Thursday, September 17, 1931: Dow 119.26 -1.33 (1.1%)

Assorted historical stuff:

Sen. Glass (D, Virginia) believes tax increase at next Congress inevitable; impossible to cut spending enough to "justify maintaining present policy of meeting deficits by short and long-term loans."

Editorial calling Pres. Hoover's response to bankers' call for longer war debt suspension disappointing; now is the time for courageous and prompt action; etc.

Administration favors idea of naval construction holiday; would create better atmosphere at disarmament talks, and give economic and budgetary relief.

Pres. Hoover's conference on home ownership to convene Dec. 2; hopes to increase credit for home building.

G. Swope, GE pres., presents industrial stabilization plan in which industries would cooperatively control production and other matters through trade associations under Federal supervision. Plan would also provide for various worker protections to be adopted by participating cos.

Sir John Simon, "lifelong freetrader," reverses stand and urges protective tariff to correct British trade imbalance. Winston Churchill says unnatural accumulation of gold in France and US cause of present situation, urges int'l conference. W. Graham blames troubles on attempts to meet reparations and war debt payments while maintaining gold standard.

French press and industrialists alarmed at effects of possible British tariff on luxury exports from France valued at $200M last year.

NY City Comptroller Berry says city getting “little or no permanent benefit” from millions in relief spending; urges that instead of current emergency employment plans, city place under contract at once $190M in public improvements already authorized.

Yet another use has been found for rubber - plants to be shipped or transplanted are dipped in a rubber solution, coating all but the roots. This retains moisture and preserves shape of the foliage. After replanting, resumed growth causes the rubber coating to crack and fall off.

The state of the art in moving buildings was recently demonstrated by Indiana Bell Telephone, which was able to move an 8-story steel-frame structure across a busy Indianapolis street without any disruption of telephone service.

Market commentary:

Market wrap: Stocks went through an irregular session; early trading was on the downside, but several periods of short-covering caused good rallies, particularly after unexpected Westinghouse dividend announcement; however, as soon as this demand was supplied the rallies petered out. Utilities suffered outburst of selling in late afternoon. Bank and insurance shares weak. Bond trading featured early “urgent selling” carrying “numerous issues to record low figures”; this was followed by some moderate rallying. Dow 40 corp. bond average hit new yearly low. US govts. firm; German govts. rallied on favorable trade report. Grains firm; cotton lower; some copper sold at new low of 7 cents/pound.

Dow industrial average closed at a new bear market low; there were no new yearly highs and 181 new lows.

Conservative interests discouraged by recent bond market weakness; believe bonds should by precedent lead the way in any rally of securities.

Better resistance shown by leading stocks since start of the week is attributed to traders buying in anticipation of a technical rally, based on the amount of time the market has gone without a recovery of “more than an hour or so's duration.”

H. Branch, pres. of the Federated Chambers of Industry of Mexico, says credit virtually no longer exists in Mexico after new monetary law.

S. Abrams, Schlitz Brewing Co. treasurer, joins list of observers predicting business stimulus would result from legalization of beer.

Economic news and individual company reports:

Editorial calling for one-year suspension of rules requiring savings banks to sell bonds that fall below legal requirements. Bond market is in a “condition of utterly unreasoning and unreasonable fear ... sellers have been obliged to make ... positively absurd” concessions. “There is no sense in requiring or pressing institutions to sell bonds ... at a time when it is manifest that ... they can be sold, if at all, only at prices materially below their actual worth.” Current condition of extreme fear can't last that long: “Men do not long rest in violent emotions ... there is, in this world at all events, an end at some time to punishment, and it can not, speaking humanly, now be far off.” NY Savings Bank Assoc. opposes change in requirements for legal bonds; favors efforts to restore rail credit instead. Value of all NYSE-listed bonds fell $1.057B in August, to $47.319B; largest monthly decline since NYSE began compiling figures in Jan. 1925.

Westinghouse unexpectedly declared a quarterly dividend of 62 1/2 cents vs. previous $1; Street had been expecting a dividend suspension.

Steel operations partly recovered from the Labor Day; production for week ended Monday was slightly over 30% vs. 28 1/2% previous week, 31% two weeks ago, 58% in 1930, and 84% in 1929. Weekly steel reviews somewhat divided. Iron Age reports more promising inquiries from railroads, pipelines, and auto makers, and increasing construction activity. Steel reports slight improvement in current production, but “Sept. is now more than half gone with no acceleration in either production or new business”; continuing hopes for seasonal improvement “have no actual, tangible support in consumer committments.”

East Texas oil prices weakening as production mounts; sales as low as 32 cents/barrel reported. Chicago wholesale gasoline steady at 3 1/2 - 4 cents/gallon.

Analysis showing Kreuger & Toll securities have now fallen to the point that “net asset values of the Kreuger & Toll Co. exceed by a substantial margin the present market prices for its various securities. ... Net income ... in the current year probably will make a good showing although not up” to the 1930 record high; earnings of about $2.75 per American certificate are expected, while the certificates are selling at about $11.50. Swedish stock exchange rallied sharply; Kreuger & Toll and Swedish Match up strongly.

German trade surplus in Aug. a monthly record of $77M due to sharp fall in imports. Surge in trade surplus caused improved sentiment on German situation; marks rose sharply.

French banker Albert Oustric, imprisoned for financial manipulations, to be freed due to ill health.

Good demand reported for just-issued $40M in long-term NY State bonds (at record low yield); over $25M have already been distributed.

Mortgage foreclosure suit filed against Hotel Pierre.

Companies reporting decent earnings: American Tobacco, Long Island RR.

Theatre:

The Constant Sinner - written by and starring Mae West, from her novel of the same title. West is indeed “a constant sinner against all generally accepted notions of good taste in the theatre,” though she does bring “an undeniably unique personal quality to all her efforts” and arouses “a certain degree of enthusiasm in her audience.” The play, however, is “downright boring and poorly written,” tracing through 16 scenes the rise of Babe Gordon, a white prostitute in Harlem, from the day she meets and captivates a rising white boxer. While she eventually marries the boxer, she also obtains “material advancement” from a black “policy king” and a rich white department store manager; “vice would appear to have its own rewards in this tale,” though Babe is also reduced to peddling dope for a short time after she has ruined her boxer husband and been temporarily impoverished. “Miss West moves on and off the stage ... in her inimitable slouching manner, reading the play's choicest salacious lines, written by her especially for her experienced delivery.”

Wednesday, September 16, 1931: Dow 120.59 -0.71 (0.6%)

Assorted historical stuff:

"High Washington officials are understood to have reached the conclusion that it is time for the Federal Govt. to assume the leadership in organizing to bolster the business and financial weak spots," though reports are conflicting on what actions are planned along these lines. Rumors of immediate further action on war debts or legalization of beer said without foundation. There are discussions of organizing bankers to "support foreclosed and weakly held real estate," as well as to stimulate cotton exports through offering credit for purchases. Administration approach seen aimed at having govt. “take the leadership in suggesting the organization of private resources and efforts” rather than passage of new laws. "Hoarding" of currency is causing some concern; "obvious way out ... is a reestablishment of public confidence in the banking structure. The method of doing that has escaped officials and experts here so far." Some have suggested guaranteeing bank deposits, but it's understood this has been "rejected since such schemes usually have ended in disaster." Rumors have circulated for some time that Pres. Hoover or some other high official plans an important statement, but White House officials say they're aware of nothing of the kind.

Labor Dept. reports five-day week gaining; of 37,857 establishments in 77 industries, 2.4% have permanently adopted a 5-day week, and 5.6% of employees are now on a 5-day week. Auto industry had highest percentage of workers on 5-day week, 44.3%.

London Times reports US bankers who met Pres. Hoover Monday asked him to amend Hoover debt plan to 4 or 5 year moratorium on all war debts. T. Joslin, secretary to Pres. Hoover, denies London Daily Herald report Hoover is considering a proposal for a world trade conference. British newspapers support move for world gold conference by NY Gov. Roosevelt.

German Foreign Min. Curtius “startles audience” at League of Nations luncheon, saying he will follow French Foreign Min. Briand on road to common goal of peace.

Mahatma M.K. Gandhi addressed the London Round Table Conference [on India], “wearing his loincloth.” Said was participating in the conference “absolutely in the spirit of cooperation”; offered to withdraw from negotiations if this would help reach an agreement.

The Cheltenham Express of the Great Western Rwy. in Britain established a new world record for a regular railroad run on Tuesday, averaging 80.4 mph on its run between Swindon and London.

“The Spectator, an insurance magazine,” has compiled a list of the 391 people in the US carrying personal life insurance policies of $1M or more; heading the list is Pierre S. du Pont, with a $7M policy.

Glass jar makers are operating at full capacity to supply demand for home canners, which is “10 times larger than at any time since 1920”; some farm families are reportedly using as many as 5,000 glass jars to preserve food for the winter.

Market commentary:

Market wrap: Rallying in major stocks petered out mid-session after announcement of dividend omission by Western Electric. Industrials and utilities weakened; rails severely pressured. Some rallying toward the close. Bonds generally lower in increasingly active market; Dow average of 40 domestic corp. bonds hit another yearly low; US govts. easy; foreign list depressed by steady liquidation in German govts. However, the $40M NY State long-term bond issue sold at a record-low yield of 3.23%. Grains and cotton rose. However, copper was offered at 7 1/4 cents/pound, a new record low and 1 3/4 cents below the lowest price previous to this year.

Dow industrial average closed at a new bear market low; there were no new yearly highs and 209 new lows.

Yet another rumor of wage cut announcement by US Steel failed to materialize.

Middle West Utilities was heavily pressured and broke sharply into new low ground.

Sun Life Assurance of Canada again denies rumors it is selling common stock holdings.

Brokers report renewed short-selling by the public (non-professionals).

Now that the Dow averages of rails, utilities and industrials are all at new bear market lows simultaneously, observers once again believe it will require a “selling climax”on large volume for several days before a definite turnaround. Many analysts feel “further immediate progress will be seen on the downside.” However, extent of the decline is disputed; “extreme bears” argue the industrial average might fall into double figures before the current decline is checked, while the more bullish feel that due to the market's “drastic” deflation already, it's illogical to expect the current decline to be as bad as the previous ones.

“Judging by many comments made in the financial district, a few important interests seem to be waiting for various readjustments they deem necessary before conditions in business and the stock market can change materially for the better. It is contended that these interests have the funds for investment, but are not eager to do much until some of the uncertainties confronting industry are out of the way”; most often mentioned are dividend and wage cuts.

Observers encouraged by recent signs of greater stability in commodity prices; Irving Fisher's wholesale commodity index hasn't varied much in the past 18 weeks.

Economic news and individual company reports:

The British Treasury has reportedly drawn on the most recent $200M US credit for $80M; of the total $650M in recent US and French credits, $325M-$350M has been used.

Western Electric Co., manufacturing subsidiary of AT&T, omitted its quarterly dividend, though AT&T officials said they expected total earnings of the Bell System this year to cover AT&T's $9 annual dividend.

Rail freight loadings for week ended Sept. 5 were 759,546, down 4,218 from prev. week, down 11.3% from 1930 week, and down 25.4% from 1929. Comparison with prev. years distorted by different week in which Labor Day holiday fell. Most class 1 rails showed seasonal increases in freight in the last two weeks of Aug., but the increases weren't as large as last year.

Weekly bank statements somewhat discouraging; deposits have failed to show seasonal increase. However, there's some evidence of greater confidence on part of bankers; “all other” (mostly business) loans have grown over the past two weeks, while holdings of non-govt. securities have been steady.

Boston retail conference finds some differing opinion on state of retail trade; J. Rosenwald, Sears, Roebuck vice chair., characterized prospects as “not particularly promising,” while John David, head of the John David chain of men's clothing stores, said business was ahead of last year, attributing improvement to strong effort at getting new customers and strategy of lowering prices on goods of the same quality.

[Note: Disinterested Observer Dept.] Fred Pabst, pres. of Pabst Corp., says the US govt. would conservatively net $200M/year from tax on legalized beer.

NY Trust Co. estimates annual US food bill at $22B, of which hotels and restaurants account for 26% and family homes 71%. Raising, manufacturing and distributing food remains the largest US industry, slightly exceeding autos.

Companies reporting decent earnings: Sweets Co. of America.

Musical:

George White's Scandals - “11th edition of the Scandals is lusty and merry entertainment ... full of resounding voices and tunes and half-mad knockabout sketches.” The latter include “Pay the Two Dollars” and “The Pedestrian”; the comedy is low, “but in the Scandals, low comedy is at least not ... seen through a keyhole; it is rowdy and unabashed in the burlesque tradition.” Featured performers include singers Rudy Vallee, Ethel Merman and baritone Everett Marshall; the dancing comedian Ray Bolger is “a most welcome rediscovery ... both an ingratiating clown and mimic and a supremely artful dancer.” [Note: yes, it's the guy from the Wizard of Oz.]

Tuesday, September 15, 1931: Dow 121.30 -2.55 (2.1%)

Assorted historical stuff:

Editorial: While it's reasonable that the American Legion convention next week should ask aid for its members in need this winter. However, based on the recent experience of the veterans' bonus loan, which was estimated to total $350M in new loans has already reached more than twice that, “may not the Legion be asked to consider in all seriousness the justice and even the necessity of limiting relief to veterans” in real need?

Washington report: In spite of recent frank admission by high Administration officials that the Farm Board has failed at supporting cotton and wheat prices, the Administration expects to continue the Board as is and defend it vigorously in political campaigns. However, it's believed the Board made its mistake in trying to stabilize prices before controlling production, and “in the future, it was said, every effort will be made to concentrate the board's activities upon building soundly managed cooperatives, with a view to using them to bring about acreage reduction ...”

Close advisors to NY Gov. Roosevelt say he will call the legislature into special session as many times as needed to get the type of unemployment relief he wants.

Aviation safety improved dramatically in the first half of 1931 vs. a year earlier; passenger deaths fell from 22 to 9 while miles flown in scheduled operations rose from 16.9M to 20.3M, making miles flown per passenger death 5.3M vs. 2.4M.

British Schneider Cup team sets new airplane speed record of 386.1 mph over 3 kilometer course.

Latest labor-saving innovation in California is planting of rice by airplane; a single plane can sow 250 to 450 acres a day, flying from 20 to 25 feet above ground at high speed; cost is about $1/acre.

Few countries have gone through greater changes in the postwar years than Ireland; the country has been electrified by the Shannon River hydroelectric development; motor traffic and radio broadcasting have been developed; “nearly all scars of civil war have been eradicated.”

NY City Transit Commission decided to open operation of the Eighth Ave. Subway to competition; traction [mass transit] co. securities fell sharply.

Origins of George Spelvin as the traditional theatre version of John Doe: Producer John Golden had a favorite carpenter by that name on his first play, Turn to the Right (1916). One of the play's actors played two small roles in different makeup, so Golden used the carpenter's name for one of the roles on the program to avoid exposing the double. [Note: Wikipedia, on the other hand, traces the name back to 1886. Georgina Spelvin was the female version, though it has apparently fallen out of use since it was adopted by the star of the X-rated The Devil in Miss Jones.]

Market commentary:

Market wrap: Following Saturday's weak session, stocks opened under an accumulation of selling orders; ticker ran several minutes behind for the first hour. Industrial and utility averages both broke through the early-June bear market lows, and liquidation continued in the rails. Some feeble rallying in last half-hour. Bond prices fell almost across the list in an active market. Rail and traction [mass transit] bonds particularly weak. Dow 40-bond average hit new yearly low; record low pries in many individual issues. US govts. slightly lower. European govts. generally lower. Grain markets bucked the general downtrend, finishing higher. Cotton held just above season lows.

