October 8, 2009

Wednesday, October 8, 1930: Dow 203.62 +0.86 (0.4%)

Assorted historical stuff:

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.

Lord Barnby, former Fed. of British Indust. Pres., asks collaboration of central banks with Bank for Int'l. Settlements in conservation of gold as circulation reserve, sees this as means of ending declining values and world trade depression.

Editorial: Revolution in Brazil seems to have gotten off to a good start, having captured two southernmost states and three others. Investors are naturally concerned about safety of large amount invested there by countries including the US England and France. However it would be foolhardy for Brazil to repudiate these obligations since they can't live without foreign trade and loans. “The revolution may be regarded as similar to a presidential election in the United States, where an administration may be changed, but the government remains unchanged.” There is some concern that a military struggle may further damage the country's finances.

Henry Ford speaks in London, favors abolition of all tariffs and predicts within 2 years no Ford products will be imported into Europe, but all manufactured there.

Wm. Wrigley providing building in Chicago to give winter shelter for 2,000 men.

New Southern Air Fast Express airline to offer 19-hour service between Los Angeles and Atlanta.

Market commentary:

Market wrap: Bears were notably absent at the market open, possibly temporarily deterred by NYSE's “pronunciamento against bear raids.” Moderate starting rally, however, brought a reappearance of the bears, “who pounded against one pivotal issue after the other,” starting with GE and AT&T. New yearly lows in these were followed by a “steady stream of liquidation” spreading to almost all sections of the market; many stop loss orders hit. US Steel was bear's next target; while they successfully forced it to a new yearly low at 151 1/4, it quickly rebounded; this was followed by a vigorous final-hour rally in the general list. Bond market more active, prices generally lower; some firmness in highest grade corporate.

Many wild rumors have circulated in Wall Street recently concerning the standing of firms, individuals, institutions, etc.” Reports have been entirely unconfirmed, but have circulated widely and influenced trading.

Market was looking for results of the NYSE statement against bears; “there was considerable uncertainty as to just what action could be or would be taken.”

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.

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

Economic news and individual company reports:

Rail freight loadings for week ended Sept. 27 were 950,381 cars, down 2,131 from prev. week, 252,758 or 21.0% from 1929 week, and 246,584 from 1928.

New bond offerings in Sept. were $424.0M vs. $202.8M in Aug. and $209.3M in Sept. 1929; first 9 months were $4.426B vs. $2.488B in 1929.

Farm real estate values were 115% of prewar level on Mar. 30 vs. 116% in 1929; attributed to large supply of land, lower earnings, and tighter mortage credit.

Steel ingot production in Sept. was 2.868M tons and 55.1% of capacity vs. 3.095M and 59.46% in Aug., and 4.528M and 92.35% in Sept. 1929.

Automobile output reportedly declined further in past week and is now approaching low of July-Aug. Rest of the year looks weak due to seasonal factors, though introduction of new models a month early in Nov. may help to some degree. Some of weakness blamed on reduced farm buying.

Companies reporting decent earnings: Consol. Gas of Baltimore, Scott Paper, Melville Shoe, National Fruit Products.

Kroger Grocery and S.H. Kress join Woolworth in announcing Sept. sales increased over 1929.


“The passerby stopped and looked at the man struggling vainly with his broken down motor car. 'Excuse me,' said the stranger, 'but perhaps I can help you. There are one or two things I can tell you about your make of car.' The owner straightened himself up and looked at the other. 'Please keep them to yourself, old chap,' he remarked, warningly: 'there are ladies present.'”

+ The Boring Stuff:

Editorial: The peak traffic year for rails was 1920; the net operating income for 1920 would have been $1.150B based on the rates set late in the year by the ICC. In the intervening 10 years, rails have invested about $6B in capital expenditures, yet operating income for 1928 was $1.173B, for 1929 was $1.252B, and for 1930 will probably be below $1B; “failure of railroad net operating income to grow in proportion to investment in railroad plant ... is developing increasingly ominous proportions.” Faith in growth is good, but “there is a limit to all things human - even in this country.”

Editorial by T. Woodlock, former ICC member: Damage cases, in which rail customers sue to recover “unreasonable” or “discriminatory” payments (generally for freight shipping), have mushroomed to the point where they take up 2/3 of the ICC's docket; system must be reformed to reduce number of cases.

