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How Come (Some) Americans Love Their Guns?

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              Last week I found out that Smith & Wesson is shutting down its factory in Springfield, MA and moving the entire operation down to Tennessee.  S&W moved some of its warehousing to Tennessee last year, and now the entire company, which started producing guns in Springfield in the 1860’s, is relocating to the South.

              The small arms industry emerged in various sites along the Connecticut River, thanks to the decision by George Washington to fund a government arsenal in Springfield to produce military rifles after the Revolutionary War. Washington justified the arsenal’s location because the Connecticut River above Hartford, CT was too shallow for British warships to come up and bomb the facility to smithereens. But the real reason the arsenal was located in Massachusetts was as a payoff to Washington’s good friend, Henry Knox, who was a Massachusetts resident and became the country’s first Secretary of War.

              Knox was the man whose remarkable effort to bring heavy cannons from Ticonderoga to Boston in 1775 broke the British siege and probably saved the Revolution. The arsenal, which opened in 1777, spawned a host of smaller gun makers up and down the Connecticut River Valley, which became known as Gun Valley, and was the location of such iconic gun companies as S&W, Colt, Ruger, Marlin, and Winchester, none of which are operating in their original locations today.

              So, the gun companies have all disappeared from where they were first located, but all these companies and lots of other gun makers are still producing and selling weapons in the United States and abroad. In 2019, American gun companies produced 7 million weapons and accounted for 35% of all small arms exported throughout the world.

              How and why does the United States have such an overwhelming devotion to small arms? After all, you don’t need to make a small, semi-automatic rifle or handgun in order to manufacture an F-35. Many countries have suitable, well-armored military forces without extending the ownership or use of weapons to the civilian side.

              And by the way, thanks to the incisive reportage by Mike Spies, for all the talk several years ago about how the National Rifle Association was on its last legs and Wayne LaPierre was on his way out the door, I just sent in an extra donation for my Golden Eagles membership and received a nice thank-you letter from Wayne.

              I had three hobbies as a kid: toy trains, toy soldiers and toy guns.  My mother got sick of tripping over the train tracks on the floor, so the trains were boxed up and given away.  I stopped collecting toy soldiers when they were no longer made out of lead because the plastic soldiers were just too crummy and cheap. But I switched from toy guns to the real thing when in 1956 I bought my first Smith & Wesson in a straw sale in Florida when I was twelve years old.

              The manufacture of small arms was one of the principal commodities which emerged in the early decades of the Industrial Revolution, both in the United States and abroad. Guns were easy to make, parts could be quickly fitted together on a primitive assembly line, and the whole technology of creating a gaseous propellant by igniting some dry chemicals had been known since 10th-Century Chinese times.

              But the reason why guns became a fixture of commonplace life in America was because we were the only country which experienced its industrial revolution at the same time that its frontier was being opened, settled, and turned into farmland to produce edible commodities for urban life.

              The first modern guns were manufactured in Europe, particularly in Italy, around the 14th Century, with the technology quickly spreading into France, Central Europe and beyond. The frontier in these zones had been entirely eradicated nearly one thousand years previously as the Roman legions came up from the South and the Germanic tribes came down from the North.

              When was Paris first settled? Try somewhere around 225 B.C.  Not A.D., okay? B.C.

               Most of the land mass which today covers the habitable regions of our Lower 48 was transformed into living and farming space less than a century ago. When the Census declared that the frontier was ‘closed’ in 1890, this mean that at least one person had a permanent habitation located within one mile of someone else.

              If you wanted to be one of those early settlers in most of the Lower 48, you needed a plow, a saw, and a gun. And thanks to the Industrial Revolution, all three objects were cheap and readily available for anyone to purchase and use.

              In other words, guns truly are as American, if not more American than apple pie. And the idea that a bunch of highly educated, urban professionals are going to convince a majority of their fellow citizens that guns represent some kind of risk is like saying that Dirty Harry was a movie character about some detective who used a 44-magnum revolver to chase the bad guys around in England and France.

Should We Get Rid Of PLCAA? Why Bother?

