Assorted historical stuff:
Editorial: No Christmas message was more important than the Pope's regarding peace on Earth. We can assume the horrors of the World War are known to world leaders, and that they realize “that in the future, wars will not be quarrels between princes but death struggles of peoples, from which neither side can expect anything but loss.” Yet, people still talk of “the next war.” Exaggerating the differences between nations and thinking in terms of war can make it more likely; also dangerous is the nationalism that interferes with peaceful settlement of international disputes. The US could also increase its efforts toward peace by joining the World Court.
Washington report: Despite good intentions by leaders of both parties, current short session has been most “active and acrid” in years. Skirmish within Republican party is in the spotlight; insurgents threaten to start third party but not taken seriously. A “somewhat mysterious” Ray Benjamin of Calif. is now active as advisor to Pres. Hoover, leading to apparent change in strategy; speculation is active on his future role. Agitation continues for extra session of Congress.
Some are predicting a tax hike will be needed in a year due to a projected deficit next June 30, and doubtful prospects for next year. However, “the truth is that no one in the world can arrive at any accurate forecast of government fiscal probabilities much beyond the next six months. Even in that limited period the forecast may go entirely awry.” [Surprisingly realistic!]
Another editorial by T. Woodlock against “social” (govt.) control of business: While in theory it's possible for democratic selection to pick those most competent to lead, in practice it's very unlikely to do so without a strongly compelling motive (usually fear).
Banker's Trust of Phila. pres. S. Barker says depositors will be fully repaid, progress made toward reorganization but premature announcement might jeopardize plan. H. Shapiro, att'y for depositors, says bank appears sound, closing was due to false rumors. NY State Banking Dept. officials say they have traced a run on an unnamed bank last Saturday to Communistic sources; D.A. Crain is investigating. People's Bank & Trust of Miss. ($1.8M deposits) and 7 affiliated institutions closed; heavy withdrawals blamed. NY Clearing House cuts rates members can pay on short-term savings by 1/2%, to 1%.
Of 1,750 women at Kansas Univ., only 7 aspire to be homemakers. 879 want to be teachers, 84 journalists, 80 nurses, 60 business women, 16 doctors, and 15 lawyers.
Todd Shipyards gets $582,500 contract for 130-foot flame-proof fireboat for NY City able to throw 16,000 gallons/minute.
Increasing numbers of Christmas greetings are being sent by telegram or wireless message instead of old fashioned greeting card (about 3M this year).
Title of busiest man in US probably belongs to Alfred J. County. The Directory of Directors lists him as director of 134 corporations, and he is president or vice president of most; the corporations include rails, ferries, coal and iron mines, banks and trusts, real estate, insurance, stock yards, etc.
Market wrap: Stock trading very light; most traders on sidelines or out of town until next week; prices higher before noon but “gently sagged” in the afternoon, with a number of new lows. Bond trading very dull, prices turned weaker after early strength; US govts. down slightly; foreign irregular; corp. mixed. Commodities weak; grains plunge, with July wheat (unsupported by Farm Board) hitting 62 3/4 cents, lowest since 1896.
Copper shares continued to be relatively strong on curtailment optimism; banks and trusts were particularly weak.
Stock weakness in afternoon attributed to break in wheat and belated tax loss selling.
No major news came over Christmas; market sentiment remains generally optimistic.
Historical market students point out market has gained in the final week of the year (Dec. 24-31) in every year but three since 1896.
Brokers report some increase in investment buying of standard dividend-paying stocks, and in buying by “inside interests.”
Gold exports seen likely following NY Fed rate cut if foreign central banks don't cut their rates.
Market observers don't see big move until “some sudden development encourages trader's operations on either side”; advise buyers to wait for new year.
Broad Street Gossip: Last year when new highs were being reached, optimists believed in a “new order of things” where stocks selling 15-20 times earnings were cheap; now, one hears stocks at 10 times earnings are expensive. Conditions will readjust without artificial aid; “If they don't, it will be the first time ... since the Stock Exchange opened for business.”
Broad Street Gossip: The head of a large broker reports he's talked to “scores of bankers, brokers, traders, and manufacturers over the last week or two ... and have concluded that 99% of the people are confident that 1931 will be a much better year from a business and stock market viewpoint than 1930.”
W. Teagle, Standard Oil NJ pres., says groundwork being laid for recovery from depression; “An enormous amount of liquidation has already been effected. The financial situation is daily becoming sounder.” Businesses are increasing efficiency and innovating; adjustment to lower prices is progressing and more buying will soon be needed. There's never been such a “determined and united” effort to combat unemployment. History of our commerce isn't one of steady growth but of alternating “eras of great strides forward” and recessions. “The present painful experience is one of those relapses from which we will undoubtedly emerge with greater strength and more prosperity than ever.”
Editorial: Before its latest rate cut (from 2.5% to 2%), the NY Fed had cut its rate 6 times since Oct. 1929. Each cut was hailed as a hopeful market factor, but they've had little effect so far. However, there are reasons to believe this latest cut may be “the turning point of the whole economic situation.” The psychological effect is likely to be far reaching; for one thing, it “affords assurance that the whole credit and banking structure in this country is sound.” It also indicates the Fed is likely to maintain very easy money in the coming months. “Unless all signs fail, the stage has now been reached ... when large supplies of available cheap credit must produce the traditional effect of stimulating new enterprise and ... expansion ... there is every reason to feel that a turning point cannot be far away.”
Economic news and individual company reports:
Bradstreet's weekly review reports retail trade continues in fair volume, about equal to 1929 in unit volume but 10%-30% less in price in various markets. Dun's reports no outstanding change in commercial trends; unsatisfactory conditions continue, but some encouraging portents seen.
[Surprisingly low.] Credit losses by 523 retail establishments in first half averaged 2.5% of total credit allowed; total sales in the period were $560.7M, up 6.7% from 1929.
Fed. Reserve reports money in circulation Dec. 24 up $177M to $5.014B, total Reserve Bank credit outstanding up $128M to $1.425B. Member banks in NY City report brokers' loans down $89M to $1.919B vs. $3.328B in 1929; loans on securities to non-brokers up $40M to $2.104B. Call money rose 1/2% to 2 1/2% due to “year-end requirements.”
Fed. Reserve report for Nov. shows further decreases in industrial production, factory employment, and wholesale prices, and less than seasonal rise in department store sales of commodities. US stock of gold up about $30M in 4 weeks ended Dec. 17.
Dow average of 8 iron and steel products declined to $44.29/ton, a new 1930 low. Scrap markets continue inactive.
Farm Board chair. Legge says favors temporary embargo on wheat imports if world price falls low enough to favor imports in spite of 42 cent/bushel tariff.
Sharp cut in Nov. cigarette production said due to overproduction earlier in year anticipating continued increase in consumption.
German business situation described as worst in 50 years; industrial production at 53.4% of capacity in Oct. vs. 60.3% in May and 71.2% in Oct. 1929; no early improvement seen. Leading French stocks declined in past week to lowest levels of year, and well below 1929 lows. Yugoslav govt. seeks $60M stabilization loan. Although the War roughly tripled its territory and population (to 14M), the absorption of parts of Austria-Hungary, Montenegro, and Bulgaria with weaker currencies caused drastic depreciation in value of the Yugoslav dinar from a gold franc to 4 gold centimes postwar.
Cuba cuts govt, budget by $12M to avoid bankruptcy; current budget is $69M for year from July 1, 1930 to June 30, 1931.
Company reports since Oct. 1: 274 companies reported higher earnings vs. 1929 and 477 lower; 996 dividends unchanged, 97 increased, 183 cut.
Companies reporting decent earnings: Hudson & Manhattan Rwy. (commuter rail), Hamilton Woolen, Meteor Motor Car.
Western Union and IT&T earnings have suffered due to depression, with each barely earning enough to cover dividends.
Montgomery Ward mgmt. said not planning to open new stores in 1931; will focus on making existing stores more profitable.
Barnsdall (oil, pipeline) stock 10 5/8; annual dividend $2, net for first 9 months $2.08/share vs. $2.53 in 1929.
Sayings from Philip Armour, founder of the meat packing co.:
[These are pretty good!]
“When the tongue lies, the eyes tell the truth.”
“In all your dealings, remember that today is your opportunity; tomorrow some other fellow's.”
“When you are through sizing up the other fellow, it's a good thing to step back and see how you yourself look. Then add 50% to your estimate of your neighbor for virtues you can't see, and deduct 50% from yourself for faults that you've missed - and you'll have a pretty accurate result.”
“You must learn not to overwork a dollar any more than you would a horse.Three percent is a small load for it to draw; six a safe one; when it pulls in 10, you've got to watch to see that it does not buck; when it makes 20 you own a blamed good critter or a mighty foolish one, and you want to make sure which; but if it draws 100, it's playing the races or something just as hard on horses or dollars.”
“In the packing business it takes a bull only thirty seconds to lose his hide; and if you'll believe me when I tell you that they can skin a bear just as quick ... you won't have a Board of Trade Indian using your pelt for a rug during the long winter months.”