An interesting piece of economics history:
Letter from T. Macauley, Sun Life of Canada pres., defending his proposal for Fed. Reserve to halt depression by buying $500M of bonds, increasing bank lending power by over $5B. Currently, dollar has no fixed purchasing power but varies with amount of currency credits outstanding as controlled by the Fed. “If we permit commodity price levels to go up and down with good and bad times, we are asking for trouble ... we shall automatically transform moderate depressions into severe ones and severe ... into disasters.” Suggests boom-bust cycle can be moderated by stabilizing value of dollar relative to broad price index of industrial and farm products, rents, real estate and security prices. Praises Fed actions in preventing inflation by selling bonds to absorb excessive gold imports in past years, and in already buying $450M of bonds to reduce effects of current depression; believes it may be hindered in acting more agressively by current criticism and opposition.
Assorted historical stuff:
Growing sentiment seen on both sides of the political aisle for modification of the Sherman antitrust laws, though form this would take is uncertain. Pres. Hoover is expected to mention the Sherman Law in his next message to Congress, while Dem. Nat'l Committee chair. Raskob outlined a specific proposal before the election.
Editorial: “China, with its great population and low standard of living, offers a great potential market ... so too does all Asia.” China trade already has grown dramatically; from 1900-20, imports grew from $155M to $940M and exports from $120M to $670M; since then wars and depression have somewhat reduced trade. China needs both physical infrastructure for business and political stability, but latter will follow former. Rehabilitation should be a business benefit, not burden.
British imperial conference apparently fails to reach definite solution of empire economic problems; another conference seen likely in Ottawa next spring.
Last Mountain Progressive Assoc. urges secession of Western Canada, saying Eastern financial interests working against best interests of the section.
Sir Percival Dewhurst Perry, chair. of Ford Motor Cos. in Europe, makes bold call on Russia: “The Russians have seen the writing on the wall. With the collapse of their five-year plan there is no doubt that they will revert to capitalism. It is the only way in which they can avoid a revolution.”
Use of airmail said to save costs in a number of fields, including: bankers sending checks for quicker deposit, vaccines, “style garments,” and urgent advertising.
Rate of admissions to NY State “Craig colony for epileptics” - one every 29 hours; “state hospital for criminal insane” - one every 38 hours.
One-room rural schools have been vanishing at the rate of 4,000 a year since 1920; however, 153,306 still remain.
Lunch service to New York high school students, begun by Dept. of Education on small scale 29 years ago, is now business of $2M annually.
Market wrap: Rally continued for a third day in a row; considered noteworthy since this was the first three day positive streak since mid-August; seen as evidence “forced liquidation was burning out.” Sharp rebounds in majors including GM, du Pont, and Woolworth, and specialties including Fox Film and J.I. Case; coppers continued strong while major industrials including US steel and American Can pushed gradually upward, reaching best levels in the final hour; banks and trusts also strong. Some irregularity in final dealings but day's highs fairly well maintained. Bond market more active, generally higher, particularly corp. with rallies in many recently weak issues; convertibles rally; US govts. remained firm, hitting high prices for the year.
V. Lersner, Bowery Savings Bank pres. (largest US savings bank), says savings can be overdone at times like these; “one should save, but not at the expense of the other fellow.” However, emphasizes that dollars in savings banks are not hoarded but loaned out, helping to increase wealth of the nation.
Rumors that E. Meyer, Fed. Reserve Gov., would issue “constructive statement regarding credit conditions” were denied by authorities.
Steel industry update: Immediate outlook gloomy, with production expected to dip to 35%-40% or lower over rest of year. Q3 earnings showed very few companies earning dividends, and many showing losses; Q4 will undoubtedly be worse. Growing belief that improvement will set in sometime between Jan. 15 - Feb. 15. Optimism on price stabilization. Peak of 60%-70% seen for spring upturn, followed by moderate lull and possible improved summer and fall.
J. Simpson, Marshall Field chair.: “We have scraped the bottom of the slump. That means things henceforth will be on the upward trend.”
Many brokers that have kept clients have the market for several months have changed views in the past few days. While expecting renewed irregularity after current rally, believe forced liquidation has brought standard stocks down to attractive prices for long-term investment.
Economic news and individual company reports:
Fed. Reserve reports money in circulation Nov. 12 down $14M to $4.477B, total Reserve Bank credit outstanding up $25M to $1.035B. Member banks in NY City report brokers' loans down $219M to $2.235B vs. $4.172B in 1929, new record low; “all other” (commercial) up $40M to $2.644B.
Companies producing over 90% of world's copper agree to reduce production by 20,000 short tons a month.
Labor Dept. says analysis of Oct. reports it received shows little change in employment situation, though large numbers remain unemployed; considered hopeful since Oct. usually shows seasonal increase in unemployment.
Agriculture Dept. reports demand for farm labor Nov. 1 was 73.6% of normal vs. 87.5% in 1929; supply was 107.2% of normal, highest in 10 years or more.
Big corporations seem to be accumulating more cash than ever, largely due to reduced inventories; in first 9 months, GM's cash was up $44.5M to $145.6M.
Companies reporting decent earnings: National Dairy Products, White Rock.
Paramount-Publix new releases include Harold Lloyd in Feet First, Maurice Chevalier in Playboy of Paris, and Jackie Coogan in Tom Sawyer.
“Ma Talltimber - I'm afraid Bud's learned to gamble at college. Pa - Well, I hope he's finally mastered the study. His expenses while he's been learning it have been too much for me.”
“'The spirit of your departed wife wishes to speak to you. Do you want to say anything to her?' 'It wouldn't do any good if I did. She always did all the talking.'”
+ The Boring Stuff: