Assorted historical stuff:
New York Governor Roosevelt calls for system of unemployment insurance; says 90% of unemployment is not the fault of the worker, but cautions against insurance becoming “a mere dole which encourages idleness;” says line must be drawn against any person who refuses to accept an offered position.
Bolivian revolution inspired by students victorious; council of six army chiefs takes over; plans economic council to deal with crisis.
Canada has third largest railway mileage in the world, including two transcontinental railroads.
Trading volume on the NYSE set records for June (76.6M shares) and for Q2 (265.7M). June regular daily volume ranged from 1.7M to 6.4M; Saturday volume from 0.6M to 2.2M.
Bulls encouraged by evaporating volume in Saturday's session in response to price declines. “Creeping” rally developed, possibly partly due to technical factors (after large scale liquidation the past two weeks, shorts had to bid against themselves to cover). New highs for the current rally in US Steel, GE, American Can, Westinghouse. Good gains in Kodak, Foster Wheeler, some utilities. Banks and trusts higher. Commodity trading dull, mostly down slightly.
Editorial: D.M. Marvin, economist for Royal Bank of Canada, says present depression caused by tight credit; points out that in spite of low rediscount rate many banks are not lending due to poor balance sheets; total credit extended by the Fed. Reserve banks fell from $1.621B last Oct. to $937M in June. Proposes Fed. Reserve banks inject $500M of reserve credit by purchasing government securities. Idea is worth considering, but must be done with care to avoid inflation.
City Bank of NY criticizes blind optimism about an upturn earlier in the year, but also cautions against excessive pessimism. Based on history, depressions usually turn around sometime in the year following their start; consumption hasn't fallen as much as production, leading to eventual rebalancing. Believes depression caused not by gold or credit shortage but by unbalanced production, leading to commodity price declines.
Labor Secretary Davis says business is definitely turning up in the East, predicts reasonable prosperity within the next year. “People have learned once again that only work produces wealth.”
Inventories at major corporations are low as they've been in years - this should lead to heavy buying when business turns up.
Railroad news has been bad, but managements are optimistic and yields have become attractive[5%-7%], leading to some investment buying. (P. Crowley of NY Central: business has turned the corner, E.N. Brown of Rock Island: freight traffic has hit its low).
Advertisement for Clement, Curtis, & Co. (broker): “Stocks at high levels look safe but are dangerous; at low levels they look dangerous but are safe.”
Economic news and individual company reports:
L.K. Boysen, Pres. Mortgage Bankers Assoc., says Chicago is badly overbuilt with 17.7% of office space vacant. Blames excessive loans on bad appraisals, inadequate foreclosure laws. Says some bond houses are “keeping their investors in ignorance of the defaults by advancing the payment of principal and interest out of other funds.”
Survey of 418 companies from variety of sectors shows 173 with increased dividends for 1930 vs. 139 decreased.
Gasoline consumption for April in 42 states was 919M gallons compared to 807M in March and 805M in April 1929.
GM sales so far this year down about 1/3 compared to 1929. If pattern of first Q repeats, profits for first half will also be down about 1/3 to $100M or $2.15-$2.20/share. Full year's dividend requirement is $3/share.
The Big Fight - story about gambling rings trying to fix a championship boxing match; adapted from the 1928 stage play starring Jack Dempsey. Best scenes are “the gambler's conferences and the training of the fighters.” Climactic fight is unrealistic; film has too much “repetition of 'fight picture' devices, now hackneyed.”
+ The Boring Stuff: