Assorted historical stuff:
Resolution introduced by Congressman Sabath to form a committee to investigate whether “the tremendous professional shortselling of stock on the various exchanges was responsible for the November, 1929, and present 'crashes,' and to what extent it is responsible for the depression of business.” Will also look into taxing short sales or outlawing them completely.
American Institute of Banking decides on educational program with theme of “less speculation and more thrift.”
A robot with “an electric eye, a radio for a brain, and magnets for hands” successfully performed a chemistry experiment. The electric eye observed acid being dropped into a basic solution; when a color change indicated the solution was neutralized the electric eye passed a signal to the radio, triggering a relay shutting off the acid flow.
Admiral Byrd's ticker-tape parade results in only 70 tons of ticker tape cleaned up, compared to 1,800 tons for Lindbergh.
Japanese typewriters have 7,026 characters, including the English alphabet tucked into a corner. Skilled typists can do 60 words per minute.
Andrew J. Eken of Starret Bros. & Eken, while sailing on the SS Statendam, reports that the outlook for construction is improved. Although the volume of permits so far this year is down from 1929, in the last half of the year should see “contracts closed for a number of building projects of great magnitude, both in New York and other large cities.”
Chrysler building now has 156 tenants occupying from a single room to 14 full floors.
Editorial noting that large US loans to foreign countries are beneficial to US business because the money gets recycled to buy US goods; this helps to absorb our production capacity, which is greater than domestic demand.
Front page above the fold editorial: “A Turn of the Tide Near” - gives some convincing calculations showing that current conditions don't indicate a long depression. Exports for the past few months are 20% under 1929; if this continues for the year total effect on US production would only be around 2%. Total installment credit is only $3 billion, or about 3 1/2 percent of national income. Even if unemployment hit a high level of 10%, remaining 90% should still make installment payments. Other indicators show the country's wealth and purchasing power hasn't been substantially hurt: department store sales for the first four months of 1930 are only 3 1/2 percent below 1929; bank deposits at 30 banks in New York district were at record levels in April; total corporate profits for the first quarter, while down from 1929, were up 5% from 1928. Commodity price decline is serious, but it's very unlikely that this decline will continue since current industrial production is below consumption, and corporations are rich in cash and low on inventory. “It cannot be imagined that the wholesale failures and interest defaults characteristic of earlier depressions will now be repeated. Confidence in our banking system wholly precludes the money panics of former eras.”
Treasury Secretary Mellon denies Smoot-Hawley tariff will damage business, says tariff will end uncertainty, criticism has been exaggerated, and flexible provisions in the law will be used to improve it. Says previous tariffs have always caused “gloomy prophecies” that have never materialized.
Stocks continued yesterday's rally early in the session, but rally quickly petered out after the first hour. Leading stocks retreated sharply from early highs; rally attempts in the midday and final hours failed. Volume was lower throughout the day. Decline in spite of good news surprised many people. Inability of the market to sustain rallies is causing increased caution.
A financier worth over $100 million advises the recent market decline shouldn't worry stock investors. Has stocks bought 25 years ago, has gone through many panics and slumps, some much worse than the current one. Every time, “you would hear the same old stories about business. But I have held on and my investments have multiplied many times. Some of them are worth 10, 20, and 30 times more than they were when I bought them.”
Record low 2 1/2% New York Fed rediscount rate indicates to businesses that very easy credit is here to stay for a while. Reserve expected to be cautious about raising rates until it's clear business upturn is here to stay. Rates have been lowered from 6% last August.
Economic news and individual company reports:
Income taxes (corporate and individual) were $35.9M in May compared to $43.5M in 1929. Taxes for the fiscal year ended May 31 were $1,887M, up $108M over the 1929 fiscal year. Other taxes were $57.8M in May, up $1M over 1929. French tax collections down 1% in May from 1929.
Trucks are taking over an increasing proportion of freight transportation from railroads. Number of trucks registered has gone from1.006 million at the end of 1920 to 3.379 million at the end of 1929. Tons of less than carload freight handled by railroads decreased from 89.9 million tons in 1920 to 63.3 million in 1928.
Oklahoma will continue restriction of oil production to 650,000 barrels a day in the third quarter as in the second quarter.
Germany cuts discount rate to 4% from 4 1/2 percent.
May auto production in the US 417,154, compared to 442,835 in April and 604,691 in May 1929.
Mack truck reports earnings for Q2 will be approximately $1.5 million, down from $2.5 million in 1929. Earnings for the first six months should cover the dividend give or take a small margin.
Abbott Labs, United Biscuit, Leonhard Teitz (German department store) report improved earnings so far in 1930.
“Quack Medicine Salesmen - Ladies and gentlemen, I have sold 6,000 bottles of this marvelous remedy, and not one complaint have I received. What, I ask you, does that prove? Voice from the Crowd - Dead men tell no tales.”
“' My little daughter has swallowed a gold piece and has got to be operated on. I wonder if Dr. Robinson is to be trusted?' 'Without a doubt. He's absolutely honest.'”