November 29, 2009

Saturday, November 29, 1930: Dow 180.91 -2.20 (1.2%)

Assorted historical stuff:

John. D. Rockefeller, Jr. returns from two-month European tour; says although one can't disregard the grave problems facing the world today, or know what the remedy will be, “I believe that they can and will be solved ultimately. We, as a nation here in America, never had more to be thankful for than we have today.”

Failure of Albert Oustric ends history of “France's big post-war speculator.” Final extent of losses uncertain; forced liquidation by members of the Oustric “group” of cos. has caused general market decline, even in concerns having no business relations. “At bottom the situation is sound,” but failure has been a shock to public confidence. Oustric was said to have previously been rescued by the Bank of France in 1929, but apparently was refused aid this time.

French Premier Tardieu narrowly wins confidence vote during debate on bank failures; three officials who were clients of failed Oustric bank resign. Tardieu consents to Parliamentary investigation after assurances it “would not be judicial in nature.” A. Oustric and P. Bloch arrested and imprisoned on fraud charges.

Goodyear builds largest structure in the world without interior supports to house the two “super-zeppelins” (ZRS-4 and ZRS-5) being built for the Navy; dimensions are 1,175 feet long by 325 feet wide by 211 feet high.

Committee on revising NY building code proposes changes to make 100-story buildings more practical, including increasing limit on elevator speed from 700 feet/minute to 1,200 feet/minute, and operating two independent elevator cars in the same shaft.

Original telephone invented by Bell had 52 parts; today's has 201.

Northwest Airways has bargain fare of $35 round trip between Chicago and Twin Cities; plans to install radios in all its planes.

Charles Millar, “eccentric lawyer and sportsman” of Toronto, left a half million dollars to the Canadian woman to have the largest number of children by 1936. Currently leading is Florence Brown, 42, who claims to have borne 26 children in the past 22 years; second is Grace Bagnato, 37, who just gave birth to her 20th.

Market commentary:

Market wrap: Reactionary trend from pre-holiday trading became more pronounced; volume was down due to many traders taking a long weekend, but considerable selling took place and stocks moved down most of the session. Traders were generally bearish due to failure of stocks to hold recent gains, as well as lower steel production and rail freight traffic. Rails were particularly weak following rail executives' request for legislative relief. Major industrials were “in steady supply” while retail and mail order shares “lost their recent buoyancy.” Pressure lightened in final hour on short covering, with a slight recovery on lower volume. Bond market moderately active, generally lower; US govts. remain firm; foreign govts. weak; corp. weak with many hitting new yearly lows.

While rail executives painted a bleak industry picture in asking for legislative relief, it's worth noting “the carriers have no effective way of promoting their cause before legislative or regulatory bodies except to emphasize their disadvantages to the utmost”; their only way to get substantial relief is to show “disaster threatens.”

Many holders of rail, utility, and industrial bonds are reported switching into govt. issues due to continued reports of “drooping” corporate earnings.

T. Shotwell of H.L. Horton & Co.: “Better times are in sight”; business more cheerful, “has quit running away and is facing the situation with that determination to win which is the American characteristic.” Time has come to invest in stocks for capital increase as well as income. European troubles “mostly noise”; wars generally caused by food shortages; at start of Great War there was a world shortage of 20%, but now there's a “world surplus of food and of productive capacity.”

Broad Street Gossip: “'When looking for bargains, don't forget ... Wall Street,' remarked a broker. 'Two cheerless Christmases in Wall Street in succession would be rather a rare happening.'”

Economic news and individual company reports:

Assoc. of Railway Executives, representing all class 1 rails, reportedly will ask Congress for sweeping legislative relief including increasing license costs on buses and trucks, putting coastal ships under jurisdiction of the ICC, and making oil industry divest itself of pipelines.

Bradstreet's reports cooler weather has stimulated buying, offsetting to some extent effects of bank suspensions in South and Midwest in the past 3 weeks; fall buying is still below a year ago.