Dow industrial average closed at a new bear market low; there were 2 new yearly highs and 199 new lows.

Conservative observers, because all three averages have now broken the June lows, now advise even more caution; urge clients to wait for market to establish a new support base.

Bearish professionals “hailed penetration of the June 2 bottom of 121.70 ... as a distinct triumph for their cause,” though it was felt the decline would have to extend for several points to indicate “a further phase of the bear market had been entered.”

Brokers report increased liquidation from discouraged longs; extent of liquidation indicated by selling in investment issues over past week, including preferred stocks certain to maintain dividends. "Important interests with funds available for the purchase of investment stocks have not been attracted into the market in large numbers thus far."

Foreign currencies have been moving in a narrow range. Dealers are cautious about taking positions in view of swiftly changing sentiment; “market opinion about sterling has shifted constantly.”

Economic news and individual company reports:

F. Sisson, Guaranty Trust VP, cites study of 97 companies over the past two years showing those that increased advertising spending in 1930 did relatively better than those that decreased it (profits only down 29% vs. 55%), and did still better in 1931.

Average yield of 12 leading NY and Boston bank stocks is now 5.67%, a high for the depression but still lower than the peak of 6.88% in 1921.

Arrangements made to provide relief to 70,000 depositors of seven recently closed banks in NY, Brooklyn and Queens; Manufacturers Trust will open new accounts immediately for the depositors containing 50% of their balances at the closed banks, and then liquidate the closed banks' assets. Total deposits at the closed banks were $42.1M. The relief undertaking is supported by a large group of leading NY City banks.

With all signatures assured on the plan for maintenance of short-term credits to Germany, the agreement will take effect by the end of the week; at that time, foreign banks will be allowed to withdraw 25% of mark balances, or 350M - 400M marks. Some public nervousness is reported about possible currency depreciation, though the Reichsbank reportedly believes the mark's value can be maintained without difficulty for the next few months.

Berlin bonds are not being quoted; interest payments are due Oct. 1, but “leading bankers call it inconceivable that the Reich will not aid the city ...”

Companies reporting decent earnings: Telautograph (machines transmitting diagrams by wire).

Movie:

Five Star Final - First National film, at the Winter Garden. Louis Weitzenkorn's “bitter dramatic broadside against tabloid journalism” is adapted into a “vitally effective talking picture” starring Edward G. Robinson. Randall, a cynical editor for the Evening Gazette, digs up an old murder story and investigates the current life of the “murderess”; it turns out this woman is now happily married, with a daughter unaware of the episode and about to be married. The girl's mother and stepfather commit suicide after the story, and the girl herself tries to shoot Randall but is restrained. “The film ends with a powerful cinematic touch, showing a ... copy of the Evening Gazette being swept up in the gutter along with the mire and filth of the street. While the movie adaptation was largely faithful to the play, a few interesting changes were made. “Some of the dialogue has been softened for the benefit of movie-goers whose ears are more sensitive to rough language than those of the hardened denizens of Broadway.” Also, to comply with the Will Hays code, the unsympathetic clergyman in the play was changed to “a man who was expelled from divinity school for immoral conduct, and Boris Karloff is caused to enact the role in an excessively unctuous manner”; in addition, a genuine minister has been added who does show sympathy.

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.

Movie:

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.'"

The Irregular Blather September 13, 1931

No Journal was published Sunday, September 13, 1931. See you tomorrow back in 1931!

Saturday, September 12, 1931: Dow 128.23 +0.93 (0.7%)

Assorted historical stuff:

House of Commons debate adjourned until Monday on the MacDonald coalition govt.'s drastic austerity budget. PM MacDonald explained that the bill gave the govt. the power to issue “orders-in-council, which have something of the semi-dictatorial effect of the 'Government by Decree' in Germany”; while only effective for a month, the orders could be altered only by act of Parliament. Labor bitterly attacked the bill as one to “suppress the opposition ... and make a mere mockery of parliamentary govt.”; also warned the measure could become a precedent for a future Labor govt. Attributed crisis largely to Conservative propaganda launched to “discredit the Labor govt. and bring it down by fair means or foul.” Foreign currency observers believe sterling is still being supported by Bank of England, and that this will continue until the budget situation becomes clearer. Britain will sell its giant R-100 airship as an economy measure; sister to the ill-fated R-101 airship that crashed on its first flight near Beauvais, France, killing 48; the R-100 made a successful round trip to Canada.

“The long fingers of economic depression finally have touched France”; a heavy budget deficit is predicted this year, and “retrenchment ... is now the watchword.”

Mahatma M.K. Gandhi visits Marseilles; welcomed by thousands “intensely curious as to the appearance and habits of the wizened Indian leader.” Will arrive in London Saturday morning; hopes new British govt. brings no change in attitude on Indian independence. Can't see independence on “immediate horizon. However, I have faith in God and humanity.” Denies reports of US visit: “America isn't ripe for my message ... It is better for my mission that I remain far away, where I am only a legend to the American people.” To repeated requests from over 100 reporters, finally answered: “I believe in equality for everyone except reporters and photographers. I detest photographers and still more journalists. It's no use pestering me. I will not answer.”

Col. H. Cooper, US engineer of the Russian Dneiper development, says Communism has been replaced by state capitalism in Russia; “this is not hearsay but information from the powers that be.”

