September 14, 2010

Monday, September 14, 1931: Dow 123.85 -4.38 (3.4%)

Assorted historical stuff:

Times special reports "officials in Washington concerned with the public's apparent exaggeration of distress conditions likely to prevail ... during coming winter."

Editorial: Likely outcome of the upcoming budget negotiations is "a compromise between borrowing and taxation, with reduction of the national expenditure, which should come first, taking third place."

US Census reports 48.833M people gainfully employed as of Apr.1, of which 38.054M were men and 10.779M women; this represented a substantial increase in the number of women employed. Highest number of male workers were in manufacturing and mechanical jobs (11.901M), while 9.568M were in agricultural work. Among women, the largest number was in domestic and personal service work (3.149M).

AFL estimates 5.1M now unemployed, 7M jobless by January if unemployment increases at current rate.

NY Gov. Roosevelt is reportedly considering John D. Rockefeller, Jr. for chairman of his emergency unemployment relief commission.

Puerto Rico Gov. Theodore Roosevelt, Jr. points to improvement in Puerto Rican finances in face of depression; ran surplus for first time in 17 years; banks in better condition.

German Foreign Min. Curtius gave impassioned speech to the League of Nations Assembly, demanding new reparations settlement and parity in armaments. Called upon League to “justify its existence”; says security based on arms supremacy “sows mistrust and revives the armament race idea, the abolition of which was the most vital purpose of the creation of the League.” Admonished France not to exploit German weakness to further French ends. French Premier Laval and Foreign Min. Briand accept invitation to visit Berlin; however, French believe discussion will be along general lines as atmosphere is too troubled for deep political discussions.

Mexico admitted to League of Nations.

H. Gibson, chair. of NY City emergency unemploymen committee, says unemployment emergency twice as bad as last year; covers all classes; presents people of NY with greatest responsibility since the World War.

The US War Dept. must give special permission before a Medal of Honor can be worn by a film actor. In addition, the medal, if rented, must be returned to its owner every night.

Market commentary:

Market wrap: Stocks declined throughout Saturday's short session; the market opened lower after rumors of a bullish overnight announcement from Washington (possibly concerning legalization of beer) failed to materialize. Selling spread from individual stocks across the list, though volume wasn't large; bids were thin in many issues. Bonds active and irregular; US govts. firm; foreign govts. and domestic corp. issues continued “readjustment” though rallies appeared “in bonds that have been carried below their real worth.” Grains and cotton weak.

Weak spots included Westinghouse, Allied Chemical, AT&T, various rails, and trading favorites including Auburn and Eastman Kodak.

The Dow industrials closed only about 2 points above the bear market low of June 2; rails closed at 59.44, a new post-1898 low.

"Judging by the action of certain stocks which were bull pool favorites, a number of these groups have been disbanded."

The Swedish stock exchange featured sharp declines in Kreuger & Toll debentures and Swedish Match [Ivar-Kreuger associated].

"Rockefeller interests" are reportedly accumulating Standard Oil of NJ stock in the most substantial volume since the memorable order for a million shares at 50 to check the decline in the stock during the Oct. - Nov. 1929 collapse.

Week in review:

Industrial stocks followed the lead set by the rails in early Sept. and broke downward out of the narrow July-Aug. trading range, falling to the lowest levels since early June; new bear market lows hit in majors including Steel, GE, Westinghouse, and Nat'l. Biscuit. Rails continued downward to a new post-1898 low; several roads reduced or omitted dividends. However, “the most potent factor influencing pressure on the principal industrials was the absence of any signs of a seasonal upturn in heavy lines of trade.”

Rumors developed toward the weekend of “strong measures on part of the administration to relieve the depression,” possibly including legalization of 3% beer. However, no news arrived.

Steel news continued to be poor; operations dropped to yearly low of 28 1/2%, though this was partly due to Labor Day. Promise of better automotive buying postponed to October. Many bankers believe wage cuts are now important in order to “bring costs down all along the line and thus widen markets.”

Bonds moved mostly lower. Domestic corp. list weak, with Dow 40-bond average hitting a new low. Lower-grade rail issues particularly weak, with many individual issues hitting record lows; however, best-quality legal bonds were relatively steady. Industrial bonds pressured all week. Public utility bonds joined in the decline, though recessions were mild. US govts. fell early in the week after the recent large new issues, but rebounded on Friday. German govts. hit record low, then rallied. British govts. down fractionally. S. American continued irregular.

Foreign currency news featured the British situation; drastic new austerity budget introduced by new British govt.; Chancellor Snowden said country had been living beyond its means, causing lack of confidence in sterling; Bank of England is supporting sterling using the $400M US-French credit, and this is seen continuing until decisive action by British govt. to bring budget into balance has restored confidence.

Cotton hit new season lows; Oct. cotton hit 6.50 cents, a post-1904 low. Various plans for curtailment of cotton acreage being debated. Grain prices moved in narrow range.

Economic news and individual company reports:

British Chancellor Snowden for the second time extended a temporary 15M sterling increase in the Bank of England's "fiduciary" note issue (not covered by gold) to 275M; limit was first raised Aug. 2 when reserves had fallen to dangerously low levels and the need for currency was expanding. W. Price of Livingston & Co. rather positive on actions of new British coalition govt.; says they demonstrate “great moral character coupled with bravery.”

C. Adams, First Nat'l. Stores treasurer, estimates "invisible" taxes, including import duties, excise taxes, licenses, etc., take $300 - $500 annually from the purse of the average family.

Despite all the discussion of new car models supposedly coming soon, carmakers appear to be deferring new model introductions; there's little evidence any major maker will have anything to offer before late Nov. Drastically lower Q3 shipments don't augur well for earnings in the period.

F.W. Dodge reports new construction contracts awarded in August in the 37 states East of the Rockies were $233.1M, down 33% from Aug. 1930.

Fisher's wholesale commodity index remained at 68.9, a postwar low but unchanged for the past 3 weeks.

Texas Legislature adjourned until Monday without taking action on curtailment of cotton planting. Texas Gov. Sterling says will veto cotton “holiday” bill advocated by Louisiana Gov. Huey Long.

Oil industry representatives and delegates from oil producing states met in Oklahoma City to consider plans for stabilization of the industry. Texas Railroad Commission modified East Texas order to restrict drilling after “abnormal increase” in number of wells. Field has been producing over 400,000 barrels/day recently.

In spite of lowest refined copper production in N. and S. America in many years and a moderate increase in shipments, inventories of refined copper reached a new high record of 455,775 tons in August.

While the Farm Board has recently disposed of 47.5M bushels of surplus wheat in sales abroad, it still holds about 182.5M bushels, costing about $2.7M a month in storage charges. Agriculture Dept. estimates gross income for farmers in 1930-31 season at $9.3B, down 22% from previous year; “general prospect for farm markets and prices anything but assuring.”

US Postal deficit seen likely to reach $200M this fiscal year.

New NYSE listings in August were $98.1M vs. $416.4M in July and $357.9M in Aug. 1930; first 8 months $2.221B vs. $6.902B in 1930 and $10.619B in 1929.

NY State expected to get extremely low interest rate on $40M bond sale Tuesday.

NY State savings banks deposits rose $21.2M in August, to a new high record of $5.113B.

Companies reporting decent earnings: Detroit Edison Co.


The Guardsman - MGM film, at the Astor. "A treat of brilliant acting ... in which Alfred Lunt and Lynn Fontanne, most distinguished team of actors on the American stage, are re-enacting on the screen their most popular theatrical success." Adaptation is faithful to the Ferenc Molnar comedy. Mr. Lunt plays an egotistical actor who feels his wife's passion toward him cooling and "sets out to test her fidelity by masquerading as a guardsman and wooing her in what he describes as 'the greatest role I have ever played.'"

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