Tuesday, July 8, 1930: Dow 218.33 -4.13 (1.9%)

Assorted historical stuff:

Hoover urges passage of London Naval Treaty, accuses opponents of misinformation. "We must naturally expect opposition from those groups who believe in unrestricted military strength as an objective of the American nation."

Suspension bridge to be built across San Francisco Bay at cost of $30M.

US car accident deaths in 1929 hit a new high of 33,060, including 81 on Independence Day.

John D. Rockefeller celebrates 91st birthday. Plans to breakfast, work for about an hour, then play nine holes of golf with a few neighbors. After lunch and rest, plans usual afternoon drive through Westchester hills. "I am in the best of health, surrounded by dear friends and have naught but good will toward all."

S.P. Gilbert, supervisor of German reparation payments, issues final report critical of German finances. Says that while tax revenues have gone up satisfactorily, expenditures have ballooned out of control. In spite of this acknowledges Germany has restored its credit and reconstructed the economy, and is confident they can get things in order. German reaction mixed; admits some of the criticism is valid, but tactless since reparation-related supervision of German economy is now ended.

Chilean government forming council to study nationalization of "all public services, industry, commerce, banking, and other fields of business."

Market commentary:

Market opened with many sell orders, prices declining through the morning with higher volume than last week. Attributed to bad business news (lower freight loadings, increase in business failures, Chrysler salary cut), anticipated bad second-quarter earnings reports, and lower commodity prices. Some buying appeared and declines slowed in afternoon on lower volume.

Commodities generally lower, wheat and cotton sharply down. Index of commodity prices at lowest point in 15 years. Bonds generally steady.

Survey of 163 sales and tech representatives for cement unit of US Steel. On construction prospects for next year, 124 said better/no change, 39 worse. On employment, 35 better/53 worse/72 no change. On tariff passage, 28 pleased, 18 resentful, 108 indifferent.

Winthrop, Mitchell believes market is in much better condition after recent liquidation, believes stocks "getting near rock bottom levels", would buy many major stocks on further selling. They may go a little lower, but not worth trying to pick a bottom: "The long pull prospect of large profits is too good to be concerned about 5 or 10 point dips, which later will be regarded as only minor setbacks in a major upturn."

National Association of Credit Men reports late May and early June collections held up well, less seasonal softness than usual. Regarding tariff, inclined to believe that "getting the tariff matter settled, even if the results are not satisfactory to everybody, will have a stabilizing and generally bracing effect on American business."

Many companies have been using accumulated surpluses to pay unearned dividends in the hope of business pickup.

Economic news and individual company reports:

NY State income tax collected $78M, only $2M below record 1929 level.

NY State Securities Bureau recovered $1.5M from bucket shops (fraudulent brokers) in first half of 1930. Money to be distributed to victims; total losses estimated $33M.

Freight car orders for first half were 30,443 vs. 59,129 in 1929; locomotive orders 289 vs. 521; passenger car 516 vs. 839.

Reynolds Metal expects operating profit for first half equal to 1929. Half of business is metal foil, used in many food-related and other industries (other half is temperature control devices). Sizeable portion of foil output is used to produce 300-400 million Eskimo Pie [ice cream] wrappers/year. Management diversifying, has come up with aluminum foil-based wallpaper. Hasn't caught on yet, but "nevertheless serves as an indication of the progressiveness of management."

Joke:

"First Executive - Did you enjoy your vacation. Second -- Yeh, but there's nothing like the feeling of a good desk under your feet again."

+ The Boring Stuff:

China considering adoption of gold standard [currency is now backed by silver, which has declined along with other commodities]. Embargo announced on shipments of gold out of China; number of gold bars in Shanghai has decreased from 30,000 five months ago to only a few at present. Some concern that Chinese gold standard might cause world shortage of gold, with resulting deflation in gold standard countries.

Editorial pointing to Brazil considering destruction of 4.5 million bags of coffee to reduce unmanageable surplus. US plan for agricultural commodities is similar to Brazil's and can be expected to lead to similar result. Current plan has resulted an accumulation of large surplus at higher than current prices; now plan is to restrict production, but both approaches likely to lead to the Brazilian conundrum. "Wealth does not lie in producing commodities and then destroying them."

Cost of running Federal prisons was $8.2M in 1930 fiscal year compared to $3.4M in 1925.

