Monday, October 27, 1930: Dow 193.34 -1.75 (0.9%)

[Note: The recap of the 1929 Great Crash will be back tomorrow - Oct. 27, 1929 was a Sunday with no Journal published.]

Assorted historical stuff:

Col. A. Woods, emergency unemployment committee chair., says time is right for construction, with rates and material costs low; to visit NY City today. Williamsburg Chamber of Commerce announces probable $5M project to “start the rehabilitation of Williamsburg.”

Dept. of Justice exonerates Interior Dept. on R. Kelley's charges of handing over rights to Western oil shale lands to large oil companies.

Historical oil stats: World production has increased from about 800,000 barrels/day in 1910 to over 4M currently, of which 64.5% is US. Currently shut-in production estimated at 2.383M barrels/day, of which 1.310M is in the US.

Dr. C. Warburton, Fed. drought relief sec., praises continuation of reduced rail rates on feed and livestock, says food situation may become serious in some states.

US birthrate in 1929 is lowest since 1915, at 18.9 per 1,000 population.

NY Gov. Roosevelt offers state armories as quarters for homeless during winter; Mayor Walker forms committee of 37 to aid jobless.

John David, NY clothing merchant, emphasizes importance of keeping well dressed as an aid to morale.

California has both highest and lowest points of dry land in the US, separated by only 86 miles: Mt Whitney, elevation 14,496 feet, and Death Valley, 276 below sea level. Until 25 years ago, the Salton Basin, near the Mexican border, was the lowest US point, but a 1905 flood turned it into the Salton Sea.

Curtiss Wright Corp. bans use of commercial planes for races due to fatal accident to airport operations manager.

Russian scientists announce methods of making leather from fish, govt. plans to open tanneries. Skin of white grampus said to make excellent shoe leather.

Market commentary:

Market wrap: Market action seen as generally positive, with profit-taking on Friday's extensive gains absorbed in good style; volume lower. Early dealings showed substantial gains in major industrials and rails; while the rally wore off as the session progressed and the final direction was down, the market as a whole impressively resisted isolated weak spots including Montgomery Ward and J.I. Case. Bond market rallied sharply on heavy trading; South American strong, particularly Brazil; European and US govts. firm; investment-grade corp. strong, convertibles sharply higher.

Week in review: Stocks showed some rallying tendencies to end the week after the Dow slumped to close at 184.98 on Wed.; at least a technical recovery is now expected. Most commodities were firmer, even early in the week when stocks were down. Bonds were down sharply most of the week, with many hitting new yearly lows; a sharp recovery toward end of the week made up some ground. Money market continued dull and easy; brokers loans continued to plunge, while commercial loans and money in circulation were down; NY City bank investments were up $84M to a new yearly high of $2.227B. German and Spanish situations considered improved; Brazil rebels victorious. Steel production down, as were steel and gasoline prices.

Stocks showing good resistance to recent selling include AT&T, American Radiator, American Tobacco, Woolworth, and dairy shares.

Recent confident statements by several business leaders including J. Raskob “carried greater weight than similar expressions in recent months,” with the market rallying vigorously in response. With commodities showing signs of stability, merchandising stimulated by cooler weather, and generally low production, chances of further declines in business were seen as lessening.

Union Trust of Cleveland says fresh wave of business pessimism in Oct. was unwarranted; notes definite evidence of improvement in merchandising and residential building, and very low inventories. Says business may be disappointed at slow pace of improvement, but believes fourth quarter will be looked back on at start of business recovery. Criticizes attempts at the “false stimulation” of trade.

Conf. of Statisticians in Industry says Sept. and first half of Oct. show a few encouraging details but no positive indication that a general upturn in business is here.

Economic news and individual company reports:

Irving Fisher's index of 200 commodities for week ended Oct. 25 was 82.7, unchanged from previous week and vs. 94.1 in Oct. 1929.

Recent demand for municipal bond offerings is down, particularly from banks, which “appear desirous of keeping their funds in liquid condition.”

Sept. rail earnings have so far been much better than expected, with first 12 rails reporting a 13.8% decline vs. 1929, compared to a 32.5% decline for all rails in Aug.; improvement is attributed to expense cuts in response to lower revenues.

Standard Oil of Indiana reduces crude oil prices in Oklahoma and Kansas by $0.07 to $.38 a barrel.

W. O'Neil, Gen. Tire & Rubber Pres.: tire inventories down 2M from this time last year; only 1 1/2 tires per car in use sold this year, drivers wearing tires out; expects higher demand, tire shortage in spring.

Companies reporting decent earnings: Lambert (Pro-Phy-Lac-Tic toothbrush, toiletries and medicinals), Diamond Match, Anchor Cap (glass, food containers).

Theater:

Ambassador Theatre presents play loosely based on the Marcus Garvey movement, starring Frank Wilson as Marius Harvey. Play begins with fraudulent stock promotion enterprise, resulting in a sincere back-to-Africa movement that ends bitterly in abandonment by the colonists.

Stock market joke:

“Broker: 'There are some very cheap stocks on the list ... that you might buy.' Trader: 'But I think something is overhanging the market.' Broker: 'You're right. The market keeps going lower because it has overhanging it thousands of traders who think something is overhanging it.'”

Jokes:

“'Mary has just married Bill Hendricks.' 'Bill Hendricks? Impossible! Why, he's the man she was engaged to.”

“Satan (to new arrival) - Hey, you act as though you owned this place. Newcomer - I do. My wife gave it to me.”

+ The Boring Stuff:

Editorial: Now that business has “sunk to levels unthought of” last fall or spring, there's a clamor of advice on how to restore prosperity. In particular, many say a simple increase in spending of 5 cents a day, a dollar a week, or some other per-capita amount, would do the trick. This is too simplistic, and reflects our weakness “for economic salvation by formula.” However, it might stand a chance of working if retailers reduced their prices to reflect lower costs and disposable income; there are some signs they're now overcoming their initial reluctance and doing this.

Col. A. Woods points to figures indicating strong financial position of most state governments. For 1928, $584.5M was spent on permanent improvements while net debt only increased $76M, indicating 87% of outlays were met from current revenues.

Editorial: Pres. Hoover, speaking at a recent AFL convention, suggested reconsidering the antitrust laws in light of modern conditions. There are two industries particularly in need of this: coal and oil. The coal industry, with twice as much capacity as needed, is “a running sore” in need of surgery, but the law won't permit the use of the knife. The oil industry is only slightly better off. The world has fundamentally changed in the 40 years since the Sherman antitrust act; the US alone “worships a fetish” in seeing things the same way; “inflexible prohibitions” should be modified to relieve an impossible situation.

Present wealth of former German Kaiser estimated at $103M, about half consisting of landed property.

Breuning cabinet approves balanced budget for fiscal year starting April 1, 1931 with spending of $2.481B, $270M under budget previously decreed in July.

Prussian govt. proposes combating unemployment by adding a year to compulsory schooling, and prohibiting layoffs in factories not adopting a 40-hour week.

Editorial by T. Woodlock: While rails have been affected by some factors out of their control, including lower rates, higher taxes, and competition from other transport, they also have their own destructive competition to blame; they should act together, intelligently and aggressively, to end this problem.

Farm Board says can't loan to Kansas Livestock Assoc. because it won't join the national livestock setup and eliminate commission men from its organization.

Westinghouse X-Ray Co. receives order from Bronx Hospital for equipment for the hospital's new x-ray department.

Foreign markets: London and Paris stronger through the week; German market up sharply on govt. parliamentary victory but lost gains toward end of week.

M. Taylor, US Steel finance committee chair, see steel industry near bottom, improvement very soon. Says US must adjust to new inventions and systems of production that increased output above consumption by equal redivision of labor.

Guaranty Trust of NY sees mixed picture; definite recovery not evident, but pronounced recession of spring and summer has given way to “irregularity, with positive improvement in some branches of trade and industry.” A full recovery probably will have to wait until spring due to the holiday lull.

Market seen as technically stronger after resisting recent isolated bad news on Montgomery Ward and the Van Sweringen rails. Since the market has declined about 25% in the past 6 weeks with no significant rallies, a more sustained improvement is expected, though possibly “accompanied by considerable irregularity.”
Demand by short-sellers borrowing stocks in the loan market was still fair, but lighter than earlier in the week.

Conservative observers inclined to wait for the market to encounter another test from liquidation, and demonstrate whether support levels can be held.

Commodities mixed. Grains weak; wheat and corn down substantially. Cotton continues rally, up substantially.

Mexican tariffs seen as emergency measure to correct trade deficit and declining peso; object will be to reduce imports by $25M; about 2/3 of Mexico's imports are currently from the US; in first 8 months, they totalled $82.7M vs. $83.8M in 1929, while US imports from Mexico were $61.5M vs. $84.1M.

Foreign financing by public US offering of securities in Q3 was about $153M vs. $466.3M in Q2 and $338.4M in Q1.

Standard Oil of NJ says has kept number of employees almost the same since start of year. Lily-Tulip cup says will start building inventory Nov. 1 instead of next year to help unemployment situation.

Youngstown District steel operations expected to advance 1% to 54% this week. Buyers said still minimizing orders and keeping supplies on hand down. Most producers in the district reportedly close to unprofitability.

Census Bureau reports cotton harvest running somewhat better than expected and slightly ahead of 1929; weather fair over the entire cotton belt.

US exports of wheat July 1 - Oct. 18 were 68.2M bushels vs. 58.6M in 1929. Exports of cotton Aug. 1 - Oct. 24 were 2.002M bales vs. 1.856M.

Cuban legislature delays action on Chadbourne sugar plan until after Nov. 1 election.

870 lumber mills reported orders for the week ended Oct. 18 were 2% above production of 265.0M feet; production is over a third below 1929 levels.

Montgomery Ward difficulties attributed to large number of new stores opened in the past two years.

Sinclair Oil has $7.86 a share in cash, $6.97 a share in crude oil and inventories, and plants valued at $32.21 a share; the stock is about 14.

Assorted Q3 earnings: Union Carbide $0.80/share vs. $0.70 in Q2 and $1.14 in Q3 1929; Maytag $0.08 vs. $0.40 in Q2 and $0.80 in Q3 1929; New Haven Rwy. $1.83 vs. $3.46 in Q3 1929, first 9 months $4.89 vs. $7.24.