October 12, 2009

Favorites of the week Oct. 6-Oct. 11, 1930

No Journal was published Sunday, Oct. 12, 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.

Important administrative note: A couple of weeks ago I wondered why no one had ever made a movie about Black Friday (Sept. 24, 1869), on which Jay Gould and Jim Fisk engineered a corner of the gold market. I am now informed that at least one movie was made that does depict it, though apparently only toward the end: The Toast of New York from 1937, starring Edward Arnold, Cary Grant, and Frances Farmer, no less! It appears to be a highly fictionalized biography of Jim Fisk. Unfortunately it's not available on Youtube; there is an insanely expensive DVD on Amazon, and I believe it's in the TCM channel library.

[*] Note: It may seem like I'm making fun of the optimistic forecasts like the ones I marked with [*] below. In fact, I think most of them were made reasonably by good to great businessmen and administrators based on the solid information they had in front of them.

Oct. 11:

[*] A. Coleman, Asst. Postmaster General, says inquiries indicate higher volume of mailings planned in Oct. and Nov., says this is one of best business barometers.

[*] J. Schenck, United Artists Pres., says “business depression definitely is ending,” announces increased production schedule.

[Note: Strangely familiar dept.] Bears argue that some stocks continue to sell at higher price earnings ratios and yields far below those reached in previous depressions; optimists reply higher valuations are justified in seasoned, financially strong stocks with record of consistently good earnings, also point to lower money rates vs. previous depressions.

[Note: This speech of course reminded me of the Greatest Movie Ever: “Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind. And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA.”] Richard Whitney, NYSE Pres., defends value of speculation as providing liquidity to market, allowing investors holding securities to turn them into cash at any time; this is an essential service for complex civilizations. Short selling necessary part of market, absence would distort prices from “real estimate of security values.” Extent of short selling and “bear raiding” exaggerated. Also believes capital gains tax an indirect cause of last year's inflation in security prices.

[Note: Ay Chihuahua! dept.] L. Baldwin, Missouri Pacific Pres.: Backbone of the long drought has been broken; situation greatly improved over a few weeks ago; Midwest and South preparing speedy comeback from economic depression resulting from the drought; praises farmers' resourcefulness and determination.

[Note: They're almost done with that dept.] Airline demands construction of passenger waiting room at Newark Airport, say will move to another airfield if demand not granted.

[Note: Strangely, the unbreakable glass had bits of pineapple floating in it.] Of 22M pounds of gelatin produced last year, 10M were used for dessert or salad and 5M for ice cream; also used to make movie film and unbreakable glass.

Oct. 10:

[*] F. Corley, Marshall Field VP, says inventories have been cleaned up, general business and industry on eve of recovery.

[Note: Strangely unfamiliar dept.] Rep. Byrnes (D., Tenn.) charges Treas. Sec. Mellon is exaggerating budget surplus for political ends; Mellon defends record, says accusation is itself political.

[Note: Sheer Genius dept.] Cure for pneumonia by electrically-induced fever of 116 degrees presented at Amer. Phys. Therapy Assoc. convention.

Oct. 9:

[*] W. Procter, Pres. Procter & Gamble: "In our opinion we have passed the bottom of the curve and business is slightly but unmistakingly better and in our opinion will continue to improve slowly."

[Note: Strangely familiar dept.] An optimist reports looking at cars on the road and finding almost all needed a new tire or two; similarly for shoes, “and so it does all the way down the line from automobiles to the end of the alphabet. Everything wears out. You and the other 121,999,999 people must buy soon.”

[Note: I like how they just casually mention the “bullet wound, mistaken identity” part.] Bill “Bojangles” Robinson appearing at the Liberty Theater in musical comedy about adventures of a company of black soldiers in the World War. Cast includes “some of the nimblest dancing talent in Harlem ... Mr. Robinson seems to find it as easy to dance as the audience finds it easy to watch him, although one of his arms at present is in a sling, due to a bullet wound, the result of mistaken identity. His dogs do not bark; they purr.”

Oct. 8:

[*] C Denny, Erie Railroad Pres., speaking to Traffic Club in St. Louis, says in his opinion business has passed bottom of the depression.