Number of foreign students at Columbia - 899; NYU - 786; University of California - 651; USC - 452. West Coast foreign students are mainly Asian.

Canadian employment index June 1 was 116.5 vs. 111.4 in May and 122.2 in 1929. Best showing of any June 1 except 1929. Canadian Bank of Commerce expects summer business upturn. Strength in tourism, mining, wheat.

Big drop in brokers' loans seen as passing of stocks from weak hands (marginal traders) to strong (investors). Many brokers believe last week was year's low for stocks.

Hearst Consolidated Publications having public offering. Company to own 11 publications with total paid daily circulation of 2,563,426, board headed by William R. Hearst. 20% of stock in the offering is reserved for employees and officers.

New York Air Brake (rail equipment) first-half earnings expected $1.80/share vs. $2.14 for 1929. Second half expected worse.

Chrysler car shipments in June 28,407, 33% below 1929. May shipments were 40,644.

Willys-Overland produced about 58,000 cars in first half of 1930 vs. about 200,000 in 1929.

Corn Products Refining earnings for first-half expected about $2.25/share vs. $2.36/share in 1929.

Federal Bake Shops first half sales $2.26M vs. $2.19M in 1929.

American Ice expects June income above 1929 level.

W.T. Grant (chain store) reports June sales up 1.7% over 1929; 6 month sales up 11.6%. Kresge down 9.3% for June, down 0.3% for 6M.

Monday, July 7, 1930: Dow 222.46 (no trading July 4-6)

Assorted historical stuff:

Editorial defending London treaty being debated in Senate [limited naval buildup among US, UK, Japan, France, Italy]. Treaty is an honest effort to relieve the world of “the oppressive burdens of competitive armament.” Opposition is not to flaws in the treaty but to any limitation at all; “That is a plea for armament without limit short of national bankruptcy.” Unthinkable that the US should stand in the way of measure to help lift world out of present depression.

Col. W.A. Starrett, President of Starrett Corp. (construction), travels to England as delegate of President Hoover, presents film of construction of Bank of Manhattan building in less than a year [70 story, 927 foot skyscraper at 40 Wall St].

Lewis Stone, film actor, obtains restraining order preventing oil drilling in the surf off Venice Beach (Los Angeles, California).

Commercial Solvents Corp. files patent infringement suit concerning Weizmann's [later Israeli president] patent for producing acetone using bacteria.

Great Britain continues copying American customs - London Times begins publishing crossword puzzles, “an American innovation which developed into a craze which is now almost gone.”

Market commentary:

Brokers' loans close to a record low as fraction of stock value; should be bullish; market caps of Std. Oil NJ + GM now greater than total of all brokers' loans.

Finch, Wilson, & Co.: “We believe that many stocks are now selling far below their real value and that purchases can now be made with a minimum of risk and a maximum of confidence of higher prices later.”

Wall Street offices deserted over the holiday weekend, a marked contrast to last year when extra holidays were needed to give office staff a chance to catch up.

Many observers believe Bears will attempt another market test in the near future. Response should be important to future sentiment.

Some complaints of unavailable credit for business and agriculture, in spite of low rates and high supply of funds at banks. Blamed on risks of particular loans.

Editorial criticizing Dept. of Agriculture's forecast that wheat prices will be lower over the next 7 years. Suspicious this fits into Farm Board plan to reduce wheat acreage; says this is doomed to fail since foreign growers will take up slack and farmers will convert to other crops, with resulting pressure on those. Compares plan to “taking a part of the load from one end of the wagon and piling it on the other end.” No alternative plan suggested.

Minnesota Gov. Christianson calls Farm Board a failure, says wheat problem can only be addressed by drastic production cut or keeping surplus off the market. Says main cause of problem is reduction in foreign demand due to problems selling their industrial products, and debt and reparation obligations.

Economic news and individual company reports:

Leading British financial figures call for a tariff wall around the Empire, with duties on foreign imports and free trade within the Empire.

Continuation of the 1% cut in income tax rates enacted in 1929 to help business looks more likely; prospects helped by the likely adoption of a compromise veteran's relief bill that will only cost $30M-$50M/year compared to the original $181M-$400M.

Great majority of retail outlets offer some form of credit; of 35,000 outlets surveyed, 75% offered open credit, 18.7% installment, 20% cash only.

At least 45 Florida towns and cities in default on bonds; committee recommends austerity, state sales tax on nonessentials.

Sugar prices now at post-Civil War low of 1.22 cents/pound, production cost estimated 1.72-1.97 cents. Big overproduction still expected this year.

Chase National Bank deposits as of June 30 were $2.065B, first bank in the world to pass $2B in deposits.

Hershey expects first half sales $21M vs. $20.5M in 1929; earnings over $4.70/share vs. $4.69. Wider profit margin and higher earnings expected in second half due to lower commodity prices. Currently selling for 11.7 time 1929 earnings, yielding 5.5%.

American Snuff has one brand that's been a leader for 148 years.

Joke:

“'Mr. Booley is certainly well read. He repeated an exquisite quotation last night.' 'What was it?' 'I can't give you the exact words, but he said he'd rather be a something or other in a something else.'”

+ The Boring Stuff:

About 44% of California natural gas production in 1930 was wasted (blown into the air), due to lack of practical storage. Wastage is being reduced somewhat by production curtailment and pumping some surplus gas back underground.

In the past year, oil companies have begun using pipelines on a large scale to transport gasoline instead of tank cars and river barges; this allows refineries located far from cities to be competitive with those close by.

Recent markets dullness taken as evidence that forced liquidation has been exhausted, and the market is now largely taking into account the admittedly unfavorable current business conditions. Many shareholders said reluctant to sell since shares have “declined to levels which in many instances represent intrinsic value.”

Commodities over past week generally ended little changed. Cotton trading slump continues in England. Investment bond prices generally higher in past week, volume light.

Many investment trusts now selling well below liquidating value, after selling well above in 1929. Lehman Corp. selling for $71.50, liquidating value $88.97.

New construction started in 37 states east of Rockies was $2.638B in the first half vs. $3.016B in 1929.

Total Florida building contracts awarded in May were $13.2M vs. $3.9M in April and $5.4M in May 1929.

Railroad locomotive shipments for first half were 419 vs. 319 in 1929.

North­west farm income for May estimated down 19% from 1929.

United Light & Power net for year ended May 31 was $2.37/share vs. $1.76 previous year.

Rainier Paper & Pulp net for year ended April 30 was $479,623 vs. $486,607 previous year.

Allis-Chalmers (farm and industrial equipment) expects net for first half to be over 15% above 1929 level; orders booked in first half were $29.5M, a gain of $1.5M over 1929.

The Weekly Blather July 6, 1930

July 6, 1930 was a Sunday with no Journal, so again a little editorial commentary.

Another couple of surprises about 1930 - these were unexpected based on my previous reading about the Depression.

Availability of good economic and company information: Previously, I tended to think of this period as a kind of Dark Age when it came to investor and managerial access to information. It's therefore surprising to read the Journal day-by-day and realize that economic stats usually seem to be available very promptly - I may be wrong about this, but some seem to come out quicker than they do now, and there are usually good preliminary estimates of the important stuff. When it comes to company information, it's true that things aren't as standardized as they are now (quarterly reports with full financials), but many companies seem to be reporting more quickly than they do today, and often you also get good preliminary estimates toward the end of quarters (possibly prohibited now due to quiet period rules). So, those of you counting on superior computerized information/statistics to save us today might be barking up the wrong tree.

Overcapacity everywhere. One of the things that jumps out at me the most is that every day there seem to be three or four stories about different industries trying to cut production down to match demand using desperate measures such as industrywide cooperatives, production holidays and curtailment, and buying and segregating surplus. Now, I understand how this would happen after the economy had spiralled down to a really serious extent, but as measured by most stats this really hadn't happened yet at this point. So, it's an interesting question to me how this chronic problem of overcapacity in many industries at once developed. Some of it can be explained by government action (ex. the Farm Board for agricultural commodities), but it happened in many industies that weren't government-”supported,” such as steel and livestock.

Favorites of the week June 30-July 4, 1930

No Journal was published July 5 or 6, 1930. Once again, a collection of my favorite items of the week. These aren't a representative selection but just the ones that made me smile or take notice.

