Wednesday, April 29, 1931: Dow 147.95 -1.83 (1.2%)

Assorted historical stuff:

H. Bancroft, Wall St. Journal publisher, returns from 30-day, 10,000 mile US trip covering 27 of the 48 states. Wall Street "easily the bluest spot in the country." East and West Seaboards have fared relatively better in the depression than the middle region between Alleghanies and Rockies. New England brightest spot in the country. Drought on West Coast is serious; industry at low ebb due to conditions in oil and lumber; however, people "manifest plenty of courage" and unemployment not as serious as in the East or Midwest. Farm conditions east of Mississippi look fine, though in areas where drought was most severe last summer there has been "normal rainfall, but no excess, and if the coming summer should be a dry one, it would make things uncomfortable, although just at present there is nothing to worry about." Crop conditions "all right" in Missouri, Kansas, and Southwest, but "not so good" in Iowa, Nebraska, Minnesota, and Dakotas.

Editorial: British Chancellor Snowden's budget closes the deficit without major new taxes, but by using a number of "admittedly temporary expedients and the hope of reviving industry." For example, shifting income tax dates to collect a year and a quarter's worth of taxes in a year "is a trick which will work only once." However our ability to criticize him for not tackling fundamental problems is weakened by the prospect that we're likely to "take refuge in a similar opportunism." In fact, "Mr. Snowden's deficit of $115M ... is a shabby little affair compared with the magnificent gap of $800M across which Americans face the federal Treasury this year."

Rep. C. Ramseyer (R, Iowa) advocates gift tax and increased estate and inheritance taxes to make up Treasury deficit.

Editorial: The Farmers Nat'l Grain Corp. (subsidiary of the Farm Board to support cooperative grain marketing) annual report is regrettable; although it shows a profit, "officials studiously avoid reporting any details upon which a judgement can be formed" on success of cooperative marketing, particularly costs to handle grain and prices paid to farmers. "The people of the US have invested $500M in an experiment designed for the benefit of agriculture. That experiment rests upon cooperative marketing ... Those who provided the money have a right to know what kind of service is being given the farmers ... How can the public know whether its $500M experiment is a success or a failure?" Another opinion piece by the [fortuitously named] D.C. Harrower covers much the same ground.

Editorial by T. Woodlock disputing charges against electric utilities made by Pennsylvania Gov. Pinchot in his weekly radio address; one concerned cost of building lines and the other overall cost of providing power.

J. Mooney, GM VP and manager of exports, says Russia "is an excellent customer of the US now" and trade can be "remarkably expanded." Calls for abandoning "economic absurdity of being willing to ship goods ... with the presumption that they can be paid for in anything but goods or services we accept from them." Russia and Italy sign renewal of commercial treaty with new clauses expected to double trade during remainder of 1931; Italy to export 350M lire in next 8 mos. Metropolitan-Vickers Electrical of London contracts with Soviet government to provide technical assistance in manufacture of electrical equipment.

NY Gov. Roosevelt dismissed charges of "misfeasance" against NY Mayor Walker that had caused the City Affairs Committee to petition for his removal. Gov. Roosevelt signed Cornaire bill setting up state power authority for development of St. Lawrence River power.

The recently enacted Watres airmail law fixed a curious situation in which airmail contractors were paid more than postage, providing incentive for a contractor to repeatedly airmail himself the heaviest possible items back and forth from New York to San Francisco.

Largest oil-burning locomotive in the world, built by Canadian Pacific Rwy., will be ready for service in the Rockies soon. Combined weight of engine and tender is 785,000 pounds; overall length of the two is 99 feet 3 3/4 inches; this is an increase of 44,800 pounds and 1 foot 2 inches over the largest previous locomotive.

Market commentary:

Market wrap: Stocks were highly irregular most of the day; trading was quiet as many awaited the US Steel report after the close. Firmness in some spots, including US Steel itself on belief dividend would be maintained, was offset by new weak points, including Allied Chemical and Union Carbide; liquidation by public continued. However, leading shares firmed as the session progressed and a fairly broad recovery took place in the last hour. Bond market tone improved after Fed. Reserve cut in bill rates; US govts. firm at close to 1931 highs in spite of record Treasury financing; European steady but S. American slumped, sharp break in Chilean; corp. highest-grade strong, readjustment in lower-grade issues continued but selling was less urgent. Commodities mixed; wheat up slightly but other grains mostly lower; cotton little changed. Coffee down sharply. New record or long-time lows in lead, crude rubber, silk, butter and eggs.

