Saturday, August 30, 1930: Dow 240.42 +2.63 (1.1%)

Assorted historical stuff:

Editorial: Gov. Roosevelt's proposed state-supported unemployment insurance may be debatable, but he's at least called attention to a crucial problem. Workers make a majority of the national income (in 1928, 46.6M workers of a total population of 119M made $50B of a total income of $89.4B, the rest being interest, dividends, rents, etc). Therefore, business life depends on workers' income and consumption, and it's crucial that there be steady and well-paid work for all those willing and able. Automation and other factors have contributed to unemployment; solution “calls for deep study of experts and an economic, not a political cure.”

Pres. Hoover meets with heads of govt. building activities with view to accelerating programs.

Canada PM Bennett calls special session of Parliament for Sept. 8 to consider unemployment relief, possible new tariffs.

Buenos Aires remains calm, although Pres. Irigoyen remains under special guard, arranged on his insistence over cabinet objections. Pres. Irigoyen said to have become convinced he has “alienated the sympathy of the army” by recent actions. Some reports of “trouble of a rebellious character” in Brazil.

Canadian Natl. Railways facilities for Toronto-Vancouver train include mini-gym with “Swedish massage machines, vibrating apparatus, and foot and hand exercisers,” shower bath, ice cream parlor, barber shop, valet service. Windows in observation cars are of “vita glass” transparent to UV rays.

American Tree Assoc. says world's forests are concentrated in Russia, British empire, Brazil, and US; these four contain 2/3 of world forest land.

Market commentary:

Major stocks advanced vigorously in unexpectedly strong pre-holiday session; bulls encouraged by $26M decrease in brokers' loans, and by recent market action; buying support even on small declines is seen preventing even normal technical setbacks from developing. Volume lower due to upcoming holiday. US Steel reached May level; also strong were American Can, Union Carbide, GE. Utilities and rails; shorts in various trading favorites had “uncomfortable time.” Banks and trusts strong. Bond market mixed; Latin and South American bonds down sharply, but other govts. strong; high grade corp. steady; convertibles up sharply.

Bradstreet's and Dun's reviews note some seasonal upturn in business, better trade sentiment.

Market sentiment quite hopeful. Some reports of increased public buying. Most observers now recommend buying standard stocks on reactions.

Recent strength in banking stocks considered positive - this group suffered heavily in panic last fall; only recently has renewed accumulation been evident.

Some bears have been arguing that stocks are still selling at higher price-earnings multiples than at low point of previous depressions; optimists counter that the greater current financial strength of corporations justifies the higher multiple.

Treasury Sec. Mellon praises Federal Land Bank system as sound and useful, and bonds as sound investments; says present drought situation temporary and confined to certain areas; Land Banks are mutually responsible for each other's obligations; this strengthens the system due to diversity of conditions across the US.

Economic news and individual company reports:

Weekly bank reports mixed; “all other” (commercial) loans were down $39M, opposite of usual seasonal pattern; this was “not reassuring.” However, currency in circulation was up $6M, bringing increase for August up to $51M, a larger gain than recent years. Brokers' loans by Fed. Reserve member banks on Aug. 27 were $3.102B, down $999M over previous 12 weeks.

Money rates remained low in August: call money on the NYSE was at 2%-2.5%; prime commercial paper was at 3%.

Rails seen benefitting if business upturn arrives because of increased efficiency forced by depression; this increased efficiency is seen in July earnings reports, which had revenues down a higher percentage than June but net down 32% vs. 34% in June.

Class 1 rails reported record fuel efficiency in first half; avg. of 125 pounds fuel required to haul 1,000 tons one mile, 4 pounds below previous record.

New high speed tickers to go into operation just in time for rush after Labor Day holiday.

P. Boggs. chair of California oil curtailment committee, calls for meeting to decide if current 596,000 barrels/day limit needs to be cut due to lower sales.

Companies reporting decent earnings: Arundel Corp. (sand and gravel), Industrial Rayon Corp, Thatcher Mfg. (milk bottles).

Company reports since July 1: 174 companies reported increased earnings vs. 1929 and 418 decreased; 818 dividends unchanged, 14 new, 7 increased, 56 cut.

Household Finance Joke:

“The wife had been put on the budget plan. At the end of each month she and her husband would go over the accounts together. Every once in a while he would find an item, 'L.O.K. $3,' and a little further on 'L.O.K. $6.'
Finally he asked: 'My dear, what is that L.O.K?'
'Lord Only Knows,' she replied.”

Prohibition Joke:

“Visitor - My word, I am thirsty.
Hostess - Wait a moment, I'll get you some water.
Visitor - I said thirsty, not dirty.”

+ The Boring Stuff:

Minnesota Gov. T Christianson says doubts success of Farm Board campaign to reduce wheat acreage; approach should start at the smalller cooperative units and build up rather than working top down from national agency, and should be focused on substituting other crops such as flax for wheat. Requiring farmers to restrict output of all products would be strongly opposed as it “would permanently subordinate agriculture to industry,” since farmers wouldn't be able to produce a surplus to sell abroad as industry can.

Reports given to Pres. Hoover on available methods for drought relief: general approach proposed is use of existing credit facilities to lend through banks or marketing cooperatives, with little direct aid available; Fed. Reserve Gov. R. Young says Reserve banks will be lenient toward member banks in affected territories, but warns they “are not in a position to knowingly make poor loans under any conditions”; shippers of feed and livestock granted reduced rates in affected areas.

Effects of war and subsequent [hyper-]inflation in Germany were least on land owners, bankers, and industrialists.

Commodities mixed. Cotton down. Grains up, corn particularly strong. Cocoa touched new low at 6.33 cents but closed unchanged.

American Metal Co. chairman L. Vogelstein expects upturn in copper prices in next two months, substantial increase in demand in next year.

Oil stats for July: Consumption of gasoline was 43.950M barrels vs. 43.028M in June and 42.960M in July 1929; gasoline in storage at end of month was 46.077M barrels vs. 50.255M in June and 37.880M in July 1929; crude oil production was 76.743M barrels vs. 76.513M in June and 91.327M in July 1929; total storage of all oil (crude and refined) at end of month was 686.625M barrels vs. 690.916M in June and 666.962M in July 1929.

July net operating income for all class 1 rails was about $82.5M vs. $122.8M in 1929 and $95.2M in 1928, but was up about 19% over June.

July shipments of auto parts/accessories makers were 88% of Jan. 1925 base vs. 116% in June, 144% in May, and 188% in July 1929.

Cuban and US sugar producers meeting to agree on “program for the rehabilitation” of sugar industry; hope to then present united front to European and Java producers. Over past few years Cuba has been alone in restricting production, leading other producers to take up the slack. Five-year plan is contemplated to restrict production allowing demand to catch up and clean up current enormous surplus.

General Foods expected to benefit from introducing frozen foods; tests of frozen fish, meat, vegetables, and fruit in Springfield, Mass. very successful.