July 4:

Researchers for the state of California find that girls are more intelligent than boys of the same age. About 10% more boys than girls are developmentally disabled; about 4% more girls than boys skip one or more grades; girls found able to study better than boys, and to be "more mature mentally." [Note: Disturbingly Familiar Item 1]

Fiat announces plan to increase output, while an Italian tariff of 100% on autos is proposed. Market not sure what to make of it; no shares traded on the Curb Exchange.. “There has been talk from time to time that a big American automobile company was seeking control of Fiat.” [Note: I swear I didn't make that one up.]

July 3:

$250,000 order placed with American Hardware Corp. for gold-plated doorknobs to be used in Waldorf-Astoria.

Eventual recovery from depression is ensured by US population growth, as seen in the recent census. 25 years ago steel capacity of 15 million tons a year was considered too high; now three times as much steel is produced annually. Similar increases have occurred in the consumption of many other products. [Note: Disturbingly Familiar Item 2]

July 2:

Bill Robinson [Bojangles], Harlem's greatest tap dancer, appearing in the Palace Theatre. Has been performing for 32 years. Famous for inventing new steps, such as the stair dance. So many performers are now imitating the stair dance that he's now doing his own imitation of himself doing it.

At a recent large corporation's stockholder meeting, the secretary was annoyed to find two men with no proxy forms. "Whom do you represent?" the secretary asked. "The short interest," the gentlemen replied.

July 1:

Editorial: D.M. Marvin, economist for Royal Bank of Canada, says present depression caused by tight credit; points out that in spite of low rediscount rate many banks are not lending due to poor balance sheets; total credit extended by the Fed. Reserve banks fell from $1.621B last Oct. to $937M in June. Proposes Fed. Reserve banks inject $500M of reserve credit by purchasing government securities. Idea is worth considering, but must be done with care to avoid inflation. [Note: Disturbingly Familiar Item 3, particularly the part in italics.]

The Big Fight - story about gambling rings trying to fix a championship boxing match; adapted from the 1928 stage play starring Jack Dempsey. Best scenes are “the gambler's conferences and the training of the fighters.” Climactic fight is unrealistic; film has too much “repetition of 'fight picture' devices, now hackneyed.” [Note: Thank God they didn't live to see Rocky.]

June 30:

Frances Perkins, NY State industrial commissioner, says Commerce Sec. Lamont is distorting unemployment figures by using percentage of total population instead of wage earners (only 40% of population). [Note: Disturbingly Familiar Item 4]

AT&T applies to Federal Radio Commission for another radio frequency to handle trans-oceanic calls. Complains that during a recent stock slump had 100 calls requested but only able to handle 29. [Note: 27 of them were from James Cramer, Sr.]

P.E. Crowley, pres. NY Central railroad: “I cannot believe that this country of ours, with its great and resourceful population ... can long remain in a state of depression, business or otherwise. I believe ... that we have turned the corner; that we will slowly but surely go forward to at least as great prosperity as has ever before been attained.” [Note: Disturbingly Familiar Item 5]

Colgate-Palmolive charged with deceptive advertising for using “naptha” in soap brand names, deceiving public into believing that said soap “contained sufficient naptha to be effective as a cleansing ingredient.”

First National Bank of Farmland, Ind. closes after cashier embezzles $12,000. [Note: May sound low, but this was approximately $12B in today's dollars. Note 2: That last note was a joke! The correct number is probably something in the $120,000-$200,000 range.]

Friday, July 4, 1930: Dow 222.46 -2.79 (1.2%)

Assorted historical stuff:

Independence Day editorial criticizing post-World War isolationism as a distorted concept of independence; calls for a middle ground “somewhere between the extremes of complete isolation and unreserved internationalism.”

House and Senate pass resolution urging speedup of authorized public works to relieve unemployment. Treasury announces $87.5M contracts to be awarded before end of the year.

Researchers for the state of California find that girls are more intelligent than boys of the same age. About 10% more boys than girls are developmentally disabled; about 4% more girls than boys skip one or more grades; girls found able to study better than boys, and to be "more mature mentally."

Film advertising and publicity directors pledge to join filmmakers in observing the Hays code, including “respect for the clergy and the law, avoidance of ... the mention of specific details of crime, and the featuring of nudity or the use of liquor in American life.” Also, censoring is not to be mentioned in ad campaigns.

Ira E. Robinson chairman of Federal Radio Commission, accuses "radio trust" of seeking to monopolize the airwaves, posing "the greatest danger to the fundamentals of American Government." Calls upon broadcasters to recognize that licenses obligate them as public servants. Also condemns excessive commercials.