Hurricane destroys city of Belize, capital of British Honduras; about 150 killed.

Labor Sec. Doak says the Labor Dept.'s newly reorganized US employment service has found jobs for 600,000 - 700,000 unemployed; says their new buying power “will do more than anything else to restore normal conditions.”

Sen. Watson comes out against any tax rise “as long as Sec. Mellon could sell short term securities”; believes rise at this time would be disastrous for business.

Reassuring study by Comptroller of the Currency Pole shows less than 25% of national bank bond holdings are subject to depreciation reserves. Total investments of nat'l. banks as of June 30 were $7.674B; of these, $4.351B were Federal and local govt. bonds, and most of the remaining $3.323B is in high-grade securities; it's estimated only about $1.5B of holdings are subject to depreciation reserves. In the past year, banks have been allowed to carry high-grade govt. bonds at full value since depreciation is believed “due purely to market conditions”; for “speculative bonds,” the govt. is requiring “a reasonable deduction for depreciation which may be accounted for over ... three or four years.” This policy, in effect for about a year, is more liberal than the earlier one requiring banks “to write down their bondholdings indiscriminately on the basis of depreciated market values.” However, it's “not so liberal as to jeopardize the interests of depositors.”

Story by H. Alloway noting the Erie Railroad headquarters' move to Cleveland; it had been in NY since the railroad's founding 100 years earlier (1831).

Jack Dempsey reportedly planning comeback.

Market commentary:

Market wrap: Stocks showed signs of oversold position; after a period of pressure carrying many issues to new low ground, rallying set in that was more impressive than in some time; short-covering increased during the afternoon, by traders leaving early for the weekend because of the heat. Domestic corp. bonds sharply lower in active market; the Dow bond averages, as well as many individual issues, hit new yearly lows. On the other hand, US govts. rallied and European issues were steady. Grains up sharply after announcement of Farm Board sale. Cocoa hit another record low.

Conservative observers continue to recommend the sidelines.

Dow average of 10 second-grade rail issues suffered a record-setting decline in August, falling 9.58 to close at 70.76. The Dow average of 40 corporate bonds fell 3.94 to 77.05. E.A. MacNutt, Sun Life of Canada treasurer, warns that 75% of all rail bonds will lose status as legal savings bank investments this year unless business substantially improves.

Short interest has reportedly increased substantially in recent sessions, as bears are encouraged by lack of seasonal business improvement.

Rail officials seem increasingly focused on conserving assets and protecting bondholders, in preference to paying dividends not earned.

Wall Street continues to believe announcement of wage cuts in the steel industry will come soon; while effect might be immediately bearish, it's believed this would be beneficial in the long term, and “a long step toward the readjustment” needed by business generally.

Drug company earnings have held up well this year; Nine leading cos. reported first-half earnings of $19.977M, down only 2.4% from 1930.

Real estate man Rockwell Smith has gone through a file of newspapers dating back to the 1850's, and found a series of 9 depressions at intervals of 3 to 12 years, lasting from a few months (1907) to 30 months (1873); the current one has lasted about 20 months. The longer the depression, the stronger the subsequent recovery.

Economic news and individual company reports:

Ths oil trade has experienced an “almost complete change” in sentiment since the reopening of the East Texas area; prices in the Chicago wholesale gasoline market have dropped sharply to as low as 3 1/2 - 4 cents/gallon, vs. 6 cents less than a month ago. The new order limits production per well but not drilling, which has been rapidly increasing; “it now appears that production will again reach unfavorable proportions in the near future.” Oklahoma Gov. Murray maintains the shutdown of production there, but his $1/ barrel price target now looks remote unless East Texas output is reduced. However, Murray remains firm, saying he's rejected “feelers” for a compromise of about 85 cents.

Farm Board announces sale of 7.5M bushels of surplus wheat to Germany; price is 49 1/2 cents/bushel, credit terms 4 1/2% maturing Dec. 1934. Total export sales by the Board since July 1 to China, Brazil and Germany 47.5M bushels. The Board has also sold about 10M bushels since June 30 in the domestic market.

Texas House of Representatives defeated Long plan for one-year cotton holiday in a test vote, by 55-45. House continues to debate cotton bills.

Bradstreet's weekly reports “slightly increased wholesale activity and a fair volume of retail trade in seasonal lines.” Prices notably lower than last year. Sales on summer merchandise less frequent; retailers apparently successful at clearing out stocks, though at low profits.

Rosoff plan for Bank of US reorganization abandoned after NY State started making liquidation payments to depositors.

Company reports since July 1: 208 companies reported higher earnings vs. 1930 and 639 lower; 897 dividends unchanged, 21 increased, 167 cut.

Companies reporting decent earnings: Warren Foundry & Pipe, Equitable Office Building.

Theatre:

Ladies of Creation - “Pleasant farce” at the Cort Theatre. Title alludes to “those modern business women who use their feminine wiles to wheedle contracts out of reluctant men, to obtain the loyalty of their employes, and to please their customers, both male and female.” Play follows Sybil Vanderlyn, one such successful businesswoman, who comes to grief after firing her competent manager and attempting to carry on the business with her effeminate assistant, Mr. Dinkle. [Note: Broadway - some things never change!] Happy ending ensues as her former manager is summoned back, “announces his love for her, and takes control of the situation.”

