December 9, 2009

Tuesday, December 9, 1930: Dow 176.09 -2.28 (1.3%)

Assorted historical stuff:

[Strangely unfamiliar dept.] G. Swope, GE pres., says US industrial leaders must recognize responsibility to furnish economic security to workers in present crisis. Sees eventual solutions in old age pensions, unemployment insurance, and cooperative employer-employee programs.

M. Folsom, Eastman Kodak asst. treasurer, says has only had to lay off 2.5% of workforce thanks to careful planning of sales and manufacturing over the year.

Editorial by T. Woodlock against “social” (govt.) control of business. Cites W. Bateson's belief that “nature has stratified” humans in all fields from poetry to golf, metaphysics, and contract bridge, with just a few outstanding individuals in each field; also cites Prof. Conklin's belief that human mental powers haven't kept up with complexity of civilization. If we don't have economic organization in hands of the best leadership, things will break down. Even with best leadership, all we can hope for is a slow, painful climb to ultimate mastery. Granted that present business leadership has only achieved moderate degree of control, there's no reason to suppose we can do better by counting votes.

[Two versions of reality:]

Editorial: The Farm Board's report to Congress “gives the reader a picture of a man who has caught an Alderney bull by the tail and finds it dangerous either to hold on or to release his grasp.” The Board first tried to stabilize cotton at 16 cents/pound and wheat at $1.18/bushel; these are now over 30% lower, and in the case of wheat the Board had to intervene again and buy unlimited quantities around 73 cents. The Board now hold 1.3M bales of cotton and over 100M bushels of wheat, with no way to “let go and risk those cruel horns ... even though ultimate disaster is inevitable.”

C. Teague says Farm Board doesn't plan to follow previous disastrous examples of continuing govt. stabilization efforts while surpluses piled up, citing Brazil and coffee in particular; says stabilization must be combined with production control. On business in general: “Our business structure has never been sounder ... I am therefore confident that this depression cannot last long; already there are signs of better times.”

Editorial: The US should ratify the revised World Court protocol allowing it to withdraw if the Court decides to consider a case over US objections. Some say the US would be constrained from withdrawing by world opinion, but this is unlikely since the Court so far has consistently refused to decide cases without advance consent of all countries affected. Another objection is that the Court would make its own law and act as “super-government,” but this is also counter to almost a decade of experience. Main purpose of the Court is “to seek controlling moral principles and enunciate them ... as overwhelming persuasions upon the consciences of men”; if we fail to ratify now, we must “forget that we ever aspired to” moral leadership.

House to take up $150M Emergency Construction bill; easy passage expected. Various other relief and tax bills seen having little chance of passage. House tackling appropriations bills; no major new legislation expected. Glass finance investigation to begin after holiday recess.

Negotiations continue on NY City Transit unification, with no agreement yet. Matter becoming urgent as opening of new 8th Avenue subway approaches.

Man's discovery of artificial heat in the form of fire dates from the dawn of civilization, but artificial cold in the form of ice only became commercially available in the late 19th century. US currently consumes 60M tons of ice annually for food preservation, 90% of it artificial; it has 1.9M home gas and electric refrigerators.

First published record of US steelmaking was 917 tons in 1810.

Scientists announce Germany's natural supply of helium is so small it would take 400 years to fill the Graf Zeppelin from it.

Market commentary:

Market wrap: Stocks declined further; rails down sharply while industrials offered more resistance. Bond market moderately active; US govts. firm; foreign govts. generally lower; corp. weak, particularly second-grade and convertible. Commodities mixed.

Market observers now advise holding back buying orders until market demonstrates resistance above early Nov. lows.

Some stock market weakness attributed to recent bond market downtrend, particularly in convertibles. Also cited are unsettled foreign conditions; reports on foreign affairs are said to be “receiving more attention now than ... in many years.”

[Finally, a report directly from one of the legendary big interests:] Broad Street Gossip: One of the “big interests” disputes claim they have been “doing nothing to help the situation.” Claims that while not directly buying on a large scale, the “so-called big interests ... have been curing many sore spots that if permitted to go unattended might have made things even worse ... All of these sore spots have been pretty well healed by the big interests, who will never be thanked, as the public will never know anything about them.”

