Tuesday, October 7, 1930: Dow 202.76 -8.34 (4.0%)

Assorted historical stuff:

Pres. Hoover addresses AFL. Praises cooperation of labor and business after fall market panic, says measures adopted “served as a practical system of unemployment insurance”; notes public works and construction by rails and utilities in first 8 months was $4.5B vs. $4B in 1929; “a new and improved tool has been added to the working kit for the solution of our future problems.” Says some regulations that lead to destructive competition and instability may need to be modified. Praises scientific and labor saving development as gain to employers, workers, and consumers; recognizes problem of “technological unemployment” but believes new discoveries and inventions will absorb workers displaced from older industries.

NY Stock Exchange warns bear operators against “raiding tactics.” Article XVII, Section 4 of the Exchange constitution forbids buying or selling securities for the purpose of “bringing about a condition of demoralization in which prices do not fairly reflect market values.” Recent aggressive attacks on leading securities together with several recently circulated unfounded rumors have caused the Exchange's Business Committee to “decide upon a firm attitude.” Committee has warned members that all messages sent over private wires must be kept on file, and called several members in for questioning yesterday.

Uprisings break out in 4 Brazilian states; Pres. W. Luis declares “state of siege” throughout republic; banks in Rio de Janeiro closed for 15 days; banks in Santos and Sao Paolo also closed; coffee breaks to lowest price since 1915, and Brazilian coffee exchanges suspend trading indefinitely.

Prohibition Bureau estimates illicit liquor production in US in year ended June 30 at 876.3M gallons; estimates consumption at 40% of 1914 level.

British R-101 airship crashes [killing 48 on board]; Rear Adm. Moffett blames fire, loss of life on use of hydrogen, urges lifting of ban on exporting helium.

Scientific research is of increasing importance to industry, with corporations including GE, AT&T, du Pont, and GM maintaining their own research labs. Many important industrial applications began as pure research, some of it in these industrial labs. Bell Labs now researching “two-way television, color television, sound picture making, and research on the three-dimensional photo camera.”

Higher education suspected of discouraging marriage in women students. Of living graduates of Wellesley College, less than 1/3 are married at the present time; of 400 women just graduated from Northwestern, only 23 stated in a final poll that “matrimony was their preferred career.”

Atlanta sues to force Census to increase population from 270,367 to 360,692; Houston protests it would suffer great injury by being demoted to third city in South.

Market commentary:

Market wrap: Stocks dropped sharply on moderate volume; attributed to reports of “serious outbreaks” in Brazil, to unsettled industrial conditions at home, and to decline of several representative stocks to new yearly lows “with unsettling effect on the entire market structure.” After early selling had spent itself, market turned dull and drifted irregularly on small volume, with little professional activity seen in either direction; disturbingly, trading dried up completely on any rallies. Some issues showed further weakness as session progressed including utilities, rails, insurance, Eastman Kodak, Allied Chemical, AT&T, US Steel. Bond market active and irregular; corp. bonds generally weak; US govt. firm; South American govts. down sharply, other foreign govts. irregular.

Harvard Economic Society says current business statistics are not reassuring though there's still time for normal seasonal gains to materialize.

Natl. Assoc. of Manufacturers annual trade survey reports signs of upturn; while slump in trade and employment has been sizeable, current favorable signs include reasonable level of inventories, wage scale generally holding, labor peace, and optimism found in survey sent to members: prospects for winter were called excellent by 2%, good by 18%, fair by 59%, and poor by 21%. J. Edgerton, President, criticizes “emotional proposals” advocating govt. solutions for unemployment as unworkable, praises Smoot-Hawley tariff as moving tariffs away from politics.

Dow closed at a new yearly low, and within 4.07 points of the Nov. 13 panic low of in 198.69. There was 1 stock at a new yearly high and 93 new lows.

Economic news and individual company reports:

Fed. Reserve member banks weekly report for Oct. 1: loans on securities up $22M to $8.483B, “all other” (commercial) loans up $79M to $8.530B.

Rails initially pleased about statement in Hoover's speech that rails should be assured of returns sufficient to maintain them in strong enough condition to extend relief in national emergencies. Upon further reflection, however, “the prospect of repeated requests of this sort from the government was not very cheerful.”

Class 1 rails net operating income in Aug. was $95.6M, a return of 3.38% on property investment, vs. $141.8M and 5.1% in 1929; first 8 months was $555.3M, return of 3.59%, vs. $828.4M and 5.48% in 1929.

American industries most affected by “five year dumping program” of Russia form temporary “Joint Conference on Unfair Russian Competition” to gather information; industries represented include lumber, matches, sausage casings, glue, coal and manganese.

Companies reporting decent earnings: Woolworth.

Joke:

“Cashier - You will have to bring someone here to identify you before we can cash this check. Do you have any friends in town? Stranger - No. I'm a tax collector.”

+ The Boring Stuff:

Editorial: Some AFL officers have blamed depression on lack of workers buying power, calling for higher wages. Henry Ford is optimistic on future, seeing ever increasing wages and living standards based on intelligent management and improving productivity. This could happen if we had leadership with the right capacities and a public with the “enlightened selfishness” to select them, but both of these are in doubt. This recalls Walter Lippmann's “drift or mastery”; perhaps the best we can do is drift in the right direction.

Editorial: Wheat for December delivery, which on Monday a week ago sold below $.76 a bushel, closed the week over $.82. This looks like a return of reason. While the wheat outlook is not good, it's not disastrous as implied by the recent market plunge. Russia will be exporting some wheat but the amount is unclear; “as in most bear stories the size of the animal is likely to be greatly overestimated.” On the other hand, Europe will be 100-150M bushels short of last year, and the US will be using a sizable amount of wheat for animal feed.

Henry Ford's visit to Paris has focused attention on battle for European auto market among US carmakers. GM bought control of Opel last year, and GM Pres. A. Sloan has pointed out the potential of this market. Due to recent tariffs, US carmakers are shifting from setting up European assembly plants to manufacturing all or most of the car parts in Europe.