Friday, September 11, 1931: Dow 127.30 -1.13 (0.9%)

Note: I only have time for a short version today, and probably for a few weeks to come, due to heavy workload

Assorted historical stuff:

"Powerful pressure" is reportedly being brought on Pres. Hoover by "high govt. officials as well as influential private citizens" to legalize 3% beer; it's argued this would increase Federal revenues by $300M annually. Proponents are optimistic of success.

Administration officials have reportedly concluded stabilization of farm product prices has been proven a failure; will now concentrate efforts on disposal of farm products at best price obtainable, support bank credits for farm exports; oppose acreage cutting as unsound.

Russia reportedly became the world’s leading wheat exporter between July and Oct., taking over the usual US position.

Republican-controlled legislative committees in NY State have decided to report favorably Gov. Roosevelt’s unemployment relief program with only minor amendments.

Market commentary:

Market wrap: A technical rally in the morning petered out by noon following omission of dividend on Rock Island Rwy.; this brought heavy selling into the rails; bears pressed for weak spots and "uncovered several"; moderate rally just before close. Bond trading featured sharp declines in Central European issues; German bonds hit record lows. Railroad issues reversed rally following Rock Island dividend announcement. Dow average of 40 corp. bonds closed at new yearly low. US govts. also declined.

[Note: These guys sure run hot and cold Dept.] "It has been many months since sentiment in the financial district was as predominantly bearish as at present."

“Important selling” reported in the bond market in the past few days; some of the liquidation is said to be institutional, particularly in the rails.

A number of investment trusts [similar to mutual funds] have almost stopped trading, largely because the market broke so rapidly in 1929, when buying was at a high level, “that the managers of the trusts had little opportunity to take such profits as were available and were not disposed to sell out at losses. ... Some companies, intended initially to be trading concerns, have become investors.”

Homestake Mining's recent sharp rally reflects popularity of gold stocks, which are benefitting from “relative value of gold in relation to the present deflated commodity prices.”

S. Strawn, US Chamber of Commerce pres., says responsibility for recovery “rests upon business men rather than upon the govt.” Can’t expect immediate return to 1929 prosperity, but by “courage and determination,” can “begin now to work our way back.” Opposes unemployment dole, favors Hoover plan for community responsibility; calls for liberal contribution by all employers who can afford it to unemployment relief funds now being collected across the US.

Economic news and individual company reports:

British emergency govt. proposes sharp tax hikes and spending cuts to close estimates budget gap of $826M; taxes increased on incomes, gasoline, beer, etc.; cuts in public salaries and the dole. Proposed new British income tax rate on single male earning $1,800 is $353.50 vs. $3.38 in US; on married couple with two children earning $5,000 it's $958.50 vs. $12.38. Top tax rate is 54%.

Renewed weakness in marks is causing concern though transactions remain very limited; rumors are circulating in Berlin of “impending inflation,” and the Reichsbank may be forced to support marks again.

US Steel unfilled orders as of Aug. 31 were 3.169M tons vs. 3.405M July 31 and 3.580M a year ago; total lowest since mid-1927.

Money in circulation Sept. 9 was up $57M to $5.092B, total Reserve Bank credit outstanding down $5M to $1.216B. Member banks in NY City report brokers' loans down $41M to new low of $1.325B; loans on securities to non-brokers down $6M to $1.694B. Money in circulation is up sharply from $4.533B at end of Aug. 1930; increase attributed to “hoarding of currency by individuals as a result of unsettled banking conditions.” Analysis of “all other” (commercial) loan figures shows recent rise in reported total is due to unusually large bill holdings; when these are excluded, remaining commercial loans are down sharply, to $1.888B as of July 31 vs. $2.236B at start of the year.

Private long-term investments by US citizens in foreign countries estimated at $14.9B - $15.4B as of end of 1930 (includes both securities and direct investment). Leading foreign country for investment is Canada, with $3.9B.

Chicago wholesale gasoline market has weakened substantially after reopening of East Texas oil area, with reports of sales as low as 4 cents/gallon.

Oats prices are lowest since 1897 despite smallest crop since 1921; “sellers’ strike” appears to be setting in similar to that in the Southwest winter wheat belt.

Rock Island Rwy. omitted dividend after cutting it twice this year; officers' salaries cut 5% - 20%.

Theatre:

Just To Remind You - Playwright Owen Davis has “shaken an impatient fist in protest against organized ‘racketeering.’” Play is set in modest 52 St laundry of Jimmie Alden, which is bombed and ruined because Jimmie won’t pay $100 a month for protection. “The subject of the play, however, by broad implication, is NY; by broader implication, the country.” Jimmie is encouraged by policeman Dan Costigan to stand up and testify against the racketeers; as he lies dying at the final curtain, Dan tells him “in earnest that the police have done the best they could. Jimmie’s last angry words are to the effect that that ‘is not good enough.’” Play also assigns blame to a “lethargic citizenry.”

Joke:

“Are you positive that the prisoner is the man who stole your car?” “Well, I was until you cross-examined me. Now, I’m not even sure I had a car.”