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              If there is one thing that all my friends in Gun-control Nation seem to agree on, it’s the idea that we have to get rid of PLCAA, a 2005 law which protects the gun industry against class-action (tort) suits. But even though it sounds like a good idea because, after all, no sane, rational individual would ever want gun makers to escape responsibility for the 125,000 victims of gun violence every year, I’m not so sure that getting rid of PLCAA would change anything at all.

              The law was the gun-industry’s counter-offensive to an attempt by the Clinton Administration to make the gun industry accept a plan (put together by then-HUD Secretary Andrew Cuomo) which would have required gun makers to adopt a self-regulating program that basically would have ended the retail sale of guns in the United States. And because the plan required the gun industry to adopt and enforce the plan themselves, no amount of kvetching about the ‘loss’ of 2nd-Amendment ‘rights’ would have done any good at all.

              Basically, the Clinton-Cuomo plan would have required every gun manufacturer to hire hundreds of people who would go around, visit every, single retail store that sold one of its guns once a year, conduct a full safety inspection of the premises, deliver a seminar on gun safety, and file a report on each visit which would then be forwarded to the government for review.

              In fact, because Smith & Wesson was owned by a British investment group which didn’t know a gun from a hole in the wall, the owners decided to adopt the plan, in return for which the Clinton Administration promised that S&W would be shielded from class-action suits. The resultant boycott by gun wholesalers and retailers almost shuttered the company’s doors except that some Palm Beach County votes were thrown out, Bush beat Gore, and that was the end of that.

              In fact, a class-action suit against the gun industry brought by the NAACP had been floating around Federal Judge Jack Weinstein’s courtroom for a couple of years, the real ‘civil rights’ organization (as opposed to the NRA’s nonsense) charging gun makers with consciously flooding inner-city, high-crime neighborhoods with their products, thus provoking too many deaths and injuries from guns.

              Ultimately, Judge Weinstein was forced to terminate the suit because the NAACP couldn’t demonstrate ‘standing’ in the case. And while Weinstein later said he believed the plaintiffs had a strong case, I’m not so sure that the guns which wind up being used to commit injuries in what we now refer to as the ‘underserved’ neighborhoods are being shipped into those neighborhoods when they leave the UPS truck pulls away from the factory loading dock.

              The reason that Gun-control Nation wants to get rid of PLCAA is because most gun-control advocates believe that by promoting the idea that a gun can protect its owner from being harmed, that the gun manufacturers are consciously and deliberately trying to deceive consumers into believing that guns aren’t as dangerous as many of us would like to believe.

              Unfortunately, the idea that the gun industry plays down the intrinsic dangerousness of its products is a myth which happens not to be true. In fact, gun makers are required to alert consumers to the potential danger, up to and including fatal danger, if their products are mis-used.

              The picture above is the front page of the safety manual which goes with every gun manufactured and sold by Smith & Wesson. The very first sentence of text says: “Read these instructions and warnings carefully. Failure to read these instructions and to follow these warnings may result in serious injury or death to you and others and damage to property.”

              If you believe for one second that the guys walking around with a gun because they want to use that gun to injure someone else don’t know how dangerous and lethal that happens to be? 

              Where do you live? In Fantasyland?

Levi-Strauss Understands Gun Violence – It’s The Gun.

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,             If there’s one brand name out there which we associate with the Old West, it’s not Smith & Wesson or Colt, it’s Levi’s, as in Levi-Strauss.  Their signature product, denim jeans held together with copper rivets rather than just plain thread, didn’t really become a mass market item until long after the frontier was closed, but the name and those leather labels still evokes everything which symbolizes how and when the U.S.A. was formed.

levi's             All of a sudden it seems, the company has decided to make a very strong and very public statement about guns. And it’s not a statement about how Winchester and Levi-Strauss won the West. To the contrary, in an open letter to Fortune Magazine, a publication you’ll find on the coffee table of virtually every business leader in the United States, Levi’s CEO, Chip Bergh, is urging the business sector to take what he calls a ‘stand on gun violence, which follows from a company policy announced in 2016 which banned guns from all Levi’s stores. The policy even applies to stores located in jurisdictions where carrying a gun is permitted by law.

Did the company receive the usual assortment of nasty emails and threats from the usual collection of pro-gun trolls?  Of course. Did Bergh and the company’s other executives back down?  Here’s his final comment from the 2016 piece: “In the end, I believe we have an obligation to our employees and customers to ensure a safe environment and keeping firearms out of our stores and offices will get us one step closer to achieving that reality.”