Germany awaits formation of new govt. following surprise radical election gains. Radical govt. seems unlikely; Communists are opposed on principle, and Fascists have only the vaguest practical program, having “promised everyone everything.” Likely solution is moderate parties uniting behind Breuning cabinet, but there are important disagreements to be settled: Breuning govt. wants to cut unemployment benefits to balance budget, while Social Democrats feel they're already too low; on the other hand, Social Dems. want to raise income taxes while Breuning parties say they're already too high.

Canada plans to spend about $90M to stimulate industries not benefitting from their new tariffs, mostly on rail and highway construction; some money to go for direct unemployment relief. One important project is national highway from Nova Scotia to Vancouver.

Supreme Court opens fall term; Arizona sues to stop work on Boulder (later Hoover) dam.

US govt. is trying to reintroduce musk-ox (looks like small buffalo) in Alaska after it's been wiped out by hunters; importing herd from Greenland. Musk-ox is not thought to compete for food with reindeer, which was already reestablished in Alaska by the govt.

Whaling is almost a lost art in the North Atlantic but is successful in the North Pacific and thriving in the Antarctic region. Companies operating whaling fleets include the California Sea Products Co. and the Mexican Whaling Co.

Discussions continue on city acquisition of BMT and IRT; questions include financing of purchase, and method of operation of the combined city transit company; Mayor Walker understood to be against direct city operation, possibly in favor of quasi-public operating company.

Representatives of Bronx civic organizations testify that removing the 6th Ave Elevated line would cause serious hardship for the traveling public.

Recent declines in many high-grade issues attributed to liquidation by investment trusts reducing their portfolios; blue chips considered more attractive to sell since they haven't declined as much as more speculative stocks. One such case in the past two days has been AT&T, which has also attracted some short selling anticipating poor Q3 earnings; the stock now yields 4.5%, and has over 500,000 shareholders. Another case is US Steel; the preferred and common shares are now both about 150, each paying annual dividends of $7.

While some predict a midweek rally, conservative observers advise clients against trying for it, and don't advise buying even gradually until the market shows the ability to move forward for more than a day or two.

Tax selling (for establishing losses and lowering taxes) reported to have been much larger than expected recently.

Copper surplus expected to increase, though it's hoped that the current low price will now start forcing small producers to stop production.

Steel price's better stability vs. copper attributed to consumer policy of buying only necessary requirements instead of buying ahead.

Commodities mixed. Most grains moderately higher, corn up substantially. Cotton down slightly. Rubber down sharply; coffee plunges on Brazilian unrest; raw sugar futures up sharply on technical recovery from last week's liquidation. Copper buying continues active, but thought to be largely for stocking up.

Rails in several territories, as well as grain shippers and millers, filing petitions with the ICC about recently lowered grain rates.

Only 2 of 52 rails show gain in loadings vs. 1929 for 2 weeks to Sept. 13; rails serving auto industry do worst.

Atchison Topeka and Santa Fe Rwy. expected to earn about $14.50/share this year vs. early estimate of $18; decline attributed to lower revenues and to keeping promise to administration to help business and employment situation by keeping up high level of maintenance and improvement work in the first half.

World sugar crop for 1929-30 estimated at 30.045M short tons vs. record 30.435M crop in 1928-29.

Lumber industry continues to hold production close to or under new orders; for week ended Sept. 27, orders were 8% above production of 269.0M feet.

World production of Ford cars and trucks in Sept. was 97,885 vs. 99,142 in Aug. and 161,305 in Sept. 1929.

Julius Kayser (one of the largest makers of silk products) stock about 20, dividend recently reduced from $4 to $2.50, earnings for year ended June 30 were $2.83, earnings for previous 3 years totalled $26.19.

Monday, October 6, 1930: Dow 211.10 -3.08 (1.4%)

Assorted historical stuff:

Editorial: France's accumulation of gold is starting to “threaten the smooth workings of the world's reserve banking machinery,” although a previous episode in the 1870's turned out fortunately through sheer accident. This recalls the German maxim about trying to forecast the future: “It always comes out different.”

Southern California has become a tourist mecca; in 1929, 1.067M visited, spending $418.5M; as many as 1 in 10 stayed, with population of 10 Southern Calif. counties growing from 1.424M to 3.284M in the past 10 years.

Times are changing in Manhattan real estate. In the past 15 years many landlords did as little as possible for tenants; repairs were kept to bare necessities unless tenants paid, and “requests for redecorating were as often as not received with dignified silence.” Recently, a tenant requested a number of quite expensive jobs; the landlord's letter back concluded “Our decorator will be around in the near future to arrange for the work at your convenience.”

Judge G. Hahn of Cleveland rules against lawsuit to stop planes flying over property that was based on ancient Roman legal principle “whosoever controls land controls it from the center of the earth to the zenith”; decides effective possession of property only extends 500 feet up.

Berlin radio engineers build mammoth loudspeaker audible over a 25 mile diameter, plan to attach speaker to a balloon anchored 3,000 feet high to broadcast concert to the city. Loudspeaker creates airwaves that can be felt 150 feet away.

Market commentary:

Market wrap: Saturday short session opened mixed, advanced moderately on low volume with activity concentrated in recent bear targets; short-covering was apparently active; majors including US Steel, GE, Westinghouse, American Can, GM showed strength. Late in the session a vigorous bear attack started in AT&T and spread to rails and other investment stocks; sharp drops in these spread to other sections and early gains were wiped out; market closed weak. Bond market moderately active; investment grade and US govt. firm; lower grade and speculative issues weak; German bonds mixed, other foreign govts. mostly firm.

Week in review: Dow at Tuesday's close was about 6 points from last Nov. panic low, dropping about 40 points in 3 weeks. Improvement in grain markets brought some optimism as week closed, and pressure lifted from stocks. Interest rates broke to lowest levels since war, though weekly bank reports showed encouraging increase in commercial loans and currency circulation. Steel prices mixed; rail figures weak. Bond market opinion generally gaining enthusiasm.

G. Verity, Pres. Amer. Rolling Mill Co.: “I think it is pretty well conceded that we have reached or passed the bottom of this depression and from now on can look to gradually improving business”; industry should be back to normal by end of Q1 1931; company business in Sept. up 25% over Aug.; Business recession has been costly, but cost will be recovered thanks to removal of “deadwood acquired in prosperous times.” Looks forward to tremendous prospects in all industries.

