres. Hoover convention votes and electoral votes needed for his nomination and reelection "are in the bag."

Sen. Glass is revising banking bill based on financial inquiry last winter; wants to regulate banking affiliates and curb use of Fed. Reserve credit for speculation.

Sen. Couzens recommends assorted tax measures, including reinstatement of 1924 surtaxes and reestablishment of gift tax, but no increase in normal taxes. Asks Chamber of Commerce to announce whether it favors cutting, increasing, or maintaining current wage scales.

Russia to curtail purchases from US due to need for long-term credits and belief US is "rapidly passing from neutrality to active hostility." Russia mobilizes all sea and river transport workers to meet one of outstanding difficulties of five-year plan - weakness in transport facilities, particularly in Northern rivers.

Settlement of Arab share of Palestine development loan ran into delay when Arab executive commission refused to talk to British High Commissioner unless govt. agreed talks wouldn't imply Arab acceptance of Zionist clauses in Palestine mandate.

Mexican Congress convened in extraordinary session to take up urgent pending problems.

Tokyo boosters now say their city is the third largest in the world, surpassed only by London and NY; official estimate of Greater Tokyo population is 5.193M; area is 223 sq miles vs. 299 for NY City's five boroughs, and 693 for Greater London.

Long, confusing historical tale by H. Alloway about deal for Liggett & Myers involving Bernard M. Baruch and James B. Duke (father of Doris and the Duke in Duke University). Anecdote about construction of Flatiron "skyscraper" on 23 St. about 30 years ago (Frank Munsey, of the magazine co., called the building "double insanity" before moving in to the top floor several months later).

New all-air 8 hour service from NY to Chicago to start May 1; fare will be $56. Group representing US, British, German and French interests investigating opening new air route from N. America to Europe via Greenland and Hudson's Bay. Postmaster Gen. Brown points to growth in air mail while other departments' revenues are declining; says airmail can potentially be profitable; makes plea for increased public use of passenger airlines, citing improved safety; says development of aviation is also essential part of preparedness for war.

The humble Irish potato exhibits some of the same postmortem regenerative powers seen in snapping turtles and snakes; a freshly picked potato, if kept in a humid atmosphere above 60 degrees, will grow a new skin to cover cuts or abrasions.

Market commentary:

Market wrap: Stocks showed some early relief from pressure; announcement of Continental Shares reorganization stopped heavy selling of their holdings including Goodyear and Republic Steel. However, "a fresh selling wave" broke out at end of first hour, before announcement of West & Co. suspension; heavy selling in leading shares intensified as prices worked lower; prices broke sharply around noon, with new bear market lows in US Steel, GE, and NY Central; utilities also pressured, though most held above Jan. lows. Support came in during final hour, with good-sized recoveries in leading shares. Bonds continued to show firmness in US govts. and highest-grade corporate issues, but heavy liquidation continued in rest of the corporate list, with convertibles particularly hard hit by slump in stock prices; bond market has also had to absorb heavy selling from brokers that have failed or are in distress; foreign list was weak, with both European and S. American issues declining. Commodities mixed; wheat up substantially on active trading but other grains narrowly mixed; cotton down sharply, with May selling below 10 cents for the first time this year. Copper buying remained quiet at 9 1/2 cents. Zinc declined to new 31-year low of 3.40 cents/pound.

Dow industrial average closed at a new bear market low; there were 2 new yearly highs and 284 new lows.

US Steel to report quarterly earnings and declare dividend after the close; traders believe a technical rally may be sparked by better-than-expected results.Coca-Cola subject of some optimism; seen benefitting from lower raw material prices. Woolworth has been holding up relatively well during recent reactions, leading to speculation it could become a leader in a market recovery.

Recent reports of widespread liquidation by long-term investors should be confirmed or disproven by upcoming second-quarter shareholder lists from the likes of US Steel and GM. One buyer of stocks during the past week reported that, of 12 certificates delivered, all showed the previous buyer had purchased the stock between Aug. and early Oct. 1929. Market students say important support still lacking; "with liquidation in progress, it is apparent that the big interests are not ready to enter the market." Recent buying has been from short covering and small-scale public accumulation.

Decline in scrap iron and steel prices in recent weeks has been discouraging, since many believe this forecasts conditions in finished steel. Optimists on copper base hopes on control of the industry by just two groups, associated with Anaconda and Kennecott. Rail car builders, "as usual at such times," are asking why railroads buy no equipment when it's relatively cheap, and rush into the market to buy at higher prices when traffic revives.

Editorial: As May approaches, interest in the cotton market centers on the crop outlook, which at present looks favorable. The price farmers get for their cotton is of national importance, affecting the welfare of the whole South. The outlook on this is uncertain; it's doubtful if acreage has been reduced much, and attempts at supporting prices "by political methods have been a disaster"; the dominant factor now will be the weather. D. McCuen, Amer. Cotton Shippers Assoc. pres., attacks Farm Board; loss of foreign markets appalling; cotton quality must be improved; farmer education must be extended; markets must be freed. "Let the government continue in the business and the farmer is doomed." C. Williams, Farm Board cotton member, says several factors point to increased world use of US cotton at expense of foreign cotton in the 1931-32 season.

Guaranty Trust survey says usual early spring peak has passed without definite signs of improvement; expansion in most industries no more than seasonal; April reports indicate usual spring recession; business will probably remain low for time being, with “distinct possibility of recovery at the end of the summer.”

Sir G. Parish says world on eve of greatest trade expansion it has ever seen; advocates removing all obstacles to trade to revive it.

