Thursday, May 14, 1931: Dow 149.63 -0.61 (0.4%)

Assorted historical stuff:

Berlin stocks rallied sharply Wednesday, following the severe drop Tuesday when news broke of the Kreditanstalt problems. Initial shock over the news appears to have given way to “satisfaction ... over the prompt manner in which the new situation was met and the frankness displayed ... in revealing its true position.” Berlin bankers were pleased with the recovery, “and opinion is expressed both here [NY] and in Berlin that the worst of the situation has been passed.”

Gen. Douglas MacArthur, army chief of staff, says War Dept. favors registration of wealth in wartime, not only to facilitate imposition of taxes to pay as far as practical for the war being fought but also to "assist in distributing equitably the economic burdens of war."

Interesting editorial by T. Woodlock quoting Lincoln Steffens [famous muckraker in earlier time], who apparently had some late regrets. “The trouble with us reformers is that we won.” Cites many victories including antitrust laws, Prohibition, referendum and recall, regulation of utilities, and direct election of Senators. However, “with all these victories, we did not change, affect or improve any single essential. In fact, we fought over almost everything but the essentials. Instead of trying to find out why men behave in certain ways we tried to make them behave our way.” With our heavy-handed approach “we made condemnations which bred hatred and bigotry. Believing in life means believing in each other. That's an essential we overlooked.”

Editorial: There's too much extremism and intolerance for other viewpoints in current discussions on debts, tariffs, wage cuts, etc. "Politicians, unfortunately, ... must necessarily appear always to be dying in the last ditch on behalf of eternal right," most of all when they're actually serving some special interest. Businessmen should be more moderate, pragmatic, and willing to compromise.

Sen. R. Smoot says impossible for US to call international silver conference at this time since it would lead to reopening of war debt question; announcement was believed to represent Administration position. J. Darling, former Midland Bank pres. and advocate of restoring silver value, opposes int'l conference on grounds they never get anywhere; believes problem should be discussed at Empire Economic Conf. in Aug., and British Empire can solve the problem; proposes to restore gold:silver ratio to 20:1 from current 65:1. A. Meighan, former Canadian PM, recommends increasing Canadian silver coinage to help relieve silver price decline.

Editorial: "All sorts of 'authorities'" have condemned installment selling as contributing to the trade reaction, but there's surprisingly little real information on it. A good beginning was recently made by VP Haberman of C.I.T. Corp.; his information suggests the blame may be exaggerated. While some sectors had a high proportion of credit sales (cars 60%), the overall figure is much lower. Availability of credit may "offer temptations to extravagance" but also may cause customers "to bring their cash expenditures under some sort of studied control." Most significantly, soundness of most 1928-29 installment sales is shown by the fact that vast majority of buyers paid off their notes in spite of the depression. Installment sales are likely to persist; proportion of total sales in 1930 was about the same as 1929.

Haiti Chamber of Deputies ends "decidedly anti-American session" by forming committee to study legality of Haitian-American convention. It appears certain the legislature will declare the convention null, which would embarrass the govt.

Prince of Wales continues criticism of British businesses selling to S. America, urges cheapening and brightening of goods and adoption of US advertising methods.

Paul Doumer elected French President by Parliament after Foreign Min. Aristide Briand, his main rival, withdraws; at 74, he is oldest ever to hold the office.

Pope Pius to issue encyclical on labor to supplement Pope Leo XIII's famous “Rerum Novarum” urging formation of labor unions to secure rights.

Passenger arrivals and departures from Newark Airport in April were 8,297, a new record.

T. Joyce, head of Berliner-Joyce Aircraft, says US air force inferior to that of other countries.

An Australian gold rush has started after a gold nugget nicknamed 'Golden Eagle' was recently found in Larkinville. Weighing 1,136 ounces and worth about 6,000 pounds sterling, it's the largest mass of alluvial gold found in Western Australia, over twice the previous record holder 'Bobby Dazzler' found in 1899; it was found 18 inches below the surface.

In India elephant transport is gradually being replaced by the faster car, but elephants retain their position as an important player in the pageantry of great estates. 10 to 30 elephants are used at major events such as a potentate's birthday. They are elaborately outfitted and painted; "trunks, ears and tails are covered with red, yellow and green flowers, and their foreheads are daubed with gilt to match the decorative coats of the howdahs and the trappings of the carriages."

J. Sharkey, Boston milkman, wins $25,000 first prize for best letter on advantages of new Camel cigarettes' cellophane wrapper. Letter not reproduced.

Fashion Note - "... the 1930 earnings of a certain concern devoted to the manufacture of button holes decresed, while better profits results were reported by a supplier of hooks and eyes."

A favorite among this month's bird arrivals is the bobolink, who started his 4,000-mile flight from Southern Brazil in March. He has been called a bird with a dual personality - welcome minstrel of Northern meadows when nesting in May, but dread scourge of the Southern rice fields when travelling.