Dow industrial average closed at a new bear market low; there were 4 new yearly highs and 208 new lows.

Although US Steel maintained its dividend, earnings report was much worse than expected; this is seen likely to depress the market today.

Loan market (in which short-sellers borrow stock) was active, with US Steel loaning at a record premium of 1/16 (indication of high demand); other issues in demand were Coca Cola, Eastman Kodak, and various rails. Brokers in the loan market reported increasing short sales by smaller traders and public. While reports recently circulated of covering by large bears, the loan market doesn't indicate this; total short interest is estimated at 3M-7M shares and there's a record number of stocks "loaning flat" (indicating high demand by borrowers). Bears seem to be confident in their position and not inclined to cut their positions. On the other hand, some contend the short interest, while large, isn't as large as thought, since some sellers have actually been liquidating stocks that they later delivered from “strong boxes.”

Based on precedent, a period of dullness without much headway in either direction is expected when current liquidation ends.

Some of the more suspect railroad bonds, though still paying interest, are selling to yield from 7% to as much as 27%. A considerable amount of selling has affected relatively high-grade rail bonds that are feared to be in danger of losing legal status as allowed investments for savings banks.

Observers believe GM may be able to cover first-half dividend requirement of $1.50/share after reporting $0.61/share earnings in Q1; some divisions including Chevrolet and Frigidaire have been doing well. Allied Chemical weakness attributed to withdrawal of Nichols family from prominent connection with company. American Chicle, going against prevailing trend, is drawing talk of a possible dividend increase; Q1 earnings were $0.97/share vs. dividend requirements of $0.50. American Cigar was strong on anticipated success of low-priced Cremo cigar, though another operating loss is seen this year due to record advertising.

Report of decline in building contracts for first half of April has drawn attention, since it contrasts with usual rise at that time.

R. Holmes, Texas Corp. pres., says in favor of interstate compact among oil states to limit production.

Economic news and individual company reports:

US Steel reported Q1 earnings of $0.05/share, vs. $0.70 in prev. quarter and $3.44 a year earlier. Regular quarterly dividend of $1.75 declared.

Failed broker Pynchon & Co. sued by Chicago brokers to prevent the use of assets delivered shortly before the failure. Federal Grand Jury indicts Charles V. Bob, bankrupt former runaway stock promoter, for mail fraud and conspiracy; charges carry maximum penalty of 52 years.

NJ Gov. Larson signs Reeves bill to protect municipal bond investors by giving a state commission wide powers over municipal finances in case of default. Bill was passed in response to North Bergen troubles, but seen as constructive step for investors in general. Florida Senate and House receive bill providing first step in relief plan for local govts.that defaulted on bonds; would permit refunding of bonds for up to 60 years.

Weekly bank statements showed continued decline in loans, increase in non-govt. securities. Arkansas state banks report total deposits Mar. 25 of $87.3M, up $2M from Dec. 31 but still $30M below last Sept., prior to series of bank failures in the state.

Rail freight loadings for week ended Apr. 18 were 760,002, up 22,068 from prev. week, down 14.8% from 1930 week, and down 24.4% from 1929.

Refineries ran at 68.1% in week ended Apr. 25; stocks of gasoline rose 67,000 barrels to 46.451M. Crude oil production in week was 2.423M barrels/day, up 600 from prev. week but down 167,500 from a year ago.

BLS reports fewer manufacturing wage cuts in month ended Mar. 15 than in prev. month (175 cos. in 38 industries vs. 228 in 43 industries).

Machine tool market trends mixed, with buying restricted to absolute needs.

European countries including Germany, Britain and France are attempting to lower wages and cost of living to match the collapse in wholesale prices. Germany took the lead in these efforts, while France has only recently realized the “necessity of cheaper production in order to maintain her export trade.” However, even in Germany, the 8% decline in cost of living over the past 15 months was far begind the 15% decline in wholesale prices.

Sharp gains in sterling vs. francs over past few days has made the long-awaited movement of gold from France to Britain appear imminent. It's also believed that this might be followed by a round of discount rate cuts in Britain, the US, and Germany.

Registered British unemployed Apr. 20 were 2.514M vs. 2.561M on Apr. 13.

Berlin Municipal Committee refuses to accept sale of city's electric utilities agreed to by city representatives, German, and foreign buyers including US group.

US supplies over 46% of German oil imports; these reached a record high of 23.5M barrels in 1930 vs. 18.9M in 1929.

Rumania suffering from overproduction and low prices in two most important industries, wheat and crude oil.