Thursday, September 10, 1931: Dow 128.43 -0.76 (0.6%)

Note: I only have time for a short version today, and probably for a few weeks to come, due to heavy workload

Assorted historical stuff:

Washington report: Administration officials seem less hopeful than they were three months ago that a tax increase can be avoided at the next session of Congress. Officials still say no decision will be reached for 2 or 3 months. While “no one ... wants to increase taxes before an election,” and “everyone recognizes that increased taxes ... may hamper a revival of business,” the Administration apparently considers it more important to maintain US credit, which may become of vital importance in a crisis [note: as was exemplified by Germany and Britain within the previous few months].

Editorial noting reports from Russia that grain farmers “must now go on short rations because their crop is unfortunately below original Five-Year Plan specifications. ... The Soviet govt. might consider whether it is not killing the goose that lays its golden eggs.”

Market commentary:

NYSE trading featured declines in a large number of leading shares; US Steel fell below 80 for the first time since 1921; some rallying took place from the lows, but it was “rather feeble.” Paris stock exchanges down sharply, continuing break that started last week; unfavorable factors include panicky conditions in other European markets including Zurich, Prague and Amsterdam, as well as British uncertainty and sharp breaks in int'l issues including Royal Dutch and Kreuger & Toll.

Public liquidation has apparently been increasing in the past few sessions, judging by increased business through commission brokers. Selling attributed to stop-loss orders and “frightened liquidation” even by customers who own their stocks outright.

Observers increasingly expect a strong effort to set up a test of the 121.70 June 2 bear market low on the industrials, since the recent decline has left “no clearly defined resistance level above the June 2 figure.

Twenty utility stocks listed on the NYSE and Curb Exchange [later Amex] are selling for an average of 15 times earnings [note: I believe this was higher than many stocks in the general list due to stability of earnings.]

E.F. Hutton notes that while some are bemoaning the drastic stock decline, a more optimistic way to look at it is that the stock-buying value of a dollar in Sept. 1929 has increased to about $2.85 in current purchasing power.

G. Gibbs, IT&T VP, predicts “slow but sure upward trend” in business after personal survey of conditions in 32 cities; says Pittsburgh and Detroit only cities outside NY where optimism hasn't started to reassert itself. Businessmen in other cities, while allowing business is running a little behind last year, believe conditions are sound, and cities are able to take care of depression victims without outside assistance.

Economic news and individual company reports:

After difficult negotiations, all creditor committees accept plan for 6-month extension of short-term credits to Germany.

Two large Geneva banks merged, reportedly after Federal intervention, after continued withdrawals from all Geneva banks “despite the official manifesto of national financial stability in Switzerland and the offer of a Federal loan to the Canton of Geneva.”

30% dividend is being mailed to Bank of US depositors; second dividend expected by early next year; final settlement estimated at 60%-70%.

“Organization of a general bondholders' committee to represent “holders of defaulted bonds of numerous smaller Florida municipalities” is being considered.

NY Lt. Gov. Lehmann, testifying at unemployment relief hearing, says NY faces $10M-$50M deficit, will be unable to balance budget without tax increases.

Texas legislature meets in special session to consider cotton acreage curtailment law. Gov Sterling says leaves it to legislature to decide on best remedy. Pres. Hoover and Fed. Reserve officials reportedly discuss creating banking credits for export of cotton.

NY Central cut annual dividend rate to $4, the second cut this year.

Steel production for week ended Monday was 28 1/2% vs. 31% previous week, a little under 32% two weeks ago, 56% in 1930, and 86% in 1929. Production slightly affected by Labor Day holiday.

Companies reporting decent earnings: MacMarr Stores.

Movie:

This Modern Age - Film starring Joan Crawford, at the Capitol. “Directed with a great deal of resource, ... but the story ... is as hoary with age as most scenarios about excessively modern youth seem to be these days.” Heroine experiences emotional crisis when she learns the magnificent Paris home in which she has been living with her mother, and “entertaining lavishly and drinking copiously with her gay young friends” doesn't belong to her mother but to a “Frenchman who is supporting her.” Happy ending ensues after some complications. “Miss Crawford's posing ... is becoming a bit too obvious ... but when she launches upon one of her big emotional scenes she can really act.”

Joke:

"What a lovely sunset. The sun sinks lower and lower.” “That's all right. I have no shares in it.”

Wednesday, September 9, 1931: Dow 129.19 -3.43 (2.6%)

Assorted historical stuff:

US Census statistics reveal decrease in number of children in spite of growth in population over past decade; children under 1 year fell from 2.1% of the population to 1.8%, whilc people 45-64 rose from 16.1% to 17.4%, and those 65 and over rose from 4.7% to 5.4%.

Editorial favoring Farm Board's 15M bushel sale of wheat to China as helping to reduce the huge surplus on hand without competing with producers of the current crop by selling to usual importing countries. In fact, advocates making "prices ... so low and terms of credit so super-liberal that the Chinese govt. would be induced to buy much more ..."

Yet another editorial on necessity for reparations and war debt adjustment; this one bemoans reports that Pres. Hoover may seek to link cuts in war debts and reparations with arms reductions, a political question which is likely to "drag its way through years of conference and negotiation" and which the US has a doubtful ability to influence; for example, France "has lately told us in unmistakable terms that only 'organization of the world for peace' will persuade her to so much as a moderation of her preparedness for eventualities." The debt question, on the other hand, must be tackled by July 1, 1932 to avoid a repeat of the recent crisis.