S. Archer, Pres. Archer-Daniels-Midland, says Sept. business largest of any month this year, inventories remain low; “with the more general feeling of optimism that is being manifested, we expect the holding off tendency which has been so pronounced to give way to more liberal buying from now on.”

AFL Pres. Green says worker's buying power key to prosperity. Suggests policies to combat depression including buying ahead, cutting overhead other than wages by modernizing equipment and cutting waste, improving product quality, and increasing advertising. Notes optimistic business signs but sees danger in increasing number of wage cuts.

Economic news and individual company reports:

Irving Fisher's index of 200 commodities for week ended Oct. 3 was 82.3 vs. 83.1 in previous week and 94.7 in 1929.

New car registrations for Aug. were 203,737 vs. 254,098 in July and 376,886 in Aug. 1929; first 8 months were 2.111M vs. 2.965M.

F.W. Dodge reports construction contracts awarded in 37 Eastern states during Sept. were $331.9M vs. $347.3M in August and $444.4M in Sept. 1929. First 9 months was $3.685B vs. $4.601B in 1929. Residential construction in Sept. was $98.5M, highest total since May.

Youngstown district steel operations down 1% this week to 53%; consumers said unwilling to book heavily due to mixed business and price picture.

US Ambassador W. Edge asks French Commerce Min. to rescind recent doubling of duty on US raw and refined lard.

Federal grand jury indicts six former employees of Manhattan Elec. Supply for manipulation of the stock; tactics included employing a group to send out letters, market sheets, and telegrams to the public, and paying money to brokers in return for advising customers and the public to buy the stock.

Movie:

Cecille B. DeMille's Madame Satan: Theme is “the eternal triangle.” Bob Brooks is dissatisfied with his marriage and turns to a pretty vaudeville singer. His wife Trixie decides to win him back; masquerading as Madam Satan, she walks into a masked ball aboard a Zeppelin “singing a vigorous song of defiance and woos her husband away from the temptress.” Meanwhile, lightning strikes the Zeppelin and “all the characters are sent hurtling through the air in parachutes.”

+ The Boring Stuff:

Editorial: Rails are facing increasing competition from passenger buses and freight trucking. They've done a good job of cutting expenses since the depression of 1921, cutting expenses and letting 350,000 employees go; further large savings are unlikely. They must now try to increase traffic through competition. For passenger traffic this can be done through rates, while for freight, service is also important - rails should offer door-to-door service and handle less than carload amounts as trucks do.

Editorial by T. Woodlock, former ICC member: The ICC (Interstate Commerce Commission, regulates railroad operations) disposed of 2,120 cases in 1929; a rather complicated calculation shows each commissioner disposes of a case every 2 1/2 official working hours. In reality commissioners must work 80 to 90% of their waking hours including Sundays and holidays, and depend on staff to do much of the research. “Raw material” on which commission decides cases includes about 50M words of oral testimony a year and scores of thousands of exhibits; published record of decisions is about one volume/month.

Recent statements by Pres. Hoover seen as advocating more tolerant treatment of rails by the ICC; Hoover said to be concerned about rails' recent revenue decline. Rails have complained about ICC's stinginess on rates while they're being called on to assist in various emergencies, at substantial cost to their revenues.

NY Trust Co. branch at 57th St. and Fifth Ave. to be decorated with one of largest murals in the city, a 200 foot canvas depicting 4 centuries of NY shipping and architecture ranging from an early Dutch merchant ship to “a speed-boat of today shooting beneath Brooklyn Bridge.”

Municipal bonds continue strong, especially highest grade; Wall St. Journal avg. of 20 long-term state and city bonds yields 3.94%, lowest since May 1928.

Expanding number of state and municipal bond issues expected to result in increased employment rolls in the near future; about $400M will be voted on in Nov.

Broad Street Gossip: Foundations for a bull market are now strong as they've been in years, though an early and sustained uptrend can't be taken for granted. Favorable factors include brokers' loans down drastically, much money available for investment, low rates, low inventories, and record low commodity prices; these are the opposite of conditions when past panics happened. In the Oct.-Nov. crash many rushed to buy stocks because they were cheap, with even John D. Rockefeller, Sr. buying and advising others to; now most stocks are well below those bargain levels.

Recent notable stock movements: Banks, trusts, and insurance companies closed sharply lower on the week. Newmont Mining (copper) stock now at 64, which is below its total earnings for the 3 years ending Dec. 31. Woolworth has shown strength on expected Sept. sales improvement. Technicolor has rallied nicely over the past few days; attributed to large short interest and bargain hunters speculating on prospects of color movies.

Conservative observers continue to advise remaining on sidelines until market has shown ability to hold upturns.

Bear traders who had covered shorts earlier in the week were reported selling the market again on Friday and Saturday, encountering little resistance.

Economists closely watching trend in electric power output in coming weeks; should reflect any improvement in industry.

Some attribute decline in Montgomery-Ward Sept. sales to declining farm buying power.

Commodities weak. Grains down moderately in dull market. Cotton again down moderately despite midmorning rally.

US-Europe trade stats: about 40% of total US foreign trade; total trade surplus including merchandise and service of $612M in 1928 and $412M in 1929 (merchandise surplus alone was over $1B each year); US investments in Europe at end of 1929 were about $4.3B, not including war loans from US govt. of $6.6B; estimated net balance including merchandise and service trade, debt payments, and capital investments was surplus of $418M in 1928 and $688M in 1929.

Agriculture Dept. reports production of wheat for 1930 in 30 countries was 2.802B bushels, up 5.9% over 1929.

US officials say will probably not know if Russia will import wheat until winter, when Soviet collections of grain from farmers will be complete.

Movement launched in Texas for law to curtail cotton planting due to low prices. Gov. Moody advises calling on Farm Board instead to bring about drastic cuts in cotton acreage nationwide by recommending concerted action in all cotton states.

Congress expected to appropriate between $5M and $25M for loans to farmers to purchase seed in drought areas.

Railway Age reports Aug. freight car orders were 565 vs. 4,257 in 1929; locomotives were 25 vs. 84; passenger cars were 62 vs. 0. For first 9 months freight cars were 33,137 vs. 66,190 in 1929; locomotives were 330 vs. 672; passenger cars 623 vs. 1059.

Bonds called in advance of maturity in Oct. were $43.4M vs. $49.2M in Sept. and $19.2M in Oct. 1929; first 10 months was $352.2M, lowest since 1924.

NYSE committee on business conduct asks members to send to it all telegraphic communications sent or received in 2 weeks ended Oct. 3 relating in any way to the financial conditions of members of the exchange.

National Auto Show reports applications for space in the 1931 show's parts and equipment sections at near record volume.
Chesapeake & Ohio Rwy. reportedly saving substantially on maintenance thanks to new equipment, though interest charges are higher due to capital outlay.

Companies reporting decent earnings: Beatrice Creamery.

Favorites of the week Sept. 29-Oct. 4, 1930

No Journal was published Sunday, Oct. 5, 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.

Oct. 4:

[Note: Strangely familiar dept.] Salmon O. Levinson urges temporary suspension of “organized short selling” on NYSE as means to end business pessimism.

Oct. 3:

[Note: I find this speech fascinating. It clearly contradicts the image of Hoover as oblivious or do-nothing - he's not in denial about the severity and human consequences of the crisis, and he sounds strangely like a modern economist in his explanation of what caused the crisis and in defending the necessity to take action. The second paragraph in particular sounds uncannily familiar, especially the part quoted about the periods of stability becoming longer and recessions milder – could this be a feature of the period when a debt bubble is ballooning to its final humongousity before bursting? ]
Pres. Hoover's address to American Bankers' Assoc.:

Past year has been a severe shock to economic system, disorganizing it and slowing consumption to 85%-90% of normal. This has caused “a great human problem ... unemployment, privation, and fear”; however, it's not a new experience but typical of recurrent crises in the past.

Main cause of most of these crises is an inflationary boom leading to destructive results, in this case in our stock markets and in worldwide overproduction of many commodities. Some fatalists believe these crises are inevitable, but the same was once said about typhoid or cholera. Govt., economic and business leaders have already accomplished much in past decade; as a result, “the period of stable prosperity between storms is longer, the period of the storm is shorter, and the relief work far more effective.”

Unprecedented cooperative measures so far by business, bankers, labor, and govt. have been effective at maintaining demand to some extent, but we should also think of prevention. The banking system can play an important role due to its large influence in directing credit, both by restraining unwise expansion and speculation during booms and by instilling confidence and making credit accessible during recovery. Rails and utilities could also act as “balance wheel” through public works and construction.

While depression is worldwide, US doesn't need to wait upon recovery in rest of the world but can lead the way as it did in 1922. Our resources, people, and scientific discovery are unimpaired. Depression is “but a temporary halt in the prosperity of a great people.”

[Note: Strangely familiar in the receipts; strangely unfamiliar in the expenditures.] Income tax receipts for fiscal Q1 (July 1 - Sept. 30) were $554.4M vs. $609.4M in 1930, total ordinary receipts were $868.9M vs. $1.015B, and total ordinary expenditures were $715.6M vs. $722.7M. Gross public debt on Sept. 30 was $16.081B vs. $16.720B in 1929.

[Note: Ay Chihuahua! dept.] British Imperial Conference hopes to solve problems of empire free trade, India, and Palestine, knitting empire into an “economic and imperial whole.”

[Note: Sheer Genius dept.] NY City Community Council recommends construction of world's largest airport on artificial island just south of Governors Island in New York Bay, and construction of subway from Manhattan to Staten Island and on to Brooklyn, with stations on Governors Island and the airport.

Oct. 2:

[Note: Interesting data point on what's depression-proof.] Amer. Beauty Congress told women spend almost $750M/year on cosmetics with no decline this year; 30% spend over $150/year.

[Note: I made this joke last week, about a laptop.] “The owner of a cheap watch brought it in to the jeweler's shop to see what could be done with it. 'The mistake I made, of course,' he admitted, 'was in dropping it.' 'Well, I don't suppose you could help that,' the jeweler remarked. 'The mistake you made was picking it up.'”

Oct. 1:

[Note: Strangely familiar dept.] National City Bank monthly business review: Thus far business in Sept. has shown some improvement, but not strongly enough to convince that the uptrend is here to stay. However, without minimizing the depression, which is caused by serious and fundamental maladjustments, we also shouldn't “magnify the difficulties out of all due proportion.” While it's true no two depressions are identical, they have been studied for many years and general characteristics are fairly well understood; business activity indexes in July and Aug. touched lows of 1921, “warranting the assumption that the decline must have nearly, if not entirely, run its course.”

[Note: Always keep your eye on the freight loadings dept.] Rail freight loadings for week ended Sept. 20 were 952,512 cars, down 13,201 from previous week, down 18.4% from 1929, and down 16.7% from 1928.

Sept. 30:

[Note: Strangely unfamiliar dept.] Editorial: “New economics” statements that consumers are now buying too little and saving too much have just enough truth to be “dangerous pabulum for the popular mind.” Consider the savings people have in banks and life insurance. “Is it conceivable that it can be for the general good ... that these savings should not be made and that the money should be spent in consumption? Will the country be better off as a whole if the mortgage on the home is allowed to remain and instead a second car placed in the garage? The question answers itself. ... Thrift and extravagance succeed each other as do the tides, and the wheel invariably comes full turn. ... A little patience is all that is necessary ...”

[Note: Strangely unfamiliar dept.] US Steel policy of keeping as many workers as possible and distributing available work among them has been favorably commented on in many quarters; “the recommendation is made in the financial district that the adoption of such a policy by other large employers ... would do much to alleviate unemployment this winter.”

[Note: Ay Chihuahua! dept.] Baar, Cohen, & Co. contrast current stock market with debacle last fall. Back then, business had been declining since June but the market kept rallying; now business has hit bottom and should improve, but the market “ignores this condition just as it ignored the business decline ... A year ago the public was in the market up to its neck - in fact, in some cases, above its head. Today the public is afraid to own stocks. We know of no better indication that a turn for the better is near.”

