Friday, August 22, 1930: Dow 231.27 -1.71 (0.7%)

Assorted historical stuff:

Dr. R. Goddard to carry out experiments financed by D. Guggenheim with aim of shooting rockets 50-75 miles “into the upper air.” Goddard has been “experimenting along this line since 1912.” Thus far maximum height attained by man is 8 miles.

T. Thatcher, Solicitor General and selected by Pres. Hoover to investigate bankruptcy reform, says thousands of wage earners taking advantage of lax Bankruptcy Act to live above means, cheat creditors, and “pay their debts with postcards.” Estimated loss from bankruptcies $750M annually.

Former Gov. Al. E. Smith says prosperity will be 1932 election issue, Democrats will take control “and will make this a happy and prosperous nation.”

Just 16 years after Germans invaded Belgium during the world war, Belgium now advertising in German magazines inviting tourists to visit.

Dr. D. Comstock, inventor of Technicolor, announces new refrigerator with no moving mechanical parts using mercury aspirator. [Note: Einstein and Szilard came up with a rival nonmechanical refrigerator; I believe neither caught on due to improvements in mechanical refrigerators.]

O. Wernicke, inventor of the sectional bookcase, dead in Florida.

Market commentary:

Leading stocks were fairly firm early, though some weak spots developed in rails (bad July earnings and further traffic decline in Aug.) and then in coppers (dividend concerns). Gillette plunged on report Auto Strop merger abandoned. Bears attempted to spread weakness into the general market, causing leading issues to give ground slowly in later trading. Limited public buying seen; movements driven by professional operations. Bond market more active, corp. up, foreign govts. firm, US govt. dull, little changed; Dow average of 40 bonds up to another new 1930 high of 96.67, best since Nov. 1928.

Editorial: Weather Bureau map for Aug 19 shows much improvement; drought has been substantially relieved across much of the country, though large sections are still affected. This should help both current crops and planting for fall. This improvement in a fundamental industry should help general business.

H. Thayer of West & Co.: “Personally, I believe we have seen the worst, both in the stock market and in business circles, and I look for substantial progress to be made in share prices and in earnings.”

While the 1920-21 depression and stock market pattern has been cited as remarkably similar, some are pointing out that whereas now credit is cheap and market valuation still relatively high, in 1920-21 opposite conditions applied.

Repeated low-volume days below 2M shares shows lack of large public buying; this, however, is typical of “a bear swing bumping along the bottom.” Public usually doesn't enter market on a large scale until there's clear evidence of business upturn.

Reports from many sections of the country of buyers' strike; “Merchants complain that their shelves are not being emptied by the ultimate consumer.” However, economists believe conditions are such that any better retail demand would be felt immediately by manufacturers.

Economic news and individual company reports:

Total first-half earnings reported by 193 representative companies were $505.4M vs. $754.3M in 1929, $582.8M in 1928, and $523.2M in 1927. This reflects a sharp profit fall in Q2, since Q1 profits were $317.8M, 5% above the 1928 level. Sectors doing best compared to 1929 were food, electrical equipment, chemicals, rail equipment (down about 10% avg). Worst were tires, mining, oils, autos (down about 45% avg).

Treasury officials say continuation of this year's 1% cut in income taxes looks unlikely; rates for next year will depend on how much depression has cut revenue.

Companies reporting decent earnings: Scott Paper, City Ice & Fuel.

Cigarette production in July was 11.859B, up 1.134B from 1929.

Wrigley spending heavily on advertising, but getting its money's worth. “There are probably no centers of population of any size in this country or Canada ... where it is possible to walk very far without being reminded in one way or another of the delights of ... Wrigley's gum.”

Testimony starts in govt. antitrust case against many major West Coast movie companies. Charges include giving preference for movie exhibitions to theaters owned by the group companies. Much of the countries most prominent legal talent involved, case will naturally be appealed to Supreme Court if govt. wins.

Upcoming movie news:

D.W. Griffith to premiere first sound film on Monday, Abraham Lincoln, starring Walter Huston in title role. Gloria Swanson's newest film, What a Widow!, to be released Sept. Eddie Cantor's Whoopee, produced entirely in Technicolor by F. Zeigfeld and S. Goldwyn, to be released shortly after. Lee Shubert (theater impresario) to produce four talking films this season.

Journalism joke:

“A budding journalist was told never to use two words when one would do. He carried out this advice in his report of a fatal accident ...
'John Jones struck a match to see if there was any gasoline in his tank. There was. Age sixty-five.'”

+ The Boring Stuff:

Editorial: J. Gerard, former ambassador to Germany, has come out with a list of 59 men he calls the true rulers of the US; their influence and power determines who rules directly, and the President and other politicians are “mere vassals to this coterie” (list is mostly prominent industrialists, some financiers and publishers). He also says they could straighten out the British empire to a high degree of prosperity in 10 years or so. This is hero worship carried to absurdity; these men's secret of success is lifelong concentration in their particular field; “to assign to them super-powers of government” is to make them into demigods who can do anything.

W. Kennedy, service manager at Saks, comes out against “glib, high-powered salesmen.” When customers take goods home and “effects of the salesmen's arguments have cooled, there is ill will toward the store and a merchandise return.”

Commerce Committee of the ABA recommends revision of Sherman antitrust law empowering the FTC to decide in advance if an agreement among businesses is in restraint of trade, thus preventing future litigation and immunizing businessmen involved from criminal prosecution.

France maintains top spot as world tourist destination in 1929; visitors spent $400M, of which $130M came from US.

French govt. and French Line contract to build 1,170 foot super-liner at cost of about $27.5M.

Treasury officials see little possibility of assessing anti-dumping duty on Russian manganese.

Chairman Legge urges farmers to substitute other feed for corn, believes this can make up shortage; believes many farmers already doing so.

Commodities mostly down; wheat down slightly, other grains up; cotton down. Hog prices continued higher.

W. Farish, Pres. Humble Oil & Refining, comments on reason for lowest gasoline prices in 2 years in spite of successful curtailment of production; price decline blamed on lack of confidence industry can maintain current “sensible scale of operations.”

Fed. Reserve member banks report brokers' loans down $27M in week ended Aug. 20 to $3.128B.

US Electric output in week ended Aug. 16 was 1,671 GWHr, down 2.8% from 1929.

Average of 8 iron and steel products holds at $45.80/ton, at low for 1930, vs. $50.61 avg. in 1929.

General wholesale price level declined in July, and in last week of July was almost 20% below 1929 level. Wholesale prices of farm products fell 10% between June 15 and July 15, to postwar low of 111% of 1913 level, and declined further to 109% in last week of July. Farm prices rebounded to 112% in early August, while non-agricultural prices continued to decline.

Volume of freight traffic handled by class 1 rails in June was 34,419B ton miles, down 15.5% from 1929; first half was 212.251B ton miles, down 11%.

New life insurance sales in July reported down 2.2% from 1929. First 7 months were up 2.3% from 1929.

Exports of electrical equipment in first half were new high of $71.150M vs. $70.315M in 1929.

Orders for fabricated structural steel in July estimated at 284,000 tons vs. 276,000 in June.

Steel scrap markets showing signs of improvement; no definite uptrend, but scattered transactions at higher prices.

Rumors continue of modification to Spanish oil monopoly.

IBM reports foreign sales growing consistently so far in 1930.