British Parliament convened in extraordinary session to consider drastic spending cuts and tax increases. Debate was caustic; Laborites vehemently attacked PM MacDonald's new coalition govt.; A. Henderson, Foreign Min. in the recently resigned MacDonald Labor govt., taunted MacDonald as a deserter. In his speech, MacDonald "caused something of a sensation" when he revealed how serious the financial crisis in August had been; said if loan had not been made, sterling "would have tumbled without control." Also said his own salary would be reduced $5,000 to $20,000; appealed to all classes to "go cheerfully ... over the hard, broken road along which our security, honor and well-being must be found." Britain's King George reduces own annuities 50,000 sterling from those granted by Parliament as "example in personal sacrifices as means of economizing during the present financial crisis."

Barcelona Mayor Ayguade says syndicalists have agreed to halt violence and resume work. Spanish govt. decrees citizens living in Spain dcan't hold foreign currency, in new move to steady peseta.

Italian Foreign Minister Grandi proposes immediate armament truce among all countries who will participate in the 1932 world disarmament conference.

Montgomery-Ward will shortly sell a new electric refrigerator called the Tru Kold, which has only 3 moving parts and doesn't interfere with radio reception.

Construction of John D. Rockefeller's $250M Radio City development estimated to take 10M 8-hour workdays; over 56,000 employed directly and indirectly.

Nevada now grants divorces after a 6-week residence by the plaintiff. On May 4, 1931, when the new law became effective, 83 divorces were granted in Reno. In spite of the required oath by the plaintiff that he or she has a permanent home in Nevada, successful plaintiffs generally board a transcontinental train immediately after being granted the divorce, and don't return ... until another divorce is desired.

The cactus has caught on in a major way in Poland; florists display dozens of cacti in all kinds and sizes, and instead of sending flowers one now sends the latest kind of cactus. At a recent wedding in Warsaw, the bride carried a cactus instead of the usual bridal bouquet. [Note: Hope no one tried to catch it.]

Market commentary:

Market wrap: Stocks opened under pressure upon return from the three-day holiday; weak spots included Steel, GM, and the rails. Selling picked up momentum in morning; stop-loss orders were caught in large numbers, and the tape ran two minutes behind. Selling lightened at mid-day but no rallies developed, and another wave of selling in the leading rails developed in the afternoon. Bond prices generally lower in active trading; heavy liquidation in many domestic issues; rails particularly pressured as institutions liquidated issues on concern they might lose legal status as savings bank investments. US govts. and highest-grade corp. steady. Weakness developed in German bonds. Grains reacted along with stocks; later wheat futures hit new season lows and corn fell sharply. Cotton steady. Cocoa futures hit new record lows. Copper held at record low of 7 1/2 cents, but with output running at least 40M pounds/month over consumption, outlook is poor.

The Administration responds to charges the US is hoarding gold, saying the buildup is caused by lack of confidence abroad rather than trade imbalances or action by the US; estimates flight of capital accounts for about $2B of the $5B in US gold holdings. Only solution is restoration of confidence abroad.

Economic news and individual company reports:

NY Banking Supt. Broderick assesses Bank of US stockholders $25/share to make up $25.250M of the bank's liabilities.

New corporate bond offerings in August were lowest since April, 1919; total was $55.0M vs. $174.4M in July and $235.2M in Aug. 1930. There were no foreign corporate bond offerings. Corporate totals (foreign and domestic) for first 8 months were $2.436B vs. $5.068B in 1930 and $7.554B in 1929.

Louisiana Gov. Huey P. Long says has assurances from 5 other Southern states they will enact "cotton prohibition" legislation provided that Texas votes total abolition of 1932 crop.

Germany is reportedly close to concluding negotiations for a loan to buy 16.5M bushels of US wheat; terms will be 3 years at 4 1/2%.

Austrian budget deficit for 1930 $1.8M, first deficit in 7 years.

East Texas restarted oil production Saturday on basis of 225 barrels per well per day; however, production in the area won't be allowed to exceed 400,000 barrels/day for 30-day period. W. Farish, Humble Oil pres., criticizes Texas Railroad Commission order as putting "a premium on unnecessary development" by not limiting drilling of new wells; predicts decision will lead to production of larger amount of East Texas oil than can be easily absorbed. J. Kessler, managing dir. of Royal Dutch Shell, says political situation of large part of the world threatened by overproduction of commodities including oil; oil industry has "duty to the world as a whole" to end overproduction by international cooperation. Gasoline in the Chicago wholesale market weakened to 4 1/4 - 4 3/4 cents/gallon.

Rail freight loadings for week ended Aug. 22 were 763,764, up 15,053 from prev. week, down 22.3% from 1930 week, and down 34.3% from 1929. New Haven RR cuts quarterly dividend to $1 from $1.50.

Holland Tunnel traffic in August set a monthly record for the third time in 1931, with 1.224M vehicles.

Olds Motor reports August increase of 19% in domestic sales vs. 1930, an improvement from the 16% year-over-year increase in July.

Companies reporting decent earnings: Amer. Gas & Elec. (doing better than the average utility holding co. due to its "good fortune in providing electric service only"), Alaska Juneau Gold Mining.

Jokes:

Customer - I chose a $25 suit, but you've charged me $26 on the bill. Tailor - Yes, I've added the postage for the threatening letters I shall have to send.

"I spent $25,000 on my daughter's education, and now she's gone and married a fellow that makes $1,500 a year. What do you think of that?" "Well, it's 6% on your money, ain't it?"