Saturday, September 6, 1930: Dow 240.37 +4.33 (1.8%)

Assorted historical stuff:

Editorial: Lindbergh proved the northern Atlantic could be flown eastward, and Costes and Bellonte, landing in Dallas on Sept. 4, proved it could under certain conditions be done westward. “No commercial use can be made of that information” now, but this was true of many technologies when first invented such as the steam engine and telephone - as a result of their development “the idea, handed down from primitive times, that every stranger is an enemy, has to a large extent been broken down under the influence of quick transportation and communication.” In the near future, aviation too will be developed; success will be measured by progress “in standards of living, and in social relationships that foster peace and goodwill between nations.”

French Ministry of Public Works reports nearly all reconstruction of regions devastated by World War has been completed. Almost all trenches filled in; most of 8M or more acres of ravaged soil has been cleaned. “Nature has healed the scarred and desolate land of 1918 beyond the most hopeful expectations.”

Brazil suffering from political disturbances, falling currency, coffee crisis, and pessimism regarding ability to get through depression without damage to credit.

Rumors Canadian govt. will shortly announce new policy to help industries such as textiles hurt by foreign competition; unclear what form policy will take.

New York metro area population is 10.741M, of which 64% live in 5 boroughs, 25% in New Jersey, 9% in other New York counties, and 1% in Connecticut.

Market commentary:

Market appeared to have been strengthened by past two days of consolidation; bulls encouraged by failure of bear efforts to bring out liquidation; also by increase of $8M in brokers' loans, taken as sign of greater public participation (though a relatively small increase). Retailers strong following news of improving Aug. sales at Woolworth. Major industrials recovered vigorously from recent lows. Amusements, utilities, banks also strong. Volume increased as prices went higher, and “bullish demonstrations” spread. Rails and oils neglected. Market closed on day's highs. Bond market strong; Dow 40 bond average at new 1930 high of 97.29; high grade corp. strong; convertibles more active; govts irregular, little changed.

Market opinion now sharply divided; bears cite repeated failure to break through 241 resistance level, bad farm news, and recent bad business news; bulls point to market resistance to selling (volume drying up on declines), and to strong positive reaction to good news as indicating path of least resistance is upward.

More brokerage houses advising purchase of stocks in their market letters; considered supporting factor for market.

One broker advises patience for current type of market; “If you hold the good stocks long enough you are bound to make money,” but if the average trader buys a stock and “it fails to move as expected, he soon tires and sells out.”

Veteran observers encouraged by recent bond market action; strength has spread from bonds to preferred stocks; this usually precedes rise in common stocks.

Bank merger rumors recently revived; possible resumption of vigorous 1929 competition to become largest financial institution.

Foreign markets including London, Paris, and Berlin sharply higher in past week; however, no increase in public trading seen and little foreign buying in New York.

M. Katzenberg, Pres. New York Hide Exchange, issues review of Exchange's first year of operations, says hide prices have declined to extremely low levels.

Economic news and individual company reports:

Bradstreet's review notes “unmistakable” business improvement from July and early Aug. dullness, back-to-school buying; Dun's review sees “acceleration of activity,” though commercial recovery still expected to be gradual.

Index of import volume for July was 91 vs. 97 for June and 124 for July 1929; lowest since Aug. 1924. July cotton imports $3.580M vs. $9.271M in 1929.

Weekly report by Fed. Reserve member banks shows currency in circulation up $65M vs. $81M in 1929; “all other” (commercial) loans up $3M vs. $41M.

Agriculture Dept. reports based on 100,000 special crop correspondents: corn crop futher damaged in first 3 weeks of Aug.; pasture also affected by drought; feed shortage said worst since 1901. Aug 1 estimate was for crop 500M bushels below average; deficit is now “no doubt considerably larger.”

Companies reporting decent earnings: American Fruit Growers, Prentice-Hall (textbooks), Penick & Ford (corn products).

Company reports since July 1: 187 companies reported higher earnings vs. 1929 and 446 lower; 918 dividends unchanged, 16 new, 10 increased, 71 cut.

Public reception favorable to new lower-priced Cadillacs; Sept. production increase announced.

Joke:

“'Are you married?' they asked the bachelor. 'Alas, no, thank heaven,' he answered.”

Movie news:

Paramount presents the Marx Brothers in Animal Crackers. Film is “usually amusing, and, once or twice, hysterically so. It is, however, almost tedious in those spots where the authors have allowed their propensity for punning to get beyond control.”

+ The Boring Stuff:

Farm Board chair Legge sees Russian return to wheat market inevitable, says only way to ensure profits for US farmers is restricting production to domestic needs. Farm Board asked to approve plan by US and Cuban sugar growers to curtail output.

GE asks employees for suggestions for improving their jobs; in first half, 17,474 suggestions were made, 5,616 adopted, and $56,974 paid to suggesters.

Acquisition by Procter & Gamble of independent British soap maker Hedley & Co. indicates they may be gearing up to challenge Unilever's effective monopoly on the British soap and margarine trade. Unilever controls every step from production of raw materials in Africa to distribution through extensive retail outlets.

Public participation in market trading still not believed large, but reported to be increasing.

Commodities mostly strong. Cotton up after rally in final hour. Grains strong; wheat up strongly, corn down slightly on profit taking, other grains up. Copper remains dull, price unchanged at 10 3/4-11 cents. Cocoa and crude rubber touch record lows at 6.04 and 8.80 cents, respectively.

F.W. Dodge reports construction contracts awarded in 37 states east of Rockies in August was $347.3M, down 5% from July and 29% from Aug. 1929. Total for first 8 months was $3.353B vs. $4.157B in 1929.

Wholesale gasoline prices in mid-continent (central US) market have increased by 1/2 cent to 6 cents in past few days. Due to oil curtailment, gasoline in storage has been reduced by 16.148M barrels since peak on March 29, although current total of 38.815M is still up from 31.233 on Aug. 31, 1929.

Steel industry currently producing at 55% of capacity, about at lowest level hit in severe depressions in past. However, inventories have not been piled up as in the past; production has been limited to requirements. Companies continue to invest in more capacity, confident in eventual growth of demand.

British steel trade reported improving from current low level; higher inquiries and better outlook.

Russia to spend 3.5B rubles to improve transportation system, of which 2.320B will be on rail system.

Freight cars ordered from US makers in Aug. were 823 vs. 1,306 in July and 2,562 in Aug. 1929; passenger cars were 13 vs. 32 and 131.

July aircraft produced were 244 (63 military); aircraft delivered were 282. For first 7 months 1,721 aircraft were produced and 1,832 delivered.

Curtiss-Wright reports first half loss of $5.352M; says company still in sound fiscal condition, but is “less than one year old, and ... still in the phase of pioneering development of a new industry”; also, industry is still recovering from severe overproduction in 1929.