Total market value of the 1930 cotton crop will decline drastically; the 1928 crop value was $1.535B, 1929 was $1.426B, and 1930 will be about $926M.

Electric output by US light and power industry for week ended Nov. 22 was 1,722 GWHr vs. 1,718 in prev. week and down 6.2% from 1929.

Operating income of 103 telephone cos. in Sept. was $22.925M vs. $23.363M in 1929; first 9 months was $202.0M vs. $205.5M.

Company reports since Oct. 1: 225 companies reported higher earnings vs. 1929 and 376 lower; 584 dividends unchanged, 57 increased, 90 cut.


Scarlet Sister Mary - Ethel Barrymore's long-deferred return to Broadway was an occasion, even more so because it was also the New York debut of her daughter, Ethel Barrymore Colt. “And the fact that the return of the one and the debut of the other were in black-face made it an occasion twice over.” However, the play's characters aren't well developed, and though they're sympathetically approached, “the time seems to have passed when black-face makeup and rhetorical inflection, however sympathetic, will make for a complete illusion” in a realistic drama, especially given the success of black actors playing black parts in the past few years. Plot: Sister Mary weds July, who then leaves her for “the serpentine Cinder, who knows the wicked ways of the city.” While this desertion is a severe blow, Mary recovers and, “in defiance of the church which has expelled her, she lives according to her own law for 20 years, bestowing her great affections on many men, having many children and radiating an earthy strength and personal agreeability in so many ... directions that her life is almost legendary.” Death of her firstborn child causes Mary to see new meaning in life and death, return to faith.


“'How shall I account for the $10,000 our cashier skipped out with last week?' asked the head bookkeeper of the bank president. 'Oh, charge it to running expenses,' ordered the president.”

+ The Boring Stuff:

Congress seen unlikely to act on Rep. Strong's bill charging Fed. Reserve with stabilizing purchasing power of money. Fed. authorities don't agree prices can be completely controlled by expanding or deflating credit; while they operate with an eye on the price level, “being charges with its maintenance is a burden that the system probably would not care to shoulder.”

Editorial: The Federal Power Commission, in its final report, has given Congress a useful warning. The report comes out against Federal development of water power, and notes that even in areas with abundant water power resources, fuel-generated electricity is becoming competitive with hydro. The proposed govt. owned hydro plant at Muscle Shoals is argued for as a yardstick to measure the utility industry, but what if after the expected $30M-$50M cost it can only compete at a loss with private fuel-burning plants? It would then be “one more drain upon the national treasury,” while unsettling the private Southern power industry.

L. Taber, National Grange master (farmers' organization) says hasn't agreed to inaction on the farm debenture at the upcoming short Congressional session; Sen. Borah (R., Idaho) says will fight for the measure.

Agriculture Dept. sees better demand for Southern farm products next year, though credit outlook will be worse due to serious decline in 1930 income.

US per capita consumption of most dairy products hit records last year: milk 58 gallons annually; ice cream 3 gallons; cheese 4.62 pounds; butter 17.61 pounds.

Dr. H. Luther, Reichsbank pres., says Germany's ability to meet Young plan (reparations) agreements depends on export markets and ability to borrow foreign funds at cheap rates; however, says regardless of outcome of demand for reparations revision, Germany will meet obligations promptly and unequivocably.

British coal and rail unions may strike over proposed cuts in wages or hours worked.

Cuban newspapers will reportedly resume publication Nov. 28 with censorship lifted.

Australia to subsidize production of gold by $5/ounce for gold in excess of last year's total production.

Prof. Junkers of Germany wins second phase of patent suit against Henry Ford for patent infringement of airplane parts.

US Army planes flew about 32.5M miles in year ending June 30; 52 people were killed in accidents, about 55% of which were caused by human error.

When the old Standard Oil was broken up it had a market cap of about $400M; this year, the various Standard Oil cos. will pay $287M in dividends and have a total market cap of about $4B.

Conservative observers advise postponing buying until market again shows resistance to declines; at the same time, most brokers advise against going short.

