July 21, 2009

Tuesday, July 22, 1930: Dow 229.29 -7.36 (3.1%)

Assorted historical stuff:

Editorial: Federal expenditures have gone from about $300M to $4.8B in less than 50 years; state and local expenditures have likewise enormously increased since the war. Much of this is used for vital services including schools, water systems, roads, etc, but not all of it is justified on the basis of results. For example, $250M so far has been spent on the Farm Board, "and the result has been like pouring water through a sieve;" yet one senator wants to give it a billion. "Herein is the fault of legislative bodies in ordering public expenditures. They do not have to make the budget balance and care little about the responsibility on those who have that delightful task."

Pennsylvania oil producers agree to cut oil production 30%. "This makes strange reading for very old-timers recall that as far back as 50 years or more ago the majority believed the oil reserves of Western Pennsylvania would be exhausted in a few years."

Dress- and cloak-makers boards, representing 60,000 workers, vote general strike of 7,000 children's dressmakers to protest sweatshop conditions.

Radio Corp. license extended to television, suggesting systems may be coming sooner than the anticipated 5 years.

Danish business satisfactory; first half 1930 up substantially over 1929 level.

Canadian government may take over development of commercial aviation, as most countries have. Airline would be owned by the Canadian National Railways.

Torbanite Products, Ltd. opens Nova Scotia plant to extract oil from oil shale. First Canadian plant to attempt this; to exploit huge deposits of oil shale throughout Nova Scotia. Oil shale rocks are heated to 800 deg. F. in airtight retort; hydrocarbon gases are then cooled and condensed to oil. Plant handles 50 tons/day; average yield is 1 to 1.5 barrels/ton.

Stromberg Motor Devices Co. wins patent suit lasting 16 years; awarded $261,511 plus costs.

Market commentary:

Market opened weakly, then turned dull with most major stocks trading around the early lows. In the final minutes of trading additional sales by bears extended early declines and stocks closed sharply down, with bigger declines in thinly traded issues (Vanadium, Auburn). Utilities, banks, and trusts weak.

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

Quite a few companies so far have reported good first-half earnings, including US Pipe & Foundry, American Chain, United Biscuit, Briggs.

Little improvement seen in Q3 earnings; quarter begins with production and prices of commodities generally lower. Improvement hoped for in fourth quarter.

Index of farm commodity prices at lowest level since 1922, down 9% in past year; general commodity price level lowest in 13 years, down 4% in June.

Harvard Economic Survey predicts business upturn in second half; cites increase in construction projects, stock market improvement, steadier commodity prices.

Officials from several large companies operating plants in Erie, PA, including GE and Hammermill Paper, say that although employment is down from 1929 they're beginning to see better business and expect to recall many workers within 30-60 days.

Economic news and individual company reports:

US June auto production was 335,475 vs. 417,406 in May and 545,932 in June 1929. First half was 2.220M vs. 3.224M in 1929.

Number of cars entering Quebec from US up 20% over 1929; J.L. Boulanger, Canadian Min. of Highways, optimistic on tourism.

California fruit growers and canners propose price stabilization plan involving dumping 40% of the crop.

Colgate-Palmolive-Peet first half earnings improvement of 19% vs. 1929 attributed to sharp decline in raw materials prices, cuts in selling and admin. expenses.

Procter & Gamble for year ended June 30 was $3.37/share vs. $2.89 previous year.

General Foods Q2 net $.88/share vs. $.90 in 1920

Westinghouse Electric first-half net $3.13/share vs. $4.92 in 1929. Some of decline due to transfer of radio manufacturing to Radio Corp. in exchange for stock.


"The story is told that a certain restaurant advertised 'partridge pie' on its menu. Patrons swarmed to the place but found the dish lacking in taste. They questioned the proprietor. He admitted casually that he had, it was true, mixed in a little horse meat. 'How much,' persisted the customers. 'Oh, half and half,' he replied. 'One horse to one partridge.'"

+ The Boring Stuff:

Editorial: NY Governor Roosevelt is the leading Democratic possibility for president in 1932. Therefore his handling of a local scandal is of national interest. Roosevelt has rejected Republican calls for a special legislative session to investigate Tammany Hall, seeing it as a fishing expedition based on unspecified charges. In trusting the New York State government and courts to investigate the many specific charges now percolating, Roosevelt leaves himself open to political damage if they fail. "There is politics here, of course, but it is not the cheap politics of personal safety first."

Commodities generally weak, including cotton, wheat, corn, copper. Raw sugar futures hit new record low of $1.17/pound; record low before current break was $1.56 in 1902. Bond market dull, irregular; US & foreign governments firm.

Fewer new stock issues since last November; financing has been done increasingly with bonds.

Some observers say record indicates that commodity prices will not improve until after substantial business upturn.

A.W. Zelomek, statistician-economist for the Fairchild Analytical Bureau, says the world wool crisis which climaxed with drastic price deflation in the first-half has passed. However does not see strong upturn in prices this year.

Detroit companies generally not able to reduce factory workers salaries; instead hours worked have been cut, including by unpaid "vacation."

US Dept. of Agriculture reports 111,175 acres of land planted to forest in 1929.

Total foreign govt. & corp. financing in first half was $839M vs. $720M in 1929 and $1.479B in 1928.

Canadian exports in June were $78.7M vs. $112.2M in 1929; imports were $91.8M vs. $111.9M.

1930 wheat crop in 12 countries estimated at 1.907B bushels vs. 1.827B in 1929. US 1930 forecast is 807M bushels, unchanged from 1929.

Northwest Pennsylvania crude oil production to be curtailed by 30% starting July 21.

Lucky Strikes June cigarette sales up 573M over 1929; first half up 2.957B.

Atlantic Refining first half net $1.05/share vs. $3.67/share in 1929.

Texas Gulf Sulphur first half net $2.93/share, unchanged from 1929. International Salt first half net $322,901 vs. $231,298 in 1929.

Collins & Aikman (pile fabrics, mainly for cars) estimated net for fiscal first half ended Sept. 1 is $2/share vs. $1.90 for year ended March 1.

Briggs Manufacturing doing well thanks to sales to Ford and Packard. Q2 net was $1.38/share vs. $0.51 in 1929.

Blaw-Knox (steel products, largely used in public works construction) first half net $1.27/share vs. $1.05 in 1929.

Lily Tulip Cup (paper cups) first half net was $2.34/share vs. $1.89 in 1929.

Bickford's (food store) first half net $1.04/share vs. $0.67 in 1929.

Beech-Nut Packing Q2 net $1.72/share vs. $1.87 in 1929.

Intertype Corp. (typesetting equipment) Q2 net $0.47/share vs. $0.97 in 1929 [profiled in Graham & Dodd's Security Analysis, 1940 ed. p 516].

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