[Perils of long experience.] A veteran trader notes traders have suffered two bad years in a row; in all the years he's traded, has never experienced three bad years in a row, so forecasts a good 1931.

One trader claims to have established tax losses three times this year on the same stocks.

Outside buying said negligible in recent sessions.

Several major rails hit new 1930 lows, with some hitting multiyear lows. Major industrials held above early Nov. lows.

G. M.-P. Murphy & Co. see good year for tire industry in 1931 based on replacement demand. For 1930, only 1.4 - 1.5 tires per car were bought vs. 1.94 in 1929 and a 2.18 average in the 6 prev. years; some of this decrease represents deferred demand.

Bank of America sees bottom of depression passed, “more prosperous business conditions in 1931”; however, recovery after prolonged depression starts almost imperceptibly, and as yet it's impossible to judge how early in 1931 it will begin.

Commerce Sec. Lamont: “We have already weathered the worst of the storm and signs of stability and recovery are appearing.” Cites few wage cuts and strikes compared to earlier depressions.

Economic news and individual company reports:

Rumors that 4-bank merger has been abandoned caused bad breaks in Public and Manufacturers; Bank of U.S. was fractionally higher.

Fed. Reserve member banks weekly report for Dec. 3: loans on securities up $8M to $7.769B, “all other” loans down $19M to $8.747B. Time deposits were down $115M in the week, to $7.372B.

[Strangely familiar dept.] Large new $400M Treasury offering at 1 3/4% - 1 7/8% well received, expected to be absorbed easily; observers see period of easy money continuing for some time.

[Pretty huge revision.] Nat'l Auto. Chamber of Commerce revises estimate of Nov. car production in US and Canada to 124,000 cars (from original estimate of 146,185).

US Steel expected to show increase in unfilled orders as of Nov. 30; considered “unusually satisfactory” since it would be the second monthly increase in a row. While Nov. production was below normal, much of the buying during the month was for future delivery.

Agriculture Dept. estimated 1930 cotton crop as of Dec. 1 was 14.243M bales vs. 14.438M estimate Nov. 1 and 1929 actual crop of 14.828M. Cotton nevertheless down sharply, attributed to lower Egyptian cotton prices.

Canadian report: Can. Bank of Commerce reports seasonal improvement continuing, but lacking the vigor of previous years.Freight loadings for week ended Nov. 29 were 55,384 cars, down 5,224 from prev. week and 6,029 from 1929. Wealth of prairie provinces estimated at $7.380B, 25.5% of Canadian total.

World sugar producers meeting in Amsterdam reportedly making progress on stabilization plan.

Attendance at 26th annual automobile salon (show) was up 25%, sales totalled $1.5M.

Lancaster Mills plant, one of the leading New England textile properties with over 1M sq feet of factory floor and waterfront, to be offered at auction Dec. 10.

NYSE seat sold for $236,000, down $11,000 from prev. sale; Curb Exchange seat sold for $92,000, down $13,000.

Companies reporting decent earnings: Finance Co. of Amer. at Baltimore, Selby Shoe.

W.K. Kellogg (cereal) says will spend record amount on advertising in 1931; increased advertising in 1930 was followed by highest sales in co. history.

AT&T Oct. operating income was $2.821M vs. $3.484M in 1929; first 10 months $27.7M vs $33.2M.

J.C. Penney Nov. sales were $18.937M, down 22.4% from 1929; first 11 months $169.2M, down 6.0%. Grand Union Nov. 4-week sales were $2.773M, up 1.5% from 1929; first 48 weeks $33.5M, up 9.5%.

Studebaker Nov. sales were 2,441 cars vs. 1,839 in 1929.


“Employee - I'd like to have a raise. I was married last week. Foreman - Sorry, but we aren't responsible for accidents outside the factory.”


Follow the Leader - Comedy vehicle for Ed Wynn, “one of our most engaging comics,” who is onscreen most of the time “enacting hilarious scenes of nonsense,” occasionally assisted by Lou Holtz. Romantic leads are Ginger Rogers and Stanley Smith; Ethel Merman sings one song.

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