Market commentary:

Final session before three-day holiday weekend began very sluggish; leading stocks failed to respond to bullish news of a decrease in brokers loans (down $197M to $3.219B in week ended July 2). Bears then resumed operations in afternoon and activity picked up, with many leading industrial and utility shares shares closing substantially lower. Banks slightly lower.

Gillette Safety Razor plunged to lowest level since 1925 on concerns of increasing competition, good report from competitor AutoStrop Safety Razor. Other bear targets with large price declines included Air Reduction, May Department Stores, duPont, and Timken Roller.

Dr. T. Grayson, dean of Wharton, advocates unemployment insurance; says current tariff system is “suicidal as well as ridiculous.”

Current depression doesn't appear that serious: number of shareholders of major corporations continues to grow; gasoline demand is up; Treasury is running a surplus; mass transit and auto traffic continues high; dividend and interest payments will not be far off record 1929 levels. Prevailing opinion is that “stocks cannot be forced much below current levels.”

H.H. Allen, economist, says history indicates we're in for two or more decades of price decline. Calls on business to adjust. Says that declining commodity prices don't inevitably cause depression, and normal profits are as possible in periods of declining prices as in rising.

Economic news and individual company reports:

Total imports in May $284.6M vs. $400.1M in 1929; exports in May $312M versus $385M in 1929.

Fiat announces plan to increase output, while an Italian tariff of 100% on autos is proposed. Market not sure what to make of it; no shares traded on the Curb Exchange.. “There has been talk from time to time that a big American automobile company was seeking control of Fiat.”

American Chicle (chewing gum, brands including Chiclets, Dentyne, Black Jack, Beeman's) reports net earnings for first five months 1930 were $811,000, slightly higher than 1929. Expects record earnings for the full year. Stock currently sells for approximately 10 times 1929 earnings, dividend yield of 7.1%.

Chicago plumbers union following several months of negotiations receives wage increase of 7.5 cents/hour to $1.70/hour.

Chrysler announces 10% cut in salaries. Cut is being made to share the burden with hourly labor, which has already suffered a substantial reduction in working hours. Cut is being applied uniformly to all salaried employees from Mr. Chrysler on down.

Play:

“The Last Mile - Mutiny in a prison death-house treated in the mood of modern war literature.”

+ The Boring Stuff:

Editorial praising the current year's Federal surplus of $184M, but noting that some revenues such as income tax and customs duties may decline this year. Calls for restraint regarding any new large expenditures such as pension bills or Farm Board [helped to support agricultural prices].

Changes in food consumption habits since the end of the World War: more dairy, citrus fruit, vegetables, vegetable oils, sugar; about the same potatoes and eggs; less cereals, poultry, other fruit.

William Boyce Thompson will filed; estate valued at over $85M; founder of Newmont Mining and Boyce Thompson Institute for Plant Research. Vast collection of minerals, carved stones, and curios left to the American Museum of Natural History. Quote from Henry Alloway's obit for Thompson: "Genuineness of pathos has this week stirred assembly of High Finance eminents at the grave side of this man whose career's deeds, motifs, have brillianted tradition's veritably revivified field of the cloth of gold."

Commodity trading mostly dull, little price change; wheat lower after good crop news. Foreign currencies generally higher, thought to be delayed reaction to low US rates.

Census survey finds only 2% of the general population unemployed (defined as having no job at time of the Census in April, though able to work and looking for a job). Survey covers about one fourth of the population, or 29.3M people. Wide variation found between localities; highest was Nevada at 4.5%. Commerce Sec. Lamont says these figures appear to be representative of the country as a whole and indicate "much less unemployment then was generally estimated."

New bond offerings in first half 1930 were $3.29B vs. $1.91B in 1929; offerings in June $525.4M vs. $630.9M in May. June total was smallest for year except February, but far above any month in first half 1929. Utility, rail, and foreign borrowings all up considerably over 1929.

May US auto exports $31.6M vs. $37.4M in April and $45.3M in May 1929. First five months exports $173M vs. $299.4M in 1929.

Chicago construction contracts awarded in year up to June 28 were $65.2M vs. $220.1M in 1929.