New South Wales passes law providing for payment of depositors in the closed Govt. Savings Bank of N.S.W. pending its absorption by the Commonwealth Bank. Australian Premier Scullin says govt. will make bond interest payments for N.S.W., which they will then owe the govt.

Farm Board wheat sales abroad since Feb. 26 estimated at 8M bushels out of proposed 35M to be sold by July 1.

Hog prices at Chicago for week ended Apr. 25 were $7.04/100 lb vs. $7.37 prev. week and $9.89 a year earlier; beef steers were $7.67 vs. $7.72 and $11.97.

NY City plans to sell 52M in 4-year loans, taking advantage of excellent condition of municipal market for high-grade issues.

Edsel Ford denies rumors of summer Ford shutdown; may take a vacation shutdown, but this isn't certain yet; sales improving.

Sales of Lucky Strikes continue to boom; March sales increased 530M vs. increase of 637M for all cigarettes combined.

Eaton-Otis interests were reelected to board of Youngstown Sheet & Tube in spite of their previous actions to block merger with Bethlehem, leading to speculation they may be ready to drop opposition to the merger and come to an amicable settlement.

Illinois Central cut annual dividend rate to $4 from $7 rate effective since 1917; new rate is lowest since 1877. Dividend reductions also made by Commonwealth & Southern (utility), Inland Steel, Jones & Laughlin Steel, and American Radiator.

Goodyear increased tire production to 56,500/day from 53,000, second increase this year; sales higher than expected; Apr. sales will exceed those in 1930.

Lima Locomotive stock is about 23; has no bonds or preferred outstanding; book value $63.79; cash and govt. securities per share $32.18; 1930 earnings $7.18/share. However, earnings this year look unfavorable as orders on hand at start of year were $1.046M vs. $13M a year earlier.

Companies reporting decent earnings: Price Brothers & Co. Ltd. (lumber, pulp and paper), National Standard (wire products).

At the galleries:

"Diminishing ranks of exhibitors point to ... unusually early close" of the art season. While "general quiet was punctuated here and there with outstanding high figure sales, ... the art season was disappointing." Kleinberger Galleries, "last stronghold of the old masters," has finally given in and gone modern with current show "Corot to Picasso," which also includes works by Matisse, Modigliani, Renoir, Bonnard, Dufy, Vuillard, Redon, Lautrec, Degas, and Cassatt; many of the pieces are outstanding examples of the artist's work. The American-Anderson Galleries are auctioning many interesting items from the library of the late William P. Clyde of NY City, including an important letter by Thomas Jefferson on constitutionality of the Louisiana Purchase, a presentation copy of the Lincoln-Douglas debates autographed by Lincoln, and a third edition of "The Canterbury Tales."

Vaudeville:

Appearing at the Palace: Henry Busse and his orchestra from the Hotel New Yorker - music is "pleasing contrast with a good deal of vaudeville jazz ... more tuneful than ostentatious"; Mr. Busse mixes conducting with trumpet solos and amusing dance steps. Helen Morgan sings a few sad songs, "in a manner that is growing a bit too affected to bear imitation ... breaks for breath-taking in the middle of lines are overused and musically unsound." Also appearing - Bert Lahr and Joe Laurie, Jr.

Political humor:

The Gridiron Club, made up of Washington newspapermen, held its annual Spring dinner with Pres. Hoover and many public figures present. One of the skits involved a policeman and a pushcart peddler talking about the strange disappearance of General Prosperity. "I don't know anything that's kept more people guessing since Coolidge said he didn't choose to run. ... Every now and then someone reports seeing him. He hadn't been gone a month till the White House said he was just around the corner, behind the Washington Monument. ... but something detained him. The next heard of him was when Roger Babson reported seeing him in a barrel of statistics in the Pacific Ocean. John Raskob felt sure he was hiding in a keg of homebrew in North Carolina. Senator Wheeler said he'd gone to Russia to work ten years on the five-year plan. Carter Glass said he was locked in a vault of the Federal Reserve Bank in New York. ... Anyhow there's ten men to tell you why he went to one that'll tell you how to bring him back." [Note: cleaned up hard-to-read accent transliteration.]

Jokes:

"Lady - Have you ever been offered work? Tramp - Only once, madam. Aside from that, I've met with nothing but kindness."

"Floridian (picking up a melon) - Is this the largest apple you can grow in your state? Californian - Stop fingering that grape."

"One reason Gandhi in a bath towel is so trusted by the Indian masses is because everybody can see he has nothing up his sleeve."