This week's action considered ominous to technical market students; “a double supply top, after being established definitely, usually proves extremely difficult to negotiate on subsequent rallies.”

Professional traders said to have been bearish the past week on failure of market to follow rallies up.

Opinion of “important financial authorities” about 2 weeks ago that forced liquidation had ended for now, though met with skepticism at the time, has been largely confirmed since.

One broker is “greatly encouraged by the large number of open orders” on their books to buy stocks somewhat below market.

Oct. rail operating income report considered disappointing; percentage declines in gross and operating income vs. 1929 were larger than in Sept. However, year over year comparisons in Nov. are expected to be better based on recent loadings reports.

G. Atkins, VP Missouri-Kansas-Texas RR, says Nov. was best month for the M-K-T in Texas in past 14 months; “Texas will lead on the uptrend of business just as it led on the downtrend. ... Next year will be nothing big, but the country will recover itself.”

Commodities weak. Grains and cotton down substantially. Copper still offered at 10 1/2 cents by smelters, with large producers asking 12 cents; buying has picked up somewhat, and less copper is available at the low price. Future prices uncertain; recent production curtailment of 20,000 tons/month will be enough only if industrial business has bottomed.

Fed. Reserve reports money in circulation Nov. 26 up $83M to $4.565B, total Reserve Bank credit outstanding up $25M to $1.028B. Member banks in NY City report brokers' loans down $63M to $2.122B vs. $3.430B in 1929, new low since April 1925; loans on securities to non-brokers down $6M to $2.054B.

Dow average of eight finished iron and steel products was $44.42/ton, unchanged from prev. week and low for 1930; 1929 range was $49.88 - $51.25. Scrap market show no improvement, with most markets weaker.

Dun's reports readjustment due to lower farm prices and unemployment is still proceeding, but “transition to a sounder basic status ... has been proceeding steadily, and ... a more confident view of the prospects appears to be warranted.”

Class 1 rails in first 10 months placed 73,887 new freight cars in service vs. 68,073 in 1929, and 694 new locomotives vs. 612 in 1929.

First 58 rails report Oct. operating income up 7.6% from Sept. but down 26.9% from Oct. 1929; gross was up 3.2% from Sept. but down 20.5% from 1929.

Production of oil is now lowest since end of 1926; consumption has gained tremendously since then. Oil industry said meeting its problems in determined manner, though curtailment efforts must be maintained through winter for definite improvement.

Bond issuance in Nov. so far has been $203M, only slightly above the year's low in Aug. While demand for bonds has been down in the past two months, authorities are now more optimistic; see improved tone in the bond market, though this hasn't yet translated into higher prices.

Several more small banks close in Mo., Ill., Ky., and Miss.

New Orleans Cotton Exchange directors call for end to govt. (Farm Board) interference and competition against private business men in the cotton trade.

Employment by 2,319 reporting firms in Midwest in week of Oct. 15 was 515,003, down 2.3% from Sept. 15 week; wages were $13.968M, down 1.8%.

Fed. Reserve reports Oct. sales of dept. stores in NY district were 5.4% below 1929 vs. 8% decline in Sept.; chain stores were about 5% below 1929, similar to Sept.; Oct. sales reported by wholesale chains were about 22% below 1929, similar to Sept.

Cuban-American committee of sugar producers headed by T. Chadbourne to meet with world sugar producers in Amsterdam on restricting production. Dec. sugar futures were up 7 points to 1.32 cents; this, however, is still well below the 2 - 2.25 cents that would be required for profitable Cuban production.

Production of soap products in US in 1929 was 25 pounds per capita, for a total of 3.056B pounds, total value $303.4M.

Inventories of large tire makers are down far enough that full production should resume in Jan.

Kreuger & Toll-controlled Swedish Pulp Co. currently makes over 25% of Swedish output of sulphite pulp, and 19% of Swedish wood exports; owns over 4M acres of wood land and 12 hydroelectric plants.

New Era Motors Co. files for voluntary bankruptcy.

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