Brazilian troubles attributed to low coffee prices, friction between states of Minas Geraes and Sao Paulo; conservative president-elect J. Prestes is from Sao Paulo. US investments in Brazil total over $500M, mostly govt. bonds.

W. Washburn, NY State Securities Bureau head, asks NYSE for any evidence of circulation of false rumors by short sellers, says will prosecute them under section 926 of Penal Law (“False rumors as to stocks, bonds ...”), providing for fine of up to $5,000 and up to 3 years imprisonment.

First metal-base highway being tested in Springfield, Ill.

Foreign exchange and bonds of several countries particularly unsettled on political instability, including Germany, Spain, and Brazil.

Consensus on stocks seems to be optimistic for the “long-pull” outlook but pessimistic on near-term price movement; many brokers are advising staying on sidelines, which should create a pent-up buying demand that “will scramble into the market at the first sign that a turn has been reached.”

Chart readers encouraged by support quickly developing following violations of former support levels on Monday. Failure to follow through on this decline may indicate a halt to the downtrend. Another market student points out recent swings have been 24-26 days long, indicating current reaction may be near end.

Opinion differs over source of recent liquidation; possibilities include investment trust and foreign selling.

Opinion differs over significance of recent weakness in scrap steel prices, with some authorities saying market is returning to normal after some short covering.

E.F. Hutton notes many small stocks have already been thoroughly deflated, with selling now concentrated in trading leaders. Full recovery is not to be expected while news continues discouraging, but history shows this changes when least expected; “in the long run we think people will look back upon this period as having offered attractive investment and speculative opportunities for the long pull.”

Conservative observers advise against any buying until “market has stabilized itself.”

Commodities weak. Wheat and other grains sharply lower. Cotton down moderately, closed slightly above years lows. Copper buying continues in good volume at $.10/pound, though it's unclear what proportion is for stocking up vs. current demand.

Class 1 rails net operating income in first 8 months was down 32.9% vs.1929; best area was southwest, down 18.2%; only 3 rails had increase.

American Petroleum Inst. reports gasoline stocks at refineries Oct. 4 were 36.441M barrels, down 781,000 in week; refineries operated at 67.2% vs. 71% prev. week; oil production was 2.387M barrels/day, down 2,800 from prev. week and down 500,100 from 1929.

Agriculture Dept. and Farm Bd. sponsor acreage reduction campaign for cotton aiming to reduce acreage from 45.8M acres to under 40M.

US soft (bituminous) coal production in Sept. was 38.6M tons vs. 35.7M in Aug. and 45.1M in Sept. 1929; first 9 months was 339.6M tons vs. 387.3M in 1929; hard (anthracite) coal production in Sept. was 5.3M tons vs. 6.2M in Aug. and 6.5M in Sept. 1929; first 9 months was 51.0M tons vs. 52.6M in 1929.

British registered unemployed on Sept. 29 were 2.162M vs. 2.110M on Sept. 22 and about 1.190M a year ago. Labor Party adopts resolution declaring application of definite socialistic principles as only possible remedy.

German mortgage banks continue to do well selling long term mortgage-based bonds (pfandbriefe) to banks and foreign buyers; rates are high and delinquencies remain low at 2%-3%.

Uruguay exports in first half were $64.6M, up $11.0M over 1929; imports were $44.0M, down $3.1M.

Detroit Bd. of Commerce employment index on Sept. 30 was 74.8, vs. 80.8 on Sept. 15, vs. 83 on Aug 31, and 119 on Sept. 30, 1929.

NY City to sell $75M in bonds Oct. 21; sale conforms to Comptroller Berry's policy of confining city bond sales to one offering a year.

National Poultry, Butter, and Egg Assoc. asks for concerted action against “radical legislation” designed to create new marketing machinery.

Agreement reportedly reached for merger of Gillette and AutoStrop Safety Razor Co.; financing to be announced shortly.


  1. You know, it's the jokes that really keep me coming back to this blog. They're actually funny, and then they're also a window into another time. Like how reprinting Calvin & Hobbes will be for the future when all media is video on the Internet.

  2. there's another interesting event in that year, was the first time that someone can Buy Generic Viagra in any drug store, this could be thanks to the support of the goverment.