Friday, September 12, 1930: Dow 242.88. -2.21 (0.9%)

Assorted historical stuff:

Editorial: M. Campbell, former NY Prohibition Administrator has accused high US officials of links to the liquor business; Assistant Treasury Sec. Lowman has replied by “saying, in substance, that Campbell was at one time a veterinarian in the army and that the mules died.” This frivolous defense by insulting the accuser is inadequate; he makes clear and detailed charges, easily verified or disproven. While the accused are entitled to presumption of innocence, the people are “entitled to a positive denial ... supported by facts. ... Prohibition is on trial now as never before in its history, and the Great American Jury” will demand a satisfactory defense.

Spain announces new currency stabilization plan; market is little affected. One authority dismisses plan as “another one of those things.”

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.

“Police tabulations show ... more apostles, founders of faiths, prophets ... and visionaries” in Paris than any other city. Devil worshipers have two temples to choose from. A new sect is being formed to fight all religion, “and to this end have invented a new one all their own”; temple being erected on Champs Elysees.

International yacht races are approaching; fans will be kept updated by wireless and telephone. This is more modern but not as much fun as the method used on Wall Street in 1887; Dow Jones & Co. stretched two ropes across Broad St. with replicas of the rival yachts attached, and moved them to reflect updates received by telegraph. Crowds packed Broad Street to follow the race.

Mary Ranney wins speed typing contest in Iowa, typing 42 words/minute in spite of only having one hand.

Van Sicklen Corp. to produce new “automobile radio,” the Van Sicklen Motoradio.

Market commentary:

Stocks underwent technical correction attributed to “feeling in responsible quarters” that market needed time to digest the upswing from August lows. Considerable profit-taking in recently strong stocks including Woolworth, US Steel, American Can, GM. However, bulls were encouraged by market action on the setback; volume dried up and buying appeared on any further declines. Market settled into narrow range for rest of day. Bond market turned dull as day progressed, with prices irregular but mostly firm; convertibles weak; foreign govts. firm, gains in South American.

Recent encouraging factors for bulls include increases in freight loadings and steel production, and drop in NYSE loans against stock to 5.31% of market value. On the technical side, market has broken above July/Aug. resistance level at 241; volume and breadth of rally has gradually increased; public and foreign buying has also been increasing; market has consistently turned very dull on breaks; and some prominent speculators have turned bullish.

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.

Labor Sec. J. Davis says business on the upswing, economy showing “unquestionable signs of life.” Urges business to stop unfair competition that is “ruining business of the country by forcing men to sell under cost of production.”

Many political and business leaders said to agree an advancing stock market might help business by improving confidence and forward buying.

Brokers, businessmen, and even the general public more optimistic; over 75% of brokerage houses now advise buying stocks.

Economic news and individual company reports:

Fed. Reserve member banks report brokers' loans rose $33M to $3.143B in week ended Sept. 10; total on Sept. 11, 1929 was $6.474B.

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.

Companies reporting decent earnings: Kelvinator (refrigerators), American Safety Razor, Warren Foundry & Pipe.

J. Michelin, VP Michelin Tire, announces closing of plant at Milltown, NJ; bitterly condemns present policy in tire industry to increase volume at all costs, even to the point where both manufacturer and retailer can't make profits.

Movie:

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.

Joke:

“'Why is it,' asked teacher, 'that lightning never strikes twice in the same place?' 'Because,' answered Herbert, 'after it hits once the same place ain't there anymore.'”

+ The Boring Stuff:

Editorial: Attempts to use taxation to “ameliorate social conditions” have lead to some bizarre situations in the past, including proposal by a former Senator for a high income tax bracket of 105%, as well as some estate tax situations where an heir left an inheritance by someone from another state could wind up owing more than 100% in taxes. These last cases have mostly been fixed, though there is the sad case of a New York investor who died in 1929 leaving an estate later wiped out in the crash; the state is demanding a tax on the value as of the date of death, as per the law there.

Postmaster General D. Brown recommends 1/2 cent/ounce increase in first class mail rates to close Post Office deficit ($85M in 1929).

Illinois Mfr. Assoc. survey of state industrial situation reports slow but steady improvement; activity in Q3 expected to be about equal to Q2, but almost all industries expect Q4 activity to be appreciably higher.

C. Bardo, Pres. American Shipbuilding Co., announces expansion program, says US recovering from depression, but former prosperity will not be restored until people realize that a lack of ships to carry products abroad is resulting in losses of millions of dollars a year.

Otis & Co. say US Steel decline in unfilled orders not necessarily a bad sign; in second half of 1921 recovery coincided with series of declining steel orders.

Conservative observers continue cautious; fear market vulnerable to sharp bear attack; advise waiting for setbacks before buying standard stocks.

Investment trust (similar to mutual funds) practices said to be more conservative this year following “shock administered” last fall; buying stocks on basis of fundamentals; also have generally put buy/sell decisions in individual hands after problems making decisions by committee in panic last fall.

Commodities down. Grains weak; wheat and corn down sharply on higher than expected crop estimates, though govt. estimate of corn crop at 1.983B bushels would be smallest since 1901. Cotton down. Copper buying up slightly, price remains at 10 3/4 - 11 cents.

Money in circulation Sept. 10 was $4.465B, down $47M from Sept. 3.

Oklahoma Supreme Court acts to uphold oil curtailment law after lawsuit; seen as important case for oil industry.

Farm Board is expected to ask for additional funds when Congress meets next winter; most of the $250M appropriated to it has been spent.

Dow average of iron and steel products unchanged from last week at $45.52/ton, low for the year. Low for 1929 was $49.88 and average $50.61. Scrap steel market continues firmer, with some recent prices between $15.75-$16.25/ton. Higher recent demand for pig iron.

Gasoline in Chicago wholesale market was 6 1/8 - 6 3/8, up from 6 - 6 1/4. Further price increase is expected; refineries last week operated at 67% vs. 69.2% previous week and 84% in 1929, and gasoline in storage has been reduced by 5.527M barrels since Aug. 1.

Volume of soft (bituminous) coal production has held up remarkably well; this has benefitted rails that transport it including Chesapeake & Ohio.

British imports in Aug. were 79.9M pounds vs. 85.2M in July and 101.0M in Aug. 1929; Exports were 42.8M vs. 50.7M and 63.0M.

Mexican oil production in July was 98,256 barrels/day; exports were 89,094.

IT&T first half net $1.04/share vs. $1.56 in 1929; continues $0.50 quarterly dividend.

Gillette up sharply on renewed merger rumors with Autostrop; Vanadium up on rumors of renewed operations by “the same interests that sponsored its rise from the year's low of 49 7/8 to above 100 in the early summer.”

Kelvinator to introduce new low-priced refrigerator unit at $159.50; will have interchangeable mechanism for servicing.

American Safety Razor to introduce new gold-plated Gem Micromatic, selling for $1 including 5 blades.