No Journal was published Sunday, Sept. 14, 1930. Once again, a collection of my favorite items of the week. These aren't a representative selection but just the ones that made me smile or take notice.
[Note: For those keeping score at home, the US population in 1930 was about 123M, or a little over a third of the current population, so per capita car sales in 1929 and 1930 were surprisingly close to the current level.] Car production for 1930 now seems likely to be about 3.75M, well short of the expected 4M. This will mean lower earnings for auto companies and for the industries supplying them. On the bright side, this should cause large deferred demand when economic conditions return to normal; there is “little question but that the automobile market normally will absorb upwards of 4.5M units a year.” In the meantime, the industry continues to operate profitably as a whole, and is increasing efficiency and cutting costs, which should further improve profitability when normal conditions do return.
[Note: Not too many people know that Al Capone got his start dealing Nova lox. ] W. Groat, Assistant Atty. Gen., brings suit to dissolve Manhattan & Bronx Smoked Fish Dealers Association due to alleged food racketeering.
[Note: Could the first shiv fight over which of the two existing radio programs to listen to be far behind?] Prisons are finding radio helpful as a diversion for inmates. Radios have been installed at Ohio and Iowa State Penitentiaries.
[Note: Strangely familiar dept.] Offering of $334.2M in 2 3/8% one-year Treasury certificates is oversubscribed by almost 4:1.
[Note: Strangely familiar dept.] Brokers, businessmen, and even the general public more optimistic; over 75% of brokerage houses now advise buying stocks.
[Note: Strangely familiar dept.] B. Anderson, Chase Natl. Bank economist, says Fed policy of easy money will not be sustainable when business revives; suggests moderate tightening now to avoid shock of a sudden severe tightening later.
[Note: Hopefully not soon to be strangely familiar dept.] Florida Bondholder's Adjustment Committee calls on owners of defaulted local bonds to accept arbitration with principle that local govt. should “pay to the full extent of its ability to pay” when fairly determined, and no more. Says full payment in many cases impossible due to string of problems in past few years including collapse of real estate boom, bank failures, storms, and Med. fly scare; local feeling is that many bonds were voted in due to high-pressure tactics by outsiders.
[Note: I can't believe that didn't work dept.] Group of executives headed by advertising man Frank Kiernan sends 15,000 blue buttons with slogan “Business is Good” to officers of all important corporations.
[Note: No, it wasn't that William Holden. I like his character's name, though - if he were a banking executive he'd be Jamie Pandit. ] Three Faces East, a fast-moving spy film; Erich von Stroheim as Valdar, German agent, William Holden as Sir Winston Chamberlain, First Lord of the Admiralty.
[Note: Strangely familiar dept.] Market considered stronger technically from recent period of consolidation, move upward on higher volume; declines of June and early August are seen as having shaken out weak hands, as indicated by shrinkage in brokers' loans. Recent economic news has also been encouraging, including steel production, retail and mail order sales. Roger Babson's switch to bullish stance has also attracted attention. All indications point to good sized gains in stocks in the near future, though third-quarter earnings reports in a few weeks may change the trend.
[Note: It's funny because it's true.] An out-of-work broker asked a friend who owned a circus for work. His friend said the circus gorilla had recently died, and if the broker wanted to get into the gorilla's skin, swing around, growl, and amuse the children, he could have the job. Things went well until one day the rope the “gorilla” was swinging on snapped and catapulted him into the lions cage. The lion let out a roar, which the “gorilla” answered with a timid yelp. The lion roared louder, and the “gorilla” lost his nerve and started screaming for help. The lion came closer and whispered “Shut up, you damned fool, you're not the only broker out of a job.”
[Note: And I thought we invented dumb alcohol-gasoline subsidies.] Germany requires gasoline to be blended with 2.5% alcohol to benefit potato farmers.
[Note: Perils of trying to make two good calls in a row dept.] Roger W. Babson (economist, made perfectly timed bearish call in fall 1929) optimistic on immediate future, sees possible “stampede of orders” due to underproduction; says it's as evident now that business is bound to improve as it was clear a year ago that it must deteriorate.
[Note: Sheer Genius dept.]
“A clever contraption within its black box -
Its figures flash out swift and sure on all stocks;
No matter how hectic the trading may get,
what millions it mounts to, its pace shall be met.
Ah, had we but had it last fall 'neath glass bell -
Twelve million, sixteen - whole world wanting to sell -
those agonized hours when the truth none could know -
the old ticker smothered because 'twas too slow.
This dainty swift prodigy, blithely abreast
of any big market, such fears sets at rest.
And yet this great boon - human nature is such -
at moment of getting it doesn't seem much.
Like Flora McFlimsy of Washington Square,
(that worthy young lady with nothing to wear)
this nifty speed marvel that's just come on view,
has cause for complaint - it has nothing to do.”
[Note: One of my all-time favorites. An almost hypnotic series of ever-increasing stupidities, a little like reading a history of mortgage banking over the past 10 years.] Canadian railway board reports on 1,791 rail crossing accidents caused by “inexplicable negligence.” Of these, 77 drivers drove under crossing gates while they were being lowered; one left his car and raised the gates after they had been lowered; 69 drove into the side of moving trains; 43 drove into trains that were standing still; 8 used the railway tracks as a highway; one stopped on the tracks and fell asleep; one stopped his wagon in path of approaching train to adjust load.
[Note: Perils of interpreting market technicals dept.] Dow considered to have given “highly bullish signal” by closing Saturday above the 241 resistance level where selling was repeatedly encountered in summer. This “reflected powerful buying based on growing optimism regarding autumn trade prospects.” Major investors reported to have participated in buying after being “persistently bearish since the early part of the year” and making “huge profits on the short side.”
[Note: Perils of interpreting market fundamentals dept.] Some of “the shrewdest market traders” now see “definite turning point” in stocks. Conclusion isn't based on “chart theories such as double or triple tops” but on fundamentals. Believe long side will be the safe one from now on, and “standard stocks can be bought with assurance of profit. The corporations, the country, and the people are very rich, richer than after any previous panic, ... industry and the market are in a strong position to stage a comeback.”
[Note: Strangely disturbing dept.] M. McCavran, Pres. American Assoc. of Cosmeticians and Hair Artists, estimates there are about 40M women in US; total annual usage of make-ups and creams is 316M pounds, or about 7.9 pounds/woman annually, or about 348 pounds/woman between ages of 16 and 60.
[Note: Strangely familiar dept.] Editorial: Last fall, Fed. Reserve failed to heed urgent warnings for months before the crash; New York Reserve bank and others were noting “orgy of speculation” and urging increase in rates, but Fed “followed schoolteacher tactics of issuing admonitions and warnings.” If new Fed appointments are more “aggressive and forceful,” a great deal will have been gained.
[Note: Strangely familiar dept.] Good business news has started to accumulate over the past week, including better wholesale and retail reports (ex. Woolworth), good steel news (increase in production and some indications of price improvement), increase in freight loadings for second week in a row (although still well under 1929 level), some increase in gasoline prices.