New York construction contracts awarded in June $80.3M vs. $84.8M in 1929.

Department of Agriculture says that drastic reductions in wheat acreage must be made in order for production to be profitable over the next several years. Sees worldwide increase in production without corresponding increase in demand. Calls for organization of producers into "units for collective action."

Baldwin Locomotive reports sales first 6 months 1930 were $17.5M vs. $8.6M in 1929; unfilled orders July 1 were $14.8M vs. $14.1M in 1929; new business booked was $9.4M vs. $17.4M in 1929.

Paramount (movies) expects first half earnings of $2.85/share vs. $2.28/share in 1929.

Packard announces record June shipments of 4,300 cars vs. 4,150 in 1929. Follows $400 price cut on all standard models.

Swiss American Electric earnings for year ended April 30 were $4.66/share vs. $4.63 in 1929.

Island Creek Coal second-quarter earnings estimated slightly under $500,000 vs. $669,498 in 1929.

Ritter Dental Mfg. expects first half sales down 7% from 1929, earnings down 20%.

Thursday, July 3, 1930: Dow 225.25 +2.22 (1.0%)

Assorted historical stuff:

Editorial: Governor Roosevelt praised for restraint in his speech concerning public help for the aged. New York State has passed a law providing cash payments to dependents aged 70 or more; Roosevelt admits fault with the law in not requiring contributions from the beneficiaries. Even if called a pension this will almost inevitably turn into a dole system. One only has to look at England to see "the appalling economic and social corrosion that results from indiscriminate state alms." Best solution would be an insurance system also protecting against unemployment, with cost divided between worker and industry, preferably without contribution from the state. Many corporations have already begun to build such a system. One argument for private plans is that "employees generally have more faith in their management than in that of governmental pension systems - and for good reasons."

International Chamber of Commerce meeting in Paris blames much of worldwide economic downturn on gold hoarding by central banks, particularly US and France [many currencies were gold-based].

J.J. Tynan, VP Bethlehem Steel, plans air ferry service between Battery and Staten Island.

$250,000 order placed with American Hardware Corp. for gold-plated doorknobs to be used in Waldorf-Astoria.

Westinghouse Electric organizes Westinghouse X-Ray Co. for "the development of x-ray and electro-medical apparatus."

Toronto hosts a convention for 10,000 Shriners by turning the Canadian National Railway's yard into a temporary city.

Market commentary:

Market very dull; morning attack on Steel because of yesterday's bad news ran out of steam; prices generally moved up and closed at highs. Experts pointed out steel curtailment was not far from normal seasonal patterns, and often marked a bottom on production. Share volume 1.227M shares, smallest for a regular session since June 1928. Industrials and utilities up, rails slightly higher. Banks and trusts up on half-year earnings reports showing banks to be "in far better shape than had been feared". Commodities mixed, generally steady.

Some observers feel a new test will be made by the bears next week and the response will indicate the near-future market.

J.M. Kern, Pres. St. Louis-San Francisco Railroad, believes trade has reached its low point and looks for a gradual improvement in the second half of the year.

N.L. Amster, director Rock Island Railway, returns from trip to Germany, France, Czecho-Slovakia, reports business on the upswing in all countries visited. Regarding the tariff, “Although a few exporters registered some complaint ... none of them felt that the question was very grave”, or that it would substantially affect trade.

Eventual recovery from depression is ensured by population growth, as seen in the recent census. 25 years ago steel capacity of 15 million tons a year was considered too high; now three times as much steel is produced annually. Similar increases have occurred in the consumption of many other products.

Economic news and individual company reports:

Miscellaneous taxes collected in 1929 included $450M tobacco tax, $77M stamp tax, and $62M estate tax.

Gasoline consumption first 5 months of 1930 up 12.6% over 1929; May consumption up 5.3% over 1929.

GE and Westinghouse to market branded radio sets. GE line will include "Highboy" and "Lowboy" consoles, ranging from $140-$200. GE stock currently selling at 69, yield 2.3%, earnings for the quarter ended March 31 were $0.50 vs. $0.48 in 1929, earnings for second-quarter expected slightly higher.

Autostrop Safety Razor estimates first-half 1930 earnings will be up more than 56% over 1929. No recent developments in the lawsuit against Gillette.

Technicolor remains target of heavy pressure, declining three points to 31 1/8. Officials continued to deny rumors of new competitive color film processes.

Italy doubles auto import duties.

Joke:

"'A shoulder strap is an important little article, isn't it?' 'Yes, it's the only thing that keeps an attraction from becoming a sensation.'"

+ The Boring Stuff:

President Hoover denies intervening in investigation of the New York Stock Exchange; newspaper story may have been caused by the postponement until next fall of hearings on Senator Glass' proposed general financial investigation.

Standard Oil and PG&E have collaborated to build one of the most technically challenging gas pipelines, a 200-mile line from Kettleman Hills to San Francisco. Most of the line is made with 26-inch diameter pipe, the largest yet used for pipeline. Each 40-foot section weighs 3,400 pounds; for the first time, electric arc welding was used to join sections; thanks to new techniques, a small group of welders was able to join up to a mile a day. New coating process developed for sections of the line with corrosive soil; accordion-like joints used for large angles to allow some flexing.

Several trade reviews believe businesses close to a bottom; sharp rebound not anticipated, but low consumer inventories should cause a good seasonal increase in demand in the fall.

Liquidation starting at the end of May took the Dow down 80 points from spring peak of 294.07. Caused by renewed decline in business instead of the expected upturn; market has now faced reality and likely to trade technically until autumn business conditions become clear.

Short interest is reduced but still large. Bad earnings reports for the second quarter may not have much effect since traders have already been selling short on that basis for several weeks.

Agriculture Sec. Hyde claims tariff will increase net income per farm by $102 based on 1928 production, and assuming rate increases are completely effective.

Raw cotton exports $154M for the first quarter of 1930, down from $208.8M in 1929 and $291M in 1927. Attributed mainly to foreign cotton mills buying cheaper cotton from other countries, rather than business recession or decline in the price of cotton.

Machine tool market dull; little hope for upturn until after the summer.

Municipal bond issues for the first half of 1930 totaled $749M vs. $700M in 1929.

Alaska total mineral production $16.066M in 1929 vs. $14.061M in 1928.

Madison Square Garden earnings per year ended May 31 $1.26/share vs. $1.51 in 1929.

Scott Paper reports sales for first 6M of 1930 were $4.421M vs. $ 3.912M in 1929; profits expected about $2.75 vs. $2.29 in 1929. Sales in June exceeded $1 million for the first time, attributed to special sales and advertising effort.

Interstate Department Stores expects earnings for first half about the same as 1929.

Van Camp Packing (food packing) sales for 5 months ended May 31 were $9.428M vs. $9.391M in 1929.

Wednesday, July 2, 1930: Dow 223.03 -3.31 (1.5%)

Assorted historical stuff:

NY Governor Roosevelt addresses the National Governor's Conference. Ventures the opinion that all governors should visit every state in the union before holding office; relays a remark by President Roosevelt [Theodore] to that effect regarding senators and congressmen.

Editorial skeptical of oil industry claims to have curtailed excess production. Coolidge formed the Oil Conservation Board six years ago to serve a resource vital to national defense and to "all industry and to private life as we live it." Notes that while production now matches refinery demand, stocks of gasoline in storage have risen dramatically over past year. Stricter measures may be necessary to ensure overproduction is ended.

France pleased with success of $350M German loan bond issue; product of years of diplomacy; feels it makes German obligations more secure by switching the creditors from foreign powers to “private citizens of all nationalities.”

Broadway theater operators will implement new plan July 21 to curb scalping by ticket brokers.

Bill Robinson [Bojangles], Harlem's greatest tap dancer, appearing in the Palace Theatre. Has been performing for 32 years. Famous for inventing new steps, such as the stair dance. So many performers are now imitating the stair dance that he's now doing his own imitation of himself doing it.

Philippine people have suffered unfortunate consequences from American high-power installment salesman. "One may now see, in or about $50 shacks, such things as $500 radios, $700 pianos, $200 phonographs, and even $1000 automobiles."

Market commentary:

Stocks continued rally in the morning but ran into resistance after reaching new highs in the first 3-4 hours. Bad news from Steel changed the general market direction. Bears renewed attacks - much of yesterday's rally attributed to short covering. Substantial short interest remains; bears expected to renew efforts after unfavorable second-quarter earning reports.