Sept. 29:

[Note: Planning for brutal world domination is one thing, but when you mess with perfectly good securities you have officially Gone Too Far.] Editorial: Market reaction to Hitler's tirade in court was a crying shame: “It is a wonder, as well as a pity, that good securities must be made a football of a bombastic radical who since [1919] has succeeded in making an ass of himself.” Germany has had a hard time since the war; Hitler has taken advantage for his own selfish purpose. He formed his present party in 1921 with no platform but opposition: to Parliament, to capitalism, to rights of the Jews, and now to the Young plan. Four months later he tried to march on Berlin to “save” Germany, which showed no interest. They are even less likely to adopt his program now that much progress has been made toward reconstruction. Hitler's testimony showed his true colors. “The almost certain reaction will be a wave of disgust that will line up the people against any further progress of his party ... it is likely that his career will prove like a glass of soda water now frothing but quickly simmering down to nothing.”

[Note: Strangely familiar dept.] Dr. B. Anderson of Chase Nat'l. Bank criticizes Fed. Reserve use of open market operations; allows they may have been necessary to arrange war financing at low rates, but use has increased greatly since, mainly to lower rates; doing this “can generate almost incredible abnormalities in the monetary picture.”

[Note: Doctor: You could live so much longer if you gave up drinking, smoking, and gambling. Patient: You call that living??] W. Graham, Pres. Great Britain Bd. of Trade, notes British spend $325M/year on drinking, smoking, and betting; suggests unemployment would be much improved if they used the money to buy commodities instead.

[Note: Passengers then had to wait 45 minutes in the friggin' taxi line] Air travel record set at Newark Airport when 114 passengers landed or departed within 2 hours.

[Note: Correct priorities dept. ] Knute Rockne, Notre Dame head coach, to join R. H. Gibson & Co. as special partner; will devote his time to brokerage business except during football season.

Saturday, October 4, 1930: Dow 214.18 +3.14 (1.5%)

Assorted historical stuff:

Editorial on Pres. Hoover's speech at the ABA convention: “Without minimizing the severity of the depression or setting any dates for recovery, he sees nothing to fear. ... There was no attempt to belittle the situation or to convince his audience that prosperity was just around the corner. A bad business situation can never be talked away ...” Instead we must face the facts, find the causes, and tackle them with all our strength. “The man who will not be whipped cannot be whipped.” This depression, like most, is the aftermath of an inflationary boom. But it's “not a permanent situation; it is more like the headache that is supposed to come the morning after a night of dissipation.” The recovery comes when consumption and production balance again; this process has been underway for over a year and won't stop. It may, however, have been slowed down by unnecessary pessimism and fear; this should be tackled both by bankers and by the general public.

In past 20 years, average steel prices have gone up 26% while average wages have gone up 133%.

German Chancellor Breuning seen likely to pursue dictatorship to enact program; several provisions would require 2/3 majority in Reichstag since they infringe Constitution, and this is unlikely to be attainable. Stock market again declines, possibly due to foreign market declines and fear of impending strikes.

French govt. takes steps to halt “flood” of Russian imports, including licenses requiring equal amount of French exports to Russia.

“Competent observers” doubt that Russia is attempting to rattle world business or is in a desparate state; more reasonable explanation is that it is trying to reduce its current sizeable trade deficit by increasing exports.

Chicago payroll funds again exhausted after paying salary checks to firemen and police; Tribune reports no more money available until State Supreme Court rules on validity of emergency $12M bond issue.

Air mail terminals are becoming popular night attractions; crowds attracted by roar of motors, flames shooting from huge exhaust pipes, sudden blaze of light as plane takes off. Pilots often cater to public by buzzing the fields after takeoff.

Last year US made 842.8M pencils, 23.1M mechanical pencils, 248.3M pen points, 13.9M fountain pens, and 588,768 typewriters.

Teterboro, New Jersey has 11 officials, including mayor and 5 council members; voting population is 12, and total population 26.

Market commentary:

Market wrap: Leading stocks worked gradually higher on low volume; grain markets also strong. Positive tone attributed to lower brokers' loans and constructive speechs by Pres. Hoover and Farm Bd. Chair Legge; “powerful bankers” also reported more optimistic on market. Some isolated weakness at midday in rails, Montgomery Ward, and Fox, but leading stocks resisted any pressure and worked upward into the last hour. Merchandising shares strong, led by Woolworth. Bond market increasingly active as day progressed; corp. generally strong with isolated weak spots; foreign issues stronger; US govt. narrowly mixed.

Bulls encouraged by rallying tendencies late Thursday, indicating support that came in at Tuesday's lows was still effective. Based on precedent in June, July, and August, a technical rally at least to a Dow of 225 was expected. Many prominent brokers also believe this is a good point to buy for long-term investment.

Large reduction in brokers' loans was taken as an indication of stocks passing to strong hands.

Recent increase in foreign buying reported, possibly due to instability abroad; some investment demand also expected from Oct. interest and dividend payments.

Salmon O. Levinson urges temporary suspension of “organized short selling” on NYSE as means to end business pessimism.

Economic news and individual company reports:

Pres. Hoover announces govt. expenditures for current fiscal year (June 30, 1930-31) estimated at $4.135B, down $67.9M from June 30 estimate.

Bradstreet's and Dun's weekly trade reviews: cooler weather over much of US enlarged retail and wholesale buying; however, seasonal gains remain irregular and short of vigorous revival. Sharp market fluctuation in week may be confusing the picture. Many lines of business showing more week to week irregularity than usual.

Youngstown District steel operations expected at 54% next week, unchanged; steel manufacturers less optimistic on continued price uptrend due to continued weakness in steel consuming industries.

Gasoline in Chicago wholesale market is 5 3/4 - 6 1/4 cents vs. 5 7/8 - 6 1/4 previously.

Company reports since July 1: 277 companies reported higher earnings vs. 1929 and 557 lower; 1297 dividends unchanged, 68 increased, 136 cut.

Joke:

“Nervous Suitor - Mr. Jackson, er - I would like to - er - that is, I have been going out with your daughter for five years.
Parent - Well, what do you want - a pension?”

+ The Boring Stuff:

Editorial: Like Prohibition and the tariff, the electric industry is in line to become a major political football. It has grown with unequaled speed, with plant investment now almost half that in the rail industry; the problem of setting rates is not solved and involves “intricacies of detail” hard for the public to understand; and companies in the field have so far been “notably successful,” with a tendency to consolidate. “Thus the industry as a whole presets a shining mark for the political agitator's guns and a promising hunting ground for 'progressives' of all kinds and colors. Much tumult and shouting is ahead of us.” We can't hope to solve every issue at once, but for starters one interesting claim to settle would be the one by Mr. Carlisle, Niagara Hudson Power Chair., that they sell power to consumers 33% cheaper than the government-run Hydro of Ontario while also paying taxes. This seems like a clear question of fact that might start shedding light on the issue.

League of Nations to adopt plan guaranteeing loans of up to $140M for nations that are victims of aggression.

NY Gov. Roosevelt says industrial employment down 19% from a year ago, says crisis will be averted if all who can, offer work.

Detroit Mayor Murphy meets with industrial leaders to discuss ways of finding work for 150,000 unemployed; almost all Detroit industrial CEO's attend. Some small scale programs agreed on including employment agency and public works; large scale relief probably depends on increase in auto production.

Chinatown, San Francisco now has its own post office, brokerage, bank, and phone exchange, all operated by Chinese-Americans.

G. Houston, Pres. Baldwin Locomotive Works, says most of US motive power is obsolete; as of Dec. 31, only 21% of locomotives in use had been built in the past 10 years. Says equipment could be modernized, saving money with little new financing, by switching funds from maintaining old equipment to buying new.

Decline in the Dow in Sept. 1929 (start of the bear market) was 37.72 points; decline from Sept. 10-30, 1930 was 35.52.

Recent break in stock prices may have been discounting poor Q3 earnings; however, Q4 earnings comparisons will be more favorable since they'll compare with a period last year when business was already significantly depressed.

Conservative observers still advise staying on sidelines, reducing long positions on rallies.

Some feel rails may be attractive at current prices; should be first to feel business improvement, and some now have high yields on current dividends.

F.J. Lisman & Co. see possibility of “old-fashioned bull market in bonds” in Nov. and Dec.; see bargains in bonds a notch below highest-rated.

Commodities mixed. Grains again up strongly; wheat up sharply in spite of bearish crop news. Cotton off moderately. Copper buying continues strong at 10 cents; considerable indication that bottom has been reached, since this price is hurting all producers.

Increasing attention being given to possible cuts in capital gains tax, with administration apparently in favor. Current tax is 12.5% on assets held more than 2 years; possibilities include lower rate or graduated tax reducing rate as asset is held longer, up to no tax for 15 year holding period.

Fed. Reserve open market operations have been reduced recently; holdings of banker's acceptances and govt. securities have only increased slightly in the past several weeks, against usual seasonal pattern.

Unitization becoming more popular in oil industry as remedy for waste and overproduction; defined as “progressive, cooperative development of oil pools,” rather than uncontrolled development with curtailment later imposed.

US has been a large importer of gold through 1930; for first 9 months, imports were $264.4M and exports $112.2M. Sept. import balance was $3.2M.

Bond Buyer reports state and local borrowings in Sept. were $72.6M vs. $95.4M in Aug. and $100.3 in Sept. 1929; first 9 months were $1.037B vs. $967.5M.

Voters decide on about $400M of municipal bond issues in near future, mostly in Nov. elections; several huge proposals including Gov. Huey Long's $135M public works program in Louisiana, a $100M New Jersey issue mostly for highways, and a $31M issue for Golden Gate bridge construction.

Canadian bond sales in Sept. were $31.7M vs. $47.8M in Aug. and $21.8M in Sept. 1929; first 9 months were $494.0M vs. $407.3M.

European production of feed grains (corn, barley, and oats) estimated at 43.9M short tons, down over 19% from last year.

NYSE seat sells for $258,000, down $2,000 from last sale.

US Steel reduces tin plate prices for first half 1931 delivery by $0.25 to $5.00 - $5.10; expected to benefit can makers.

Dodge Bros., a division of Chrysler, reduces prices $100 on its 6 and 8 cylinder car lines, to $755 - $1,095, say sales are ahead of expectations.

Companies reporting decent earnings: Western Maryland Dairy.

Loose-Wiles Biscuit stock about 55, dividend $2.60, earnings in 1929 $4.58/share, earnings in 1930 expected higher.

Friday, October 3, 1930: Dow 211.04 -3.10 (1.4%)

Major presidential speech:

Pres. Hoover's address to American Bankers' Assoc.:

Past year has been a severe shock to economic system, disorganizing it and slowing consumption to 85%-90% of normal. This has caused “a great human problem ... unemployment, privation, and fear”; however, it's not a new experience but typical of recurrent crises in the past.

Main cause of most of these crises is an inflationary boom leading to destructive results, in this case in our stock markets and in worldwide overproduction of many commodities. Some fatalists believe these crises are inevitable, but the same was once said about typhoid or cholera. Govt., economic and business leaders have already accomplished much in past decade; as a result, “the period of stable prosperity between storms is longer, the period of the storm is shorter, and the relief work far more effective.”

Unprecedented cooperative measures so far by business, bankers, labor, and govt. have been effective at maintaining demand to some extent, but we should also think of prevention. The banking system can play an important role due to its large influence in directing credit, both by restraining unwise expansion and speculation during booms and by instilling confidence and making credit accessible during recovery. Rails and utilities could also act as “balance wheel” through public works and construction.

While depression is worldwide, US doesn't need to wait upon recovery in rest of the world but can lead the way as it did in 1922. Our resources, people, and scientific discovery are unimpaired. Depression is “but a temporary halt in the prosperity of a great people.”

Assorted historical stuff:

F. Kent, Bankers Trust NY director, deplores tendency of the masses to follow unscrupulous politicians in adopting economic remedies contrary to experience. “The record of laws passed to accomplish the impossible is amazing ... and yet so alluring is the word 'government' that many who demand less law usually end up by asking for more law to meet their intent ... It is more spectacular to 'get men' than to correct abuses and therefore the politician is out to get men.”

AFL to be asked to adopt policy of 5 hour day and 5 day week, with pay at 8 hour rate or higher, in Boston convention next week.

British Imperial Conference hopes to solve problems of empire free trade, India, and Palestine, knitting empire into an “economic and imperial whole.”

Mexican govt. instructs high vigilance against gold smuggling to US; cars said to be smuggling gold in gas tanks.

Transcontinental 24-hour air mail and passenger service between NY and California to be inaugurated as soon as night-flying facilities installed along route.

