July 26, 2009

Favorites of the week July 21-26, 1930

No Journal was published July 27, 1930. Once again, a collection of my favorite items of the week. These aren't a representative selection but just the ones that made me smile or take notice.

July 26:

[Note: A depression is a depression, but the Waldorf is the Waldorf.] Largest and heaviest steel truss ever used in building construction is placed in Waldorf-Astoria; assembled unit is 312 tons, 90 feet long by 33 feet high, located above main ballroom, supporting part of hotel from 9th-46th floor; allows 10,000 sq foot ballroom to be free of supporting columns.

[Note: Well, I guess a maelstrom counts as a tidal impulse.] Bradstreet's weekly review reports sentiment improved although business still dull; "The trade situation at present might well be likened to that of a ship in a calm in slack water and waiting for a new tidal or aerial impulse to carry it in a new direction."

[Note: Strangely familiar #1.] J.A. Stransky Mfg. of Pukwana, SD prohibited by FTC from advertising their vaporizer device as enabling Ford cars to get 57 miles/gallon, start easier.

[Note: I swear I didn't make this one up department.] Annie Gamble of Atlantic City sued by broker for $3,279 loss incurred on margin account; Mrs. Gamble claims margin investment is a gambling debt, hence illegal.

July 25:

[Note: Strangely familiar #2.] Union Trust of Cleveland sees improving business sentiment, upturn starting soon. Positives include production generally below consumption, ample purchasing power as seen in bank deposits, strength in construction and public works, and easy credit. Cautions that recovery may not be quick and easy, but rather gradual over some months.

[Note: Strangely familiar #3.] Consensus that business will improve seasonally in fall, but while optimists expect improvement to continue through winter, conservative authorities expect another slowdown in winter, and sustained upturn not until spring of 1931, and therefore continue to advise selling stocks on rallies and waiting for breaks to buy.

July 24:

[Note: Strangely familiar #4.] Second-quarter earnings so far better than expected. Third-quarter predictions are difficult; current business is below second-quarter average; if seasonal pickup does not develop until September, as leading authorities expect, the improvement won't be reflected in third-quarter earnings.

[Note: Strangely familiar #5.] Deposits at member banks up $1.494B to $21.317B in past six months. Similar increase to 1924, which was soon followed by business revival; caused by easy money policies of Reserve banks. However use of the money has been different from 1924; banks then increased commercial loans, but now there's been a large decrease in commercial loans and large increase in security loans and investments; easier credit policy has so far failed to increase demand for business credit. However, if a recovery does come, the Fed would be reluctant to allow rates to rise; necessary expansion in Reserve credit could then lead to inflation.

[Note: I had the adder plus the points.] Mysteries of Nature. Film opens with scarab beetle rolling ball of camel dung; other details of beetle lifecycle; studies of plant life including the "uncanny fly-trap;" capture of large Nile crocodile; laboratory experiments with sound waves; large tropical spiders; and finally, "battle-to-death between the most poisonous tropical snake known and a non-poisonous adder," each more than 6 feet long (adder wins after terrific struggle).

July 23:

[Note: Strangely familiar #6.] Administration members reported telling Wall Street that business has turned corner, and should curve slowly upward until winter, becoming clearest in October. No forecast beyond that ventured. However, administration strenuously denies rumors of using "its influence to bring about organized support for the stock market."

July 22:

Dull trading attributed to large professionals extending weekend due to recent heat wave.

July 21:

[Note: Emphasis added to highlight the more-than-a-little-spooky part.] Governor R.A. Young of Fed. Reserve Bd. warns banks to be careful about the increasing amount of loans against securities. About the crash last fall, says: “there is food for serious thought in the fact that, under our excellent banking system ... we nevertheless came to the brink of a collapse, had to resort to heroic action to prevent a panic, and were not able to avoid ... severe liquidation and what appears to be a business depression. Is this unavoidable? Is it necessary for this country to go through periods of reckless exuberance, accompanied by enormous credit expansion and fantastic levels of money rates that profoundly disturb the financial structure not only here but all over the world?” The cost of these episodes is paid in unemployment and worldwide depression. Reminds banks that security loans are safe only if a liquid market exists for the security; large scale sales can cause a drop in value, “and there is no telling when such a drop may terminate and what catastrophe may follow ...” Calls on banks not to assume Fed will always be able to help them, since its resources are “not inexhaustible.”

[Note: Danger of historical analogies department.] Current conditions seem quite similar to postwar deflation in 1920-2. From peak in June 1920, business gradually declined until October, and sharply until April 1921. "At the bottom of the movement, pessimists were talking of the worldwide character of the depression, of the tremendous surplus of commodities, widespread unemployment, and even of the baneful influence of the tariff." Shortly afterward "a solid recovery set in, leading to nine years of unprecedented prosperity."

"Sitting in the broker's office, Wondering what in heck to do;
Watching, waiting, hoping, fearing, Praying all my dreams come true. ...
NPT is still a dairy; old VA has just gone by;
BMT is slowly mending; Radio is flying high.
Will I? Won't I? Hurry, Hurry; Down she wavers; up she goes.
'Buy,' I shout with great decision; Comes the answer - 'Market closed.'"

1 comment:

  1. Is there any way we can subscribe to just the weekly favorites?