Airplane industry is having birth pains as the automotive industry did 25 years ago. However auto industry is now "one of the great pillars of prosperity;" it's having an off year, but production 25 years from now will be much greater than 1929. By that time the airplane industry may also reach maturity, with large employment and earnings.

Market decline has been worldwide, but an improvement in the US should spread. "Business all over the world in recent years has contracted a habit of moving in sympathy with the course of business in the United States. And there is good reason."

Many broker's letters say it's a good time to buy stocks as long-term investments, particularly quality rails, many of which are yielding 6%-7%.

Economic news and individual company reports:

U.S. Treasury surplus for fiscal year ended June 30 was $184M. Receipts were $4.178B vs. $4.033B in 1929; expenditures $3.994B vs. $3.848B in 1929. Public debt was reduced by $746M due to surplus and $554M of "sinking fund" operations charged to ordinary receipts. Original estimate of surplus before start of fiscal year was $225M; 1% tax cut last fall reduced this estimate to $145M.

Senate may direct the Secretary of Agriculture to investigate the multiyear decline in cotton prices. Resolution would budget $125,000 to investigate "the cause of the decline, the amount of short selling, and by whom."

California potential oil output estimated more than 1.1 million barrels daily; current production restricted to about 600,000 barrels, slightly over quota.

Car company shipments in June: Graham-Paige 3,190 vs. 5,989 in 1929; Reo 1,027 vs. 3,042; Buick 4,135 vs. 14,665.

Stock Market Jokes:

At a recent large corporation's stockholder meeting, the secretary was annoyed to find two men with no proxy forms. "Whom do you represent?" the secretary asked. "The short interest," the gentlemen replied.

"Many big operators who leave on vacation vowing not to look at a stock market quotation ... usually find what they are not looking for."

+ The Boring Stuff:

Editorial: the US will receive long-term German annuities totaling $755M to settle World War claims. Suggests the US could give up these claims to help with European reconstruction. This would not be charity, but a practical matter of helping our country's export markets.

French economy holding up well so far (index of industrial production 144 in April vs. 139 average for 1929, full employment). Public mood, however, is pessimistic, and stock market is down.

California population 5.642M, up 65% from 1920.

Returns on retail sales estimated at 7%-8% of sales or about $3B; returns on installment credit 12%, open credit 9.9%, cash sales 5.2%; highest returns on credit sales for musical instruments, over 15%.

Wheat, cotton up; other commodities dull, mostly down. Government and corporate bonds generally higher; sharp rally in Bolivian bonds following revolution.

Railroad freight car loadings for week ended June 21 were 920,859, down 149,015 from 1929, down 66,501 from 1928, and down 5,234 from the previous week.

Steel industry production for the past week was around 64% of capacity vs. 66% previous week, 93.5% a year ago, and 72% in 1929. Holiday shutdown may cause a reduction to 48% next week.

A large steel producer believes production may decline a little but 60% of capacity should be the bottom.

Total gasoline in storage at the end of May 54.046M barrels, vs. 54.435M end of April and 44.648 end of May 1929.

June commercial failures 2,026 down from 2,179 in May but up 15% over June 1929. Total liabilities, however, were $63.1M, highest of the year and double 1929 level.

Walter Chrysler reports Dodge acquisition and integration has gone well. Company now is positioned well at all price levels, has developed good cooperation with employees, and is financially strong enough to weather a severe depression.

United Fruit earnings for 6 months ended June 30 estimated at $10.1M vs. $9.3M previous year. Selling at 12.8 times 1929 earnings, yielding 4.5%.

Warner Bros. (movies) expected to earn $5.50/share in the year ended August 31 compared to $5.23 previous year.

Globe-Wernicke (office furniture) sales for year ended May 31 $6.4M vs. $5.8M previous year; earnings $7.26/share vs. $8.42. High backlog of orders into the summer and fall.

Utilities: North American Co. expects earnings for year ended June 30 slightly above 1929. Consol. Gas & Elec. of Baltimore reports earnings for year ended May 31 was $6.22/share vs. $5.83/share in 1929.

Kress (chain store) announces 50 cent special preferred stock dividend; sales for five months ending May were $25.1 million up 5% from 1929.

Montgomery Ward June sales up 9.2% over 1929.

Savage Arms (firearms) expects first half 1930 earnings to be below dividend requirement of $1.00, vs. $1.38 in 1929.