To make up for Hawaii's shortage of native birds, the Outdoor Circle, a Honolulu women's society, has been actively introducing birds from abroad.

Penstate Homestead Jessie, world-famous cow, dies after devoting 4 years to science; had window installed in stomach to enable observing digestive processes.

NY City Community Council recommends construction of world's largest airport on artificial island just south of Governors Island in New York Bay, and construction of subway from Manhattan to Staten Island and on to Brooklyn, with stations on Governors Island and the airport.

New Lincoln building on E. 42nd St. to have unique dining room named the Dungeon, “hewn out of the virgin rock 35 feet below street level” and decorated in medieval Viking style. Difficulty providing satisfactory ventilation was overcome by construction of air intakes near top of the building.

Market commentary:

Market wrap: Following sharp technical rally on Wednesday, bears resumed “hammering tactics” on major stocks, succeeding in forcing major setbacks from Wed. highs. Volume was sluggish, possibly due to Jewish holidays, but selling was persistent and prices worked gradually down most of the day. Trading favorites including J. I. Case and Worthington Pump broke badly on light volume. Improved grain markets didn't affect stocks until late afternoon, when a rally lifted prices above the day's lows. Bond market active, prices mixed but trading in narrow range; foreign issues mostly lower.

Goodbody & Co.: “From the data on hand, it is our belief that the chain stores have definitely turned the corner”; see continued improvement from now on.

F. Sargent, Pres. Chicago & North Western Rwy., says rail profits being seriously reduced by constant rate reductions, and by what amounts to govt. competition.

Some prominent govt. officials reportedly considering arrangement of large-scale commodity buying, internationally coordinated between producing and consuming nations. Farm Bd. Chair Legge says time may have come for purchase of commodities as investment.

Economic news and individual company reports:

Fed. Reserve reports money in circulation Oct. 1 was $4.494B, up $58M from prev. week; NY City member banks reported loans on securities $3.796B, up $177M and “all other” (commercial) loans $2.448B, up $34M.

NYSE reports brokerage loans to members Sept. 30 were $3.481B, vs. $3.599B Aug. 29, and the record high of $8.549B on Sept. 30, 1929.

Income tax receipts for fiscal Q1 (July 1 - Sept. 30) were $554.4M vs. $609.4M in 1930, total ordinary receipts were $868.9M vs. $1.015B, and total ordinary expenditures were $715.6M vs. $722.7M. Gross public debt on Sept. 30 was $16.081B vs. $16.720B in 1929.

US electric output for week ended Sept. 27 was 1,704 GWHr, down 3.2% from 1929 but up 5% over 1928.

26th annual auto show to run in Chicago Nov. 8-15; number of exhibits is within 5% of last year's record.

Bradstreet's commodity index for Oct. 1 was down 1.2% from Sept. 1 and 18.9% from Oct. 1, 1929.

Steel price picture mixed; scrap prices showing some declines, but Dow avg. of 8 finished products up $0.14 to $45.60/ton, first increase since July 1929.

Panama Canal tolls for Sept. totaled $2.057M by 458 ships, lowest number of transits in a month since June 1927.

Diversification: American Radiator now producing metal caskets; MacAndrews & Forbes now producing Maftex insulating board from licorice root.

Joke:

“Moll - And what did your poet do when you turned him down? Doll - Oh, the poor dear threw himself into the waste paper basket.”

+ The Boring Stuff:

Assoc. Against Prohibition Amendment estimates US spends $2.848B on alcoholic drinks, up over $1B from 1913.

Editorial: State and municipally owned ports should be under jurisdiction of the Interstate Commerce Commission just as privately owned ports are. Main interest of the ICC in regulating ports is to ensure that rails serving more than one port don't discriminate between them by charging “unduly” preferential rates.

British Imperial Conference considers two schemes for improving economic conditions in empire: import board in Britain to negotiate large and long term purchases with cereal producers in dominions, and formation of large utility companies to develop tracts of land in dominions, creating self-supporting communities.

British and Soviet govts. negotiating for settlement of about $6B in British claims arising from 1917 revolution; Soviets expected to bring huge counterclaims based on British involvement in White Russian movement.

Dr. H Schacht, former Reichsbank Pres., arrives in US, will make a number of speeches during visit. Won't discuss political or financial conditions in Germany since he's now a private citizen, but states he believes conditions are much less severe than pictured.

State Dept. watching Cuban situation closely; Pres. Machado reportedly has requested suspension of constitution, though Nov. 1 elections will go ahead.

More odd-lot (small) buying reported in last few sessions.

Many bear operators reportedly covered shorts earlier in week.

Conservative observers still favor staying on sidelines until “market has demonstrated definitely its ability to hold on rallies.” Stop-loss orders favored.

R. Lyons, exec. VP National Chain Store Assoc., warns depression and distress in farm areas likely to lead to attempts at higher taxes against chain stores.

Sir R. Horne, Imperial Smelting Corp. Chair., says commodity price fall has now been overdone. Expects large gap between selling prices and production costs to be bridged by combination of lower costs and price increases, but doesn't see much prospect of rapid recovery.

Commodities continue strong. Grains generally substantially higher. Cotton up slightly on late rally. Copper buying continued strong, but thought to be mostly for averaging down on inventory price.

Fed. Reserve member banks report for week ended Oct. 1: brokers' loans down $159M to $3.063M, vs. record high of $6.804M on Oct. 2, 1929; total is lowest since July 20, 1927.

US shippers estimate carload shipments of 29 main commodities will be down 7.3% in Q4 vs. 1929.

German marks continue stronger, flight of capital decreasing.

Canada to spend about $90M to relieve unemployment.

NY city banks and trusts generally report lower resources as of Sept. 24 due to lower deposits and earnings.

Some NY City savings banks cut interest on deposits to 4%, while some will maintain the current 4 1/2%.

Gasoline in Chicago wholesale market down to 5 7/8 - 6 1/4 cents vs. 6 - 6 3/8 previously.

F.W. Dodge reports NY metro area construction contracts awarded in Sept. were $81.6M vs. $76.7M in Aug. and $57.8M in Sept. 1929; first 9 months was $739.6M vs. $904.7M.

