Tuesday, August 5, 1930: Dow 238.16 +3.66 (1.6%)

Assorted historical stuff:

D. MacMillan, Arctic explorer, disputes idea of Arctic as wasteland, says over 700 plant varieties known in the Arctic Circle, some within 9° of North Pole.

Economy of US South has grown from minor size in 1900 to now producing 16% of US manufactured goods, 32% of mineral, and 36% of agricultural products.

Over 95% of all Swedish electric power supplied by hydropower, also known as "white coal."

French Senator V. Dalbiez says Russia exported $33M of products to France in 1929 while only importing $10M; accuses Stalin of using surplus to help with "the object of preparing a world revolution and increasing propaganda funds for Communist groups in other countries."

Three-day meeting of European carmakers in Paris ends without agreement on quota system to restrict American imports.

Navy awards contract to Loening Aeronautics of New York for seaplane with folding wings to be used on submarines. Contract price is $49,500.

Dr. K. Clark of the Univ. of Alberta has been working on tar sands for past 10 years; recent experiments successfully produced 5 barrels of pure tar from 5 tons of sand. This summer experiments will continue with production of petroleum products from extracted tar.

Individual drugstores estimated to carry in stock 8,000 to 15,000 different articles.

Jack Warner, VP of Warner Bros., announces new policy. For past four years, studio has taken 8-12 week vacation period “in order that the creative workers might rehabilitate themselves and start the new year's work after a good rest.” Plan is no longer practical, and studio will now operate 52 weeks a year.

Market commentary:

Bulls encouraged by resumption of auto manufacturing and higher commodity prices; technical market position also considered promising, ready for gradual resumption of upward trend interrupted in late July. New rally highs reached by US Steel, GE, Westinghouse, Consol. Gas. Trading favorites including Vanadium and Radio particularly strong. Volume remained low, but prices generally improved through the session and closed at day highs. Utilities and oils strong; banks and trusts weak. Bonds dull but generally firm.

August bulletin of Nat'l. Assoc. of Credit Men optimistic; "We have managed to get through the storm with no conspicuous failures and no serious damage to our machinery of production and distribution." Now sees business skies clearing, sees gradual but sustainable recovery.

Chairman G. Woodruff of Nat'l Bank of the Republic in article "Green Lights Ahead" predicts second-half recovery in business. "The red lights, through which our people last year drove, have changed. The curbstone admonitions of the minions of the economic law near an end."

Technical market strength seen in resistance to repeated bear efforts since July 18; very low recent volume attributed to stocks in strong hands ("in the hands of interests not to be frightened by professional drives"). Recent rally having been digested, market considered in good technical shape for further advance.

Market action still seen driven mostly by professionals, not much public or outside buying seen. Conservative observers still believe sustained uptrend unlikely until market breaks through previous resistance levels on good volume.

Farm leader Taber predicts "major catastrophe" unless rain appears in drought area soon; calls on President Hoover for immediate help for affected areas.

Attorney General Mitchell orders investigation of low-price for Georgia tobacco after charges that speculators are manipulating the market.

Economic news and individual company reports:

All states have a gasoline tax; average is a little below 4 cents a gallon. Total expenditure by motorists for fuel, tires, parts, other needs about $3.75B/year.

150,000 auto workers, including 100,000 in Ford's Rouge plant at Dearborn, returned to work yesterday as production shutdowns ended.

Auto sales worldwide remain at depressed levels, including India, China, Canada; attributed to world economic depression and political situation.

Fed. Reserve member banks report $75M increase in week ended July 30 in “all other” (mostly commercial) loans to $8.529B.

Companies reporting decent earnings: American Machine & Foundry (cigar/cigarette making machinery), Crown Cork & Seal (bottle caps).

RCA-Victor exhibiting new radio models to retail for $110 to $285. More expensive models will come with recorder able to permanently record radio programs.

Musical:

“Earl Carrol's 'Vanities.' A lavish and expert spectacle, containing good comedians and a spectacular chorus: marred by offensively infantile grossness in the sketches and awkward aspirations toward mere nakedness.”

+ The Boring Stuff:

Editorial: Treasury Department has allowed entry of $4.5M in Russian pulpwood, says will only embargo shipments based on "specific complaints backed by evidence." Since Russia isn't open to foreign observers, this could in practice make it impossible to exclude products make with forced labor. We shouldn't exclude Russian goods because we disagree with their political ideas, but a more trustworthy investigation of the forced labor question is needed.

Wheat and corn sharply higher on news of crop damage. Cotton finished up but didn't react to news of drought damage; rise was on short covering in final hour.

Interstate Commerce Commission decision lowering grain transport rates to help farmers seen hurting rail revenues, particularly in Southwest, Pacific Northwest.

Farm Board Chair Legge repeats call for wheat curtailment, also calls for using wheat surplus as cattle feed, solving feed shortage and wheat surplus at once.

Attorney General Ward praises some aspects of current investment trust [similar to mutual fund] management; found to engage in little risky speculation such as short sales or buying on margin. However, calls for universal publication of portfolios held by trusts.

West & Co.: "it would appear that the present time presents the most advantageous period since 1921 to purchase bonds" - note that in previous recoveries from depression, bond prices advanced for about a year after business and commodity prices stabilized. Recommend long term over short term bonds.

Harvard Economic Society sees favorable signs of business recovery in easy credit, slowing of commodity price decline, and increasing confidence.

B. Snow of Bartlett Frazier & Co. predicts heavy loss of corn crop due to drought will improve farm situation after long and futile government effort to do the same. Anticipates improvement will extend to other grains including wheat, rye, and barley, as they are substituted for corn in feed and other uses.

Number of US companies represented in Germany is now 1,500; number of branch plants is 79.

Rail companies in 1929 bought 19.2% of total US fuel oil, over 20% of timber, 17% of iron and steel products, and 23% of bituminous coal.

July construction contracts for NY Metro. area were $68.9M vs. $80.3M for June and $177.7M for July 1929.

Canadian construction in first 7 months was 17.3% below 1929 level.

Canadian index of employment was 118.9 on July 1 vs. 116.5 on June 1, 124.7 on July 1, 1928, and 117.7 on July 1, 1927.

Canadian tariffs not likely to be enacted by new govt. until winter session; Conservatives will concentrate on public works in current legislative session. Many complex tariff issues need to be resolved, some will depend on results of Imperial Economic Conference in London. US companies expected to counter tariff as car companies already do, by putting branch plants in Canada. Conservative victory attributed to business depression and Liberal policy of extending tariff advantages to British goods without first receiving reciprocal advantages; slogan of “Canada first. Empire next.” captured public mood (parties agreed on higher tariffs on US).

National park visitors up to July 12 this year were 1.314M vs. 1.163M in 1929. Rail traffic down, automotive up.

Business failures reported to Bradstreet's in July numbered 1,930, up 18.6% over 1929; liabilities were $72.2M, down 31% from 1929.