J. Cohen of Baar, Cohen sees forces "working in the right direction for at least five years of trade expansion, business prosperity and rising security and commodity prices." Important step in recovery would be adjusting wages downward to increase profitability and employment; this would be "bullish on the country as a whole."

B. Hutchinson, Chrysler treasurer, hits "sunshine talk" and "wishful thinking" by US business leaders that "took us up too high and down too low in 1928-29." Advocates elimination of waste in govt. and industry, tariff policy that develops markets instead of antagonizing customers, and increasing security of banking system.

Economic news and individual company reports:

Shakeup in Continental Shares, a large investment trust co. with commanding stakes in several major corporations; Eaton-Otis interests were replaced as directors by heads of four Cleveland banks. Street was surprised at absence of a NY bank with which the co. had a $30M loan. New pres. G. Bishop says has reviewed Continental's balance sheet and found it sound; “no reason for ... shareholders to be apprehensive as to the entire solvency of the corporation.” NYSE firm of Otis & Co. transferred their commission business to E.A. Pierce & Co., keeping their investment business. NYSE and Curb Exchange firm of West & Co. suspended for insolvency; founded in 1901. Will "cooperate in every way with our customers and other creditors to work out the best possible results in their interests." Editorial: Relative equanimity with which market received unfavorable developments Monday is due to realization that “suspensions and readjustments of the past week represent the clearing away of old debris.” Almost 19 months have passed since the peak; market appears to be approaching period of hesitation and false starts typical after “a prolonged decline of major proportions.”

Col A. Little, Bank of US dir., testified minutes of some meetings showed him approving loans when he wasn't present. NY Att'y Gen. Bennett to investigate whether Pynchon & Co. violated any state laws prior to its failure.

Fed. Reserve lowered buying rates on bills for second time in six days, to record lows of 1 1/4% for bills up to 45 days and 1 3/8% for bills of 46-120 days. Action was taken after sterling and francs failed to hold most of improvement after earlier cut. Possible cut in rediscount rate seen if necessary to support sterling, prevent gold imports from France, and "turn away the enormous volume of funds glutting the NY market".

British Chancellor Snowden presented balanced budget with no major rise in income tax, but new tax on land values; claimed continued reduction in national debt. Reaction was generally favorable; sterling led strong day for European currencies.

A. Whitney, head of rail union: "agreement we drew up with railroads is still in force and we will keep it in force. We're not going to be even approached for a wage reduction. ICC revises allowable rail freight rates on tomatoes, string beans, green peas, carrots, beets, onions and turnips originating in Mississippi.

A number of important dividend announcements are due over the next few weeks, including US Steel (today), Illinois Central, GM, Bethlehem, and Union Pacific.

Veterans' bonus loan applications declined sharply in past week.

F. Godber, Royal Dutch-Shell managing dir., hits recent introduction of low-quality gasoline by some marketing companies to meet "bootleg" competition; says this will increase production that's already too high and require heavy unproductive investment. Says company is in accord with oil states' curtailment program.

Canadian report: March exports $55.0M vs. $89.6M in 1930; exports to US $26.9M vs. $43.3M. Bank of Montreal reports little change in trend of Canadian trade and employment other than seasonal spring increase. Since Turner Valley oil area appears to be waning, other areas in Alberta are being explored for oil.

German March exports were 662M marks vs. 591M in Feb.; imports 584M vs. 884M in Mar. 1930; unemployed on Apr. 15 were 4.628M vs. 4.980M on Mar. 15 (highest since the war), and 2.787M in Apr. 1930. Dr. E. Wagemann, dir. of German Federal Office of Statistics, estimates world unemployment at 20M.

Argentine corn crop estimate sharply reduced after farmers refuse to harvest over 2M acres of corn (about 15% of planting) due to low prices.

Corn Canning Institute recommends to all canners that 1931 acreage be cut 25%, citing decline in canned food consumption and forced selling of substantial inventories of canned goods below production cost.

NY City Transit Commission instructs S. Untermeyer to sue B.M.T. alleging improper accounting of $6.5M in declared losses; seen as indication of difficulties standing in way of transit unification.

Sears seen benefiting from expense cuts; in spite of lower sales, first-half earnings expected to equal 1930 level.

General Mills stock about 41; annual div. $3; earnings in year ended May 31, 1930 were $4.83/share vs. $4.57; earnings for following year expected to increase.

Companies reporting decent earnings: Pacific Lighting, Wm. Wrigley, General Printing Ink, McCall (magazines).

Movie:

Gun Smoke - Paramount film, starring Richard Arlen and Mary Brian. City gangsters invade the wide open spaces, assuming control of a Western town; "joining of the gangster theme with the traditional Western furnishes situations that possess both novelty and humor."

Theatre:

Much of European theatre has its roots in the street fair; Paris now features two of the most venerable. The Foire du Trone, also known as "the spice fair," started in the 15th Cent., is now filling the Place de la Nation with the smells of ginger bread, cookies, and "that rubber-like and enduring substance which the French affectionately call pain d'espice"; the fair is also crowded with merry-go-rounds, lotteries, performing dogs, and tiny electric cars; weaving in and out are street singers, sometimes carrying a guitar but "more often a wheezing and mournful accordion." On the other side of Paris, the Foire du Saint Germain is being prepared. This fair harkens back to the 11th Cent.; it was built around open-air theatres, and was the incubator of half the most celebrated theatres in France. The old theatrical productions are still faithfully reenacted, giving a "'flash-back' into medieval times."

Joke:

"Fair Damsel - Where do you think I'd be if I had a million dollars? Male Escort - On my honeymoon."

A well-driven golf ball leaves the head of the club at 135 miles an hour. This is only slightly faster than a golfer leaves the office. - Life