Market commentary:

Market wrap: Stock session was irregular. Bears applied pressure early, encouraged by new bear market low in Dow rail average on Tuesday; majors including Steel and Can gave ground, and rails broke further, led by NY Central. However, the slump failed to induce fresh liquidation and selling dried up during the first hour. This evidence of an oversold position caused professional bears to back off, with some apparently switching to the bull side. American Can led a rally on announcement earning were holding up well; Western Union and Woolworth were also strong. However, improvement in the general list was wiped out by a flood of selling just before the close that pushed US Steel to a new bear market low and unsettled the whole market. Bond market continued to diverge, with US govts. and highest-grade corp. rising, in many cases to record highs, while lower-grade issues were "highly irregular"; foreign govts. were heavy, with sharp reactions in some parts of the list, although Austrian bonds were firm. Commodities weak; corn down sharply after recent sizeable rally, other grains narrowly lower; cotton down substantially. Copper asking price lowered to 9 1/4 cents by producers; foreign buying more active, but domestic sales difficult to make even at 9 cents. Cocoa rose after report of doubtful crop. "Fat steer" prices fell to 20-year lows of $7-$8/100 pounds.

Conservative observers continue to recommend sidelines, noting failure of market to sustain upturns due to bear opposition.

Dow theory students noted decline in Dow rail average to new bear market low this week and anticipate another test of support in the industrials. The rail average has predicted general market movements accurately during the bear market, though optimists point out that the current decline was on very low volume, as is typical when bear markets peter out. Also, utilities have held above bear market lows; if industrials now find support, this could indicate change of trend.

Trading in the past week or 10 days has at times been largely professional, similarly to Jan.; in that case a rally followed in Feb., but this was based on hope of a good spring, which doesn't apply now. "Many observers admit they are puzzled, and decline to predict the immediate future." Several brokers report some selective buying in the past week or so, as normal after a sharp market setback. Precedent would now indicate a dull period, with next move dictated by business conditions; most brokers are dissuading customers from buying, saying there will be plenty of time to jump in when market indicates ability to rally for more than a day or two. Optimists encouraged by lack of "necessitous liquidation," indicating "weak positions have been eliminated at least temporarily."

Westinghouse is target of large short interest, though optimists point out its net working capital together with its holdings of Radio Corp. are worth about $62 a share, or roughly the current stock price. Grand Union is subject of favorable scuttlebutt.

Front-page survey of industrial bonds which sport very secure coverage of interest charges, ranging from 6.3 times to 193.3; yields range from 2.9% to 7.6%.

Letter to the editor questioning practice of some fixed investment trusts of paying dividends out of cash reserves when payments from securities held fall short.

Freight car loadings report for the May 2 week drew mixed reviews; while it showed a 16,019 increase over the previous week, the 17.7% decline vs. 1930 was the worst since April 11. NY Central's report for the May 9 week showed an even larger decline vs. 1930.

Best guess of automotive observers is now for production peak in May of about 370,000 cars, and at least 325,000 in June. GM April sales report [see yesterday] demonstrates good basis for the recent optimism on the company; April gains over March in deliveries to dealers (29.4%) and sales (34%) were highest in at least 10 years; inventories declined; on basis of trend in April and so far in May, it's likely Q2 sales will exceed those in 1930.

"Well-informed interests" discount rumors of general increase in Calif. gasoline prices.

French financial circles expect announcement soon of Portugal stabilizing currency on gold basis.

Missouri Bankers' Assoc. committee advocates wage cuts unless general price level is “made to rise again”; opposes increase in banknote circulation; proposes new int'l body to deal with monetary stabilization.

Sen. D. Reed spoke at Amer. Bankers Assoc. meeting; said several signs indicate worst of US business depression passed; criticized various groups for seeking financial aid from the Federal govt., particularly war veterans and wheat farmers. W. Wilson, Assoc. pres., urged delegates to work for "defeat of the Communist experiment," saying it poses danger to US standard of living through unfair competition in various industries, citing recent example of coal.

Dr. O. Sprague, Bank of England economic advisor, says no sign yet of US recovery, sees "indications that the depression is becoming more acute, if not chronic."

Economic news and individual company reports:

NY Fed. Reserve Bank cut buying rate on bills again, for the fourth time in 3 weeks; rates are now at record lows of 1% to 1 1/4% for periods up to 120 days. Action seen as indicating Fed. Reserve determination to "press the credit structure until definite results are achieved toward the outflow of funds from NY to foreign centers and the general stimulation of the bond markets"; efforts haven't been appreciably successful yet in stimulating foreign exchange or most of the bond market. Foreign currencies continued irregularly lower. Sterling slumped against francs; weakness attributed to belief Bank of England may cut rate from current 3%. Pesetas were firm in spite of the troubles in Spain.