Did Levi-Strauss suffer at the cash register the way that a gaggle of alt-right trolls is claiming Nike will see its sales collapse because of the new ad campaign featuring Colin Kaepernick that even has Sleazy Don weighing in to remind everyone that he’s America’s Patriot Number One? Levi’s has been privately-owned so we can’t determine whether they have paid any kind of price with falling revenues since they announced the ban.  The company has left open the issue of enforcement but the message is clear: one of America’s most storied and celebrated business organizations has decided to turn its back on guns.

In addition to the open letter, the company is also putting its money behind its mouth in the form of a million-dollar Safer Tomorrow Fund that will support what it calls “the work of nonprofits and youth activists who are working to end gun violence in America.”  The company is also doubling the match it donates when employees support organizations that get involved with the Fund. Most important, and this is a point which needs to be emphasized by anyone and everyone who supports the decision by Levi-Strauss, the company is going to partner with a new group of business leaders who want to reduce gun violence; it’s called the Everytown Business Leaders for Gun Safety, started by you-know-who.

Nobody on either side of the gun issue should underestimate the importance of this move. And the importance isn’t a function of the deep pockets of Mike Bloomberg, although that never hurts. What’s really important about this new campaign is that we finally have an effort to focus gun violence where it really belongs, namely, on the companies who create the 125,000 gun deaths and injuries each year because they make the guns.

I don’t know of another advocacy campaign aimed at reducing injuries from a consumer product in which the companies which make the product are so hidden from public view. And please don’t make the mistake of thinking for one minute that the 2nd Amendment is any kind of protective shield behind which gun manufacturers can hide. It’s not. Period.  But again and again the gun-control movement tries to come up with policies and laws that regulate the behavior of gun owners while exempting the gun makers from greater scrutiny and regulatory review.

Recall the 1992 Presidential campaign slogan ‘It’s the economy, stupid.’ Now replace the word ‘economy’ with the word ‘gun’ and you have the real importance of what Levi-Strauss plans to do.

 

Want To Make A Million In The Gun Business? Start With Two Million.

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If you decided to invest in the stock market on June 15, the Dow that day stood at 21,359. The day after Thanksgiving it closed at 23,557. In other words, just about any stock you would have bought in June was probably up at least 10% over the following five months. Unless you made the mistake of buying Smith & Wesson stock, which was selling for $24 on June 15 and closed on November 24 at $13 a share. You would have done a little better with Sturm, Ruger, which was at $68 a share in mid-June and ended last week at $50, a nosedive of ‘only’ 25 percent.
stock prices

Talk about a Black Friday! The old joke used to be that if you wanted to make a million in the gun business, start with two million. That old joke seems to be coming true in spades! But if that’s the case, and I thank our good buddy Shaun Dakin for pointing this out, how come the FBI-NICS background check system set a new, single-day record for the number of received calls? They claim they were ‘flooded’ with 203,086 calls on Friday, which broke the single-day record of calls – 185,713 – set on Black Friday in 2016.
Before all my friends in the gun violence prevention (GVP) community start lamenting that America is once again becoming awash with guns, let’s remember that on average, more than 40% of the calls received by NICS are for license verifications, private sales and other issues which have nothing to do with the over-the-counter movement of guns. And when the FBI publishes their total monthly stats for November, I’ll take the short odds that retail gun sales will continue to show the same 15% slide that has been going on all year.
Want to see a really great investment opportunity in guns? Add some corporate debt bonds issued by Remington Arms, which has dropped from $65 to $14 over the last six weeks. And it appears that this trend will not only continue but may get worse, with Remington broadly hinting that a default on their debt may not be far behind. And the reason why their bonds are turning into junk is the same reason that prices for Ruger and S&W stock continue to fall, namely, that nobody’s buying their guns.
Incidentally, Remington happens to be the ‘flagship’ company for an outfit known as the Freedom Group, which was the brainchild of an amateur gun nut named Steve Feinberg who cobbled Remington together with Bushmaster, DPMS, Marlin and a couple of smaller companies to create what was described as the leading “innovator, designer, manufacturer and marketer of guns and ammunition” anywhere, anytime, anyplace. I’m quoting from the press release for what was supposed to be a big $200 million IPO in 2010. Now they can’t pay off their $275 million debt. Oh well, oh well.
I don’t follow the ins and outs of the stock market but I do know something about the price of guns. Right now I can buy a Smith & Wesson Shield pistol from Bud’s Gun Shop for $299. I can buy the same gun from the Grab-A-Gun website for $279. I’ll have to pay my local dealer a few bucks to do the transfer, but a year ago that gun was selling for $379. I can pick up a Ruger AR-15 for under 600 bucks; that man-killer used to sell for $899 or more.
In my lifetime I remember when every, single American kitchen had a Mixmaster next to the stove. I also remember when I first put my hands on the keyboard of an electric typewriter made by IBM. If the stock prices of S&W and Ruger continue to slide, those company names will wind up like Studebaker, Philco and Trump Air. Remember something called a pay phone?

 

Is Investing In Gun Companies A Safe Bet? I Don’t Think So But Some Might Disagree.

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I love when The New York Times, the so-called newspaper of record, publishes an interview with a quick-buck artist who bought shares of Smith & Wesson after the massacre at Sandy Hook and tells us that “some” Wall Street investors see gun companies as a good buy. Meanwhile, if you bother to read Julie Creswell’s entire article, you quickly learn that the real Wall Street money – institutional funds – are staying as far away from gun investments as they can.  And the reason for this is very simple, namely, that putting money into a publicly-owned gun company represents an investment in an enterprise whose value has little or nothing to do with the health and business prospects of the enterprise at all.

nyt logo              I recall that in September, 2012, there wasn’t a Republican who didn’t believe that all the polls showing Obama beating Romney had to be wrong.  After all, how could a President get re-elected with an unemployment rate that was holding at 8%? It’s the economy, stupid.  Remember that?  Meanwhile when voters went to the polls in 1992, the unemployment rate was 7%, so no way Obama was going to go back to the White House again. And there wasn’t a retail dealer in the country, including myself, who could figure out what to do with all the inventory that was sitting on our shelves, because we knew that if Romney got elected, gun sales would collapse.

Well Romney didn’t get elected and several weeks later we had the awful shooting at Sandy Hook.  And the result of that massacre was a spike in gun sales, and another spike when Obama started pushing a gun-control bill, and now another spike because Obama’s promoting his own gun-control initiatives regardless of whether Congress wants to go along or not.  Even the NRA, which has been peddling a paranoid vision of Obama doing something drastic in his lame-duck term, admitted that the proposals were fairly mild and didn’t add up to all that much.

But let’s go back to the NYT article and focus on the data used by Julie Creswell to drive her argument home.  The article contains a graphic showing how the stock prices of Smith & Wesson and Ruger have climbed over the last several years. Note that the S&W share price was around $16 in mid-2014 and then fell like a rock to under $10 at the beginning of 2015.  During roughly the same period, Ruger stock dropped from $75 a share to $35.  Both stocks began climbing again in the 2nd quarter of last year, but the price that is now attracting traders like Louis Navellier isn’t s reflection of the gun industry’s long-term health, it’s a classic bubble which, like all bubbles, will soon burst and the stock will die.

Why do I say that?  Because the collapse of those stock prices back in 2014 was the result of the gun industry discovering that even after Sandy Hook and Aurora, the ability of the gun market to absorb new inventory could only go so far.  It took gun makers a year to ramp up production once it began to look like a gun-control effort would succeed, but by the time all that additional product got through wholesale distribution and onto retail shelves, the mad rush into gun shops had slowed down.

The gun industry can talk all it wants about how fears of terrorist and/or criminal violence are creating a new customer base.  They can have Colion Noir pitching to the inner-city market and Dana Loesch speaking on behalf of ‘America’s Moms,’ but it just doesn’t work.  The only folks who remain convinced that you can protect yourself from gun violence by responding with gun violence are the folks who keep buying guns whenever they believe they won’t be able to buy guns.  The truth is that investors who put their money into gun companies aren’t really investing in the gun industry, they’re investing in fears that the industry won’t survive another Sandy Hook.  Maybe it won’t.