[*] T. Girdler, Republic Steel Chair.: “Steel prices are touching bottom”; large buyers now placing orders for future delivery; “Prices of many steel products have dropped to a point where many large consumers themselves realize any further decline would serve no constructive purpose.”

[*] F. Hulswit, Amer. Commonwealth Pwr. Pres., says co. will buy now for future needs; based on study of current conditions believes bottom of depression passed.

[Note: Some interesting stats here about US consumption/standard of living in 1930. I've seen some opinion that one difference between today and the 1930 is the more dominant US position today; while this may be true with regard to “superpower” status, it doesn't seem correct WRT consumption.] Pres. Hoover speech marking 150'th anniversary of battle of King's Mountain [major Southern battle in American Revolution]: One test of our system of govt. is the practical results: US has more youth in higher education than rest of the world combined; compared to the most advanced European countries, US has double the rate of homeownership per capita, consumes 4 times as much electricity, has 7 times as many cars, etc. Equally important is intangible qualities - sense of freedom, security, confidence in future progress. Sees govt. involvement in business except in emergency as destructive of equal opportunity and tyranny through bureaucracy; business practices which would dominate the country for selfish purposes likewise destroy equality of opportunity.

Oct. 7:

[Note: For those wondering why Hoover is suddenly appearing everywhere, I'm assuming it's because of the upcoming midterm election. This speech is interesting because it shows there was in fact a significant amount of “stimulus” applied in 1930 – note the entire Federal budget was only about $4B at the time. It appears that most of the stimulus was accomplished by enlisting industry, particularly rails, to maintain expenditures and advance planned work. Hoover seems to have conceived of these industries as reservoirs of spending that could be drawn on in times of unemployment.] Pres. Hoover addresses AFL. Praises cooperation of labor and business after fall market panic, says measures adopted “served as a practical system of unemployment insurance”; notes public works and construction by rails and utilities in first 8 months was $4.5B vs. $4B in 1929; “a new and improved tool has been added to the working kit for the solution of our future problems.” Says some regulations that lead to destructive competition and instability may need to be modified. Praises scientific and labor saving development as gain to employers, workers, and consumers; recognizes problem of “technological unemployment” but believes new discoveries and inventions will absorb workers displaced from older industries.

[Note: 1914 must have been one hard-partying year.] Prohibition Bureau estimates illicit liquor production in US in year ended June 30 at 876.3M gallons; estimates consumption at 40% of 1914 level.

Oct. 6:

[*] S. Archer, Pres. Archer-Daniels-Midland, says Sept. business largest of any month this year, inventories remain low; “with the more general feeling of optimism that is being manifested, we expect the holding off tendency which has been so pronounced to give way to more liberal buying from now on.”

[*] G. Verity, Pres. Amer. Rolling Mill Co.: “I think it is pretty well conceded that we have reached or passed the bottom of this depression and from now on can look to gradually improving business”; industry should be back to normal by end of Q1 1931; company business in Sept. up 25% over Aug.; Business recession has been costly, but cost will be recovered thanks to removal of “deadwood acquired in prosperous times.” Looks forward to tremendous prospects in all industries.

[Note: Strangely familiar dept.] Times are changing in Manhattan real estate. In the past 15 years many landlords did as little as possible for tenants; repairs were kept to bare necessities unless tenants paid, and “requests for redecorating were as often as not received with dignified silence.” Recently, a tenant requested a number of quite expensive jobs; the landlord's letter back concluded “Our decorator will be around in the near future to arrange for the work at your convenience.”

[Note: Thank goodness they don't do that anymore dept.] Federal grand jury indicts six former employees of Manhattan Elec. Supply for manipulation of the stock; tactics included employing a group to send out letters, market sheets, and telegrams to the public, and paying money to brokers in return for advising customers and the public to buy the stock.

[Note: Sheer Genius dept.] Berlin radio engineers build mammoth loudspeaker audible over a 25 mile diameter, plan to attach speaker to a balloon anchored 3,000 feet high to broadcast concert to the city. Loudspeaker creates airwaves that can be felt 150 feet away.

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