Detroit considers coordinating with industrial companies to modify schedules to create additional 25,000 jobs.

Utility company profits said benefiting from miniature golf craze; some 500 courses have been established since May in PSE&G of New Jersey's territory, all outfitted for night play.

IT&T reportedly will not reduce dividend except as a last resort; business in many departments said improving in past month.

United Fruit Company plunges after reporting Q3 earnings of $.46/share vs. $2.26 in 1929.

Restrictions on shipping fruits from Florida requiring sterilization due to infestation were removed by Agriculture Dept.

NYSE seat sold for $260,000, up $5,000 from previous sale.

Transcont. Air Transport has gained on govt. mail contract; now operating passenger service at a loss, but mail contract is expected to let it reach profitability.

Companies reporting decent earnings: Cudahy (meat packing), United Light & Power, American Ice.

Thursday, October 2, 1930: Dow 214.14 +9.24 (4.5%)

Assorted historical stuff:

Editorial: Chancellor Breuning's plan for German economy calls for drastic cuts saving about 1B marks/year. If adopted, “one obstruction in the way of a geneal recovery of world business will be removed.” Adoption seems likely since Pres. Von Hindenburg backs it, and apparently has authority to declare a dictatorship to carry it out if parliament can't agree. While it would be preferable for moderate parties to put politics aside and agree on a govt., we can't find fault if a dictatorship is necessary - this would be similar to Lincoln's Civil War statement that he would save the country with the Constitution if possible, but without it if necessary.

Dr. Nicholas M. Butler: unemployment no passing ill but danger to social organization; desperation of millions of jobless may lead them to try “something new.”

Dr. K. Vaugoin forms Austrian minority cabinet to hold office until Nov. elections; first ministry in which Heimwehr (Fascists) are represented as separate party.

British bankers including Sir O. Niemeyer of Bank of England arrive in Australia to discuss solution to financial difficulties; Australia has about $180M of floating obligations coming due in London shortly with no clear way to settle them.

Amer. Beauty Congress told women spend almost $750M/year on cosmetics with no decline this year; 30% spend over $150/year.

Fabian Society celebrates 46 years of “street corner debating, soap box oratory, and parlor socialism.” Now 2,000 strong, members include George Bernard Shaw and 8 British cabinet ministers; Prime Minister is former member.

Market commentary:

Market wrap: “Remorseless” drop in market that had run for six consecutive days was broken by strong rally, attributed to support finally coming in for main trading shares and to short covering. Market improved from the bell, opening at 206.16, up from 204.90 at Tuesday's close. Rally gained breadth as session wore on; US Steel and American Can led the rally; GE, Westinghouse, Allied Chemical, other majors also participated vigorously. Oils strong with Standard of NJ leading; trading favorites including Gillette, Worthington Pump, J. I. Case sharply higher. Volume moderately heavy but lower than Tuesday and fell off in afternoon; major stocks maintained gains and rose to day's highs in final hour. Bond market opened down but improved to close generally higher; foreign markedly stronger, convertibles up, corp. up narrowly; Dow 40 corp. bond avg. at new 1930 high of 97.70.

Rally considered influenced by technical factors; Dow had declined over 40 points since Sept. 10, and had declined 9 of the last 11 sessions. Increased volume of 4.497M shares also thought to indicate selling climax, since trading for two weeks ended September 23 averaged less than 2M shares.

On Tuesday, 54% of NYSE stocks traded below fall 1929 panic levels; taken as indicating liquidation has been more thorough than indicated by Dow averages (since leading stocks have held up better). Group that held up best was utilities, with 26 of 29 above 1929 low.

Some margin calls have gone out in the recent decline, but they've been relatively light compared to the fall panic when many traders were wiped out overnight.

Many bull pools reported to have accepted their losses and disbanded.

Call money is at 1 1/2% and going begging; stocks are at lows with no takers; commodities are at record lows with little demand.

Experts say some seasonal increase in business may have been delayed by unusually warm Sept. weather.

Many estimates for third quarter earnings lowered due to slower than expected Sept. business.

F. Lisman & Co. see bull market in “seasoned, dividend-paying” rail stocks due to low money rates: “The present generation in Wall Street has never seen the powerful lever which easy money exerts to raise the price of high grade stocks.” Sees prices discounting much adversity, says rails have adjusted to hard conditions.

Economic news and individual company reports:

Railcar loadings for week ended Sept. 20 were down 18.4% vs. 1929 and 16.7% vs. 1928; considered disappointing, largest percentage drop this year.

Fed. Reserve reports department store daily avg. sales in Aug. down 8% from 1929; first 7 months down 6%.

US Steel ingot production for week ended Sept 29 at about 65% vs. almost 66% prev. week; industry at 60%, down slightly from prev. week.

Federal circuit court in Oklahoma allows oil proration to continue until federal trial, expected soon. State Supreme Court decision on the issue expected Tuesday.

Companies reporting decent earnings: Fox Film, Amer. Water Works & Elec., Amer. Tank Car, Chicago Great Western Rwy., Jantzen Knitting Mills.

Western rails arrange conference with ICC requesting reconsideration of large cuts in grain freight rates; say cuts are unaffordable and deny them lawful return.

Estimates of grain crops as of Oct. 1 are somewhat improved over Sept. 1 due to rainfall relieving some drought areas; corn still about 20% below last year.

Joke:

“The owner of a cheap watch brought it in to the jeweler's shop to see what could be done with it. 'The mistake I made, of course,' he admitted, 'was in dropping it.' 'Well, I don't suppose you could help that,' the jeweler remarked. 'The mistake you made was picking it up.'”

+ The Boring Stuff:

Editorial: Russian dumping of commodities on world market has an “atmosphere of malefic mystery and diabolic ingenuity,” since it supplies them with funds to industrialize while also intensifying depression in “capitalist” world. Looked at calmly, it's not that mysterious. Any govt. with the necessary raw materials and ability to persuade or compel its labor to work for less can take over markets if it wishes. Theoretically the world could boycott Russian products, but this isn't really practical, and “if a people deliberately desires to play helot for other people, why not let it do so?” Soviet govt. is unique historically in that it's put us on notice that it aims to destroy Western civilization, and that its word is worthless, even in business. “Even the Hottentot and the Bushman have a code by which they will live