December 10, 2009

Wednesday, December 10, 1930: Dow 176.59. +0.41 (0.2%)

Assorted historical stuff:

[Strangely familiar.] Editorial: With promises of political truce still fresh, Congress is starting to give signs of a gathering logjam. Problem isn't the party leaderships so much as “innumerable parties and subparties, ... each convinced that only its own projects are the cure for what ails us.” Congress must seek common ground for immediate action, even if this means compromise and adding to some programs later.

[Strangely unfamiliar.] Pres. Hoover criticizes wide variety of extensive relief measures introduced in Congress as “playing politics at the expense of human misery”; says prosperity can't be restored by raids on the public treasury, relief measures already proposed by administration are maximum possible without increased taxes; “no matter how devised, an increase in taxes in the end falls upon the workers and farmers, or alternatively deprives industry of that much ability to give employment.”

Italian Stefani news agency denies reports in French newspapers that France was offering Italy large loans to abandon its friendliness with Russia; states Italy has no need of and doesn't seek foreign loans. Italy reportedly arranging to import all wheat from Russia as before the war.

Australian Trade Min. Moloney dismisses “ridiculous report that Australia contemplated repudiating her debts” as “utter nonsense.”

Bank of Japan expected to issue 500M yen notes in Dec. vs. usual 250M; inflation seen inevitable. Bank conditions generally very weak.

[Now about 127M.] Japanese census reports population of 64.447M, up 4.017M in five years.

[Now about 13M.] Province of Buenos Aires population 4.092M, almost doubled since 1914.

NY State Conservation Commissioner estimates reforestation program will increase state wealth by $300M with expenditure of $20M.

Bus transportation has grown phenomenally in past few years; Greyhound Lines started in 1926 and in 1930 will carry about 22M people 125M motor miles. Bus travel is cheap and increasingly comfortable; now have “individual reclining chairs upholstered with air cushions,” heating, and porters.

German scientists construct 86-foot diameter balloon for use of “aerologists”; expected to ascend to 9 mile height, carrying researchers equipped with oxygen.

German scientists have developed process for making cotton-like product from iron; feels and burns like cotton though blackish in color.

Sir Giles Scott designed “sun-trap” apartment house just built; in heart of London, but “providing ... every room with a good supply of natural daylight.” Building has a number of notch-like insets in outer walls, with sides angled to admit as much sunlight as possible.

Market commentary:

Market wrap: Stocks opened with heavy selling in first hour, then staged a recovery, with major industrials generally rising above Monday's close; market remained mostly steady through the afternoon. Bond market more active; almost all classes weak, with sharp declines in many corp. issues and even US govts. down slightly. Commodities narrowly mixed; cotton down to new season lows.

Goldman Sachs Trading Corp. declined to new record low of 7 3/8 after recent rally to 13; holds large position in Manufacturers Trust, one of the 4 banks in the aborted NY bank merger.

Bears seen mounting test of last month's lows; market observers watching closely for signs of support; if majors are supported above the lows, trading range would be established and new buying should develop.

Fed. Reserve member banks' time deposits have declined to $7.372B in the latest report vs. $7.577B Oct. 29, counter to usual seasonal pattern. This may be causing banks to sell some securities, and may account for recent weakness in the bond market. Banks haven't been reducing loans on securities significantly.

[I'd really like to know what all these rumors about the big interests were based on.] Whaley Eaton Washington letter: “The great industrial leaders and financiers have more at stake than any others, and they are not twirling their thumbs ... They are doing a tremendous amount of work. The economic system has not toppled over and is not going to. This is a typical trade depression and it will disappear just as others before it have.” Sees positives in: extensive liquidation already accomplished; financial situation “incomparably better than it was a year ago,” with Fed. Reserve “magnificently buttressed”; adjustment to new price ranges and equilibriums progressing.

Col. Ayres of Cleveland Trust now sees 1931 as year of slow business recovery, with activity still below normal at end of year. However, sees fair prospect “it will be characterized by progressive improvements, instead of by recurrent declines.” This business depression “has been very much more severe than anyone expected,” but records of the past half-century indicate improvement next year; by our records, businesses has never declined for so long and to such low levels and then postponed a definite recovery for another year.

Broad Street Gossip: “In the production of such commodities as steel, we are back we were close to a quarter of a century ago. A country of 125M people and wealth estimated around $400B cannot be retarded 25 years and 'stay put' at that level for any great length of time.”

Farm Board defenders say current wheat stabilization has better prospects due to higher expected demand for use as feed.

F. Baine of Richmond, Va., member of Pres. Hoover's unemployment committee, outlines troubles of South: business depression not as severe as in rest of US, but also suffering from drought, low commodity prices, bank failures, and the transient problem in Florida. Calls for end to delays of Federal projects already authorized.

A. Dickinson, Indiana Limestone Co. pres., sees more hopeful spirit beginning to permeate construction industry, expects “far better situation in 1931.”

US Steel has attracted strong support when it nears the 140 level (with a $7 dividend, it then yields 5%). Support attributed to “prominent industrialists and banking interests” on early 1931 prospects, and expected rise in unfilled orders to be announced today.

Economic news and individual company reports:

New York bank merger called off; stocks of banks involved (Public, Bank of US, Manufacturers, and International) were slightly higher.

Rail freight loadings for week ended Nov. 29 were 702,035 cars, down 77,672 from prev. week and down 134,225 or 16% from 1929 week.

New Nov. car production estimate of 124,000 called too conservative; industry expects final total to be closer to original 146,000 estimate vs. 154,585 in Oct.

Gasoline stocks at refineries Dec. 6 were 37.742M barrels, up 455,000 in week; refineries operated at 61.2% vs. 62.9% prev. week; oil production was 2.229M barrels/day, down 36,650 from prev. week and down 401,300 from 1929. Wholesale gasoline prices continued to weaken over the past several days.

1930 airplane production estimated about 3,000 vs. 6,034 in 1929; deliveries in the first 10 months exceeded production by about 391.
Machine tool inquiries reportedly encouraging, though trading hasn't markedly changed.

Silver breaks to record low of 33 cents/ounce; attributed to Chinese selling to get gold exchange.

Justice Dept. to investigate reason for spread between wholesale price of bread and cost of raw materials.

Editorial: Cotton prices and market action should encourage cut in acreage planted; Farm Board is campaigning for this, as are some banks by denying credit. However, although “statistics and prices do point to the necessity” for a cut, this may “mean for the farmers to jump from the frying pan into the fire.” There aren't obvious alternatives for use of the idled land; also, foreign competitors have been growing and would likely take more of the market.

Ford production continues inactive, with rumors of a complete shutdown for the second half of Dec. and well into Jan. This contrasts with renewed activity at Chevrolet, Pontiac, and other makes.

At the galleries:

A group of almost 100 old American temperance prints from 1829 - 1875 that “cannot fail to amuse,” including The Drunkard's Progress (from first glass to death in the gutter), portraits of Carrie Nation, temperance rally broadsides, etc. The Guelph Treasure - a “surpassingly beautiful” collection of medieval ecclesiastical objects dating from 1030 - 1483. Portraits of dogs by Diana Thorne “in her inimitable pleasing manner”; most breeds represented, and all are well done.

Jokes:

“Pete - My wife doesn't understand me; does yours? John - I don't know; I've never heard her even mention your name.”

“Old Lady (to motorist who has just had a terrific smash) - I suppose you've just begun to drive? Motorist - On the contrary, Madam, I've just finished.”


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