Steel production for week ended Monday was 46% vs. 47% prev. week, 48 1/2% two weeks ago, 75% in 1930, and 97% in 1929. Weekly steel reviews reported further resistance to decline in operations due to favorable automotive and construction demand; this indicates continued output at close to current levels for some time. However, price structure has shown "further cracks," including weakness in scrap, sheets, alloy steel, and cast iron pipe; this doesn't bode well for industry profits. 1,000 workers went out on strike against Empire Steel, protesting a 5% wage cut said to have followed other recent cuts of 15%-20%.

American Can's sales so far this year reportedly only slightly behind 1930, net almost equal to 1930 record high; outlook improved in recent weeks; consumption of canned goods stimulated by very low prices prevailing in retail stores; record gain in canned pea consumption.

R.C.A. faces probably most pressing and important of its many legal difficulties in a Federal Radio Commission hearing on June 15, which could in theory lead to loss of 1,409 radio licenses due to court decision that it violated antitrust law; however, R.C.A. may be spared since decision was in civil suit, not criminal one.

US electric output for week ended May 9 was 1,600 GWHr, down 2.4% from 1930, vs. a 3.0% decline prev. week and 3.1% two weeks ago.

FTC resumes investigation of public utilities, scrutinizing affairs of the North American Co.

Newsprint production in US and Canada in April was 308,288 tons vs. 287,595 in Mar. and 338,015 in April 1930; first 4 months' total lowest since 1925.

Portland cement production in April was 11.245M barrels, down 16.8% from prev. year; shipments were 11.184M, down 16.2%.

Postal deficit as of June 30 estimated at $140M vs. $98M a year earlier; Postmaster Gen. recommends increasing first-class mail rate 1/2 cent to 2 1/2 cents.

Sales of US military and commercial aircraft and engines in Q1 were $9.019M, up 0.4% from 1930; production was $7.923M, down 10.4%.

Berlin City Council approves sale of electric utility to international banking group; new Berlin Power & Light Corp. will be capitalized with 300M mark debt, 160M class A stock, and 80M class B stock.

Canadian farmers' May 1 planned spring wheat planting was 22.2M acres, down 8% from 1930.

Acting Gov. Lehman testified for NY in "free lighterage" case [see May 13]; cites huge NY expenditures for development that also benefitted NJ, including Holland Tunnel and Hudson River bridge; says present NJ attempt for transport rate advantage is breach of 1921 "gentleman's agreement." Mayor Walker to testify today.

Brick consumption in NY metro. area is up sharply in recent weeks; price rise expected.

A new type of life insurance policy has been brought out with the graduating class of a large Eastern university as its first customers. A $1,000 policy taken out by willing students has the provision that all dividends paid during the first 10 years of the policy go to the class memorial fund.

Standard Oil of NY cuts wholesale gasoline prices 1/2 cents/gallon to 6 - 6 1/2 cents.

Woolworth announces plan to reorganize British subsidiary as public company, to be distributed to shareholders as stock dividend.

Berkshire Fine Spinning Associates says will curtail production more sharply unless definite upturn develops before summer [Note: yes, it's that Berkshire.]

Theatre:

After winning the Pulitzer, Susan Glaspell's Alison's House has moved from its quiet spot on Fourteenth Street to the Ritz on Broadway, at the center of the theatrical world. The move has been made simply, without services of a rewrite man or change in costumes or scenery; Eva LeGallienne will continue to star for some time. The play draws on the continuing interest in Emily Dickinson, "the posthumously 'discovered' New England poet of last century"; it takes place on the last day of the 19th century, on the Mississippi. Alison Stanhope (based on Dickinson) has been dead for several years, and her family must go through her papers and books in preparation for a move; this reveals the influence Alison's life and career had on her family. Acting was generally fine; audience favorite was Alma Kruger as Miss Agatha, the poet's “doddering sister” who took care of Alison in life and later “guarded the secret of her chaste love for a man already married.”

Film:

Young Sinners - adapted from the play by Elmer Harris, at the Roxy. For the most part a "static" copy of the play. Characters include Tom McGuire, Irish mountain guide who makes men out of rich young playboys, Gene Gibson, playboy of the moment, and Constance Sinclair, Gibson's girlfriend. Good acting can't save the film; theme of "flaming youth" is forced, and scene where Constance is rebuffed by a reformed Gene, who insists on waiting until they're married, is unconvincing.

Jokes:

"Teacher - If the National Gallery were on fire which five pictures would you attempt to rescue? Pupil - The five nearest the door."

"How did you get that black eye, Mrs. Higgins?" "Well, sir, me 'usband came out of prison on 'is birthday." "Yes?" "And I wished 'im many 'appy returns."

"Head of Business College - In teaching shorthand and typewriting, we are strong for accuracy. Inquirer - How are you on speed? H.O.B.C. - Well, of last year's class, six married their employers within six months."