July 2, 2009

Thursday, July 3, 1930: Dow 225.25 +2.22 (1.0%)

Assorted historical stuff:

Editorial: Governor Roosevelt praised for restraint in his speech concerning public help for the aged. New York State has passed a law providing cash payments to dependents aged 70 or more; Roosevelt admits fault with the law in not requiring contributions from the beneficiaries. Even if called a pension this will almost inevitably turn into a dole system. One only has to look at England to see "the appalling economic and social corrosion that results from indiscriminate state alms." Best solution would be an insurance system also protecting against unemployment, with cost divided between worker and industry, preferably without contribution from the state. Many corporations have already begun to build such a system. One argument for private plans is that "employees generally have more faith in their management than in that of governmental pension systems - and for good reasons."

International Chamber of Commerce meeting in Paris blames much of worldwide economic downturn on gold hoarding by central banks, particularly US and France [many currencies were gold-based].

J.J. Tynan, VP Bethlehem Steel, plans air ferry service between Battery and Staten Island.

$250,000 order placed with American Hardware Corp. for gold-plated doorknobs to be used in Waldorf-Astoria.

Westinghouse Electric organizes Westinghouse X-Ray Co. for "the development of x-ray and electro-medical apparatus."

Toronto hosts a convention for 10,000 Shriners by turning the Canadian National Railway's yard into a temporary city.

Market commentary:

Market very dull; morning attack on Steel because of yesterday's bad news ran out of steam; prices generally moved up and closed at highs. Experts pointed out steel curtailment was not far from normal seasonal patterns, and often marked a bottom on production. Share volume 1.227M shares, smallest for a regular session since June 1928. Industrials and utilities up, rails slightly higher. Banks and trusts up on half-year earnings reports showing banks to be "in far better shape than had been feared". Commodities mixed, generally steady.

Some observers feel a new test will be made by the bears next week and the response will indicate the near-future market.

J.M. Kern, Pres. St. Louis-San Francisco Railroad, believes trade has reached its low point and looks for a gradual improvement in the second half of the year.

N.L. Amster, director Rock Island Railway, returns from trip to Germany, France, Czecho-Slovakia, reports business on the upswing in all countries visited. Regarding the tariff, “Although a few exporters registered some complaint ... none of them felt that the question was very grave”, or that it would substantially affect trade.

Eventual recovery from depression is ensured by population growth, as seen in the recent census. 25 years ago steel capacity of 15 million tons a year was considered too high; now three times as much steel is produced annually. Similar increases have occurred in the consumption of many other products.

Economic news and individual company reports:

Miscellaneous taxes collected in 1929 included $450M tobacco tax, $77M stamp tax, and $62M estate tax.

Gasoline consumption first 5 months of 1930 up 12.6% over 1929; May consumption up 5.3% over 1929.

GE and Westinghouse to market branded radio sets. GE line will include "Highboy" and "Lowboy" consoles, ranging from $140-$200. GE stock currently selling at 69, yield 2.3%, earnings for the quarter ended March 31 were $0.50 vs. $0.48 in 1929, earnings for second-quarter expected slightly higher.

Autostrop Safety Razor estimates first-half 1930 earnings will be up more than 56% over 1929. No recent developments in the lawsuit against Gillette.

Technicolor remains target of heavy pressure, declining three points to 31 1/8. Officials continued to deny rumors of new competitive color film processes.

Italy doubles auto import duties.


"'A shoulder strap is an important little article, isn't it?' 'Yes, it's the only thing that keeps an attraction from becoming a sensation.'"

+ The Boring Stuff:

President Hoover denies intervening in investigation of the New York Stock Exchange; newspaper story may have been caused by the postponement until next fall of hearings on Senator Glass' proposed general financial investigation.

Standard Oil and PG&E have collaborated to build one of the most technically challenging gas pipelines, a 200-mile line from Kettleman Hills to San Francisco. Most of the line is made with 26-inch diameter pipe, the largest yet used for pipeline. Each 40-foot section weighs 3,400 pounds; for the first time, electric arc welding was used to join sections; thanks to new techniques, a small group of welders was able to join up to a mile a day. New coating process developed for sections of the line with corrosive soil; accordion-like joints used for large angles to allow some flexing.

Several trade reviews believe businesses close to a bottom; sharp rebound not anticipated, but low consumer inventories should cause a good seasonal increase in demand in the fall.

Liquidation starting at the end of May took the Dow down 80 points from spring peak of 294.07. Caused by renewed decline in business instead of the expected upturn; market has now faced reality and likely to trade technically until autumn business conditions become clear.

Short interest is reduced but still large. Bad earnings reports for the second quarter may not have much effect since traders have already been selling short on that basis for several weeks.

Agriculture Sec. Hyde claims tariff will increase net income per farm by $102 based on 1928 production, and assuming rate increases are completely effective.

Raw cotton exports $154M for the first quarter of 1930, down from $208.8M in 1929 and $291M in 1927. Attributed mainly to foreign cotton mills buying cheaper cotton from other countries, rather than business recession or decline in the price of cotton.

Machine tool market dull; little hope for upturn until after the summer.

Municipal bond issues for the first half of 1930 totaled $749M vs. $700M in 1929.

Alaska total mineral production $16.066M in 1929 vs. $14.061M in 1928.

Madison Square Garden earnings per year ended May 31 $1.26/share vs. $1.51 in 1929.

Scott Paper reports sales for first 6M of 1930 were $4.421M vs. $ 3.912M in 1929; profits expected about $2.75 vs. $2.29 in 1929. Sales in June exceeded $1 million for the first time, attributed to special sales and advertising effort.

Interstate Department Stores expects earnings for first half about the same as 1929.

Van Camp Packing (food packing) sales for 5 months ended May 31 were $9.428M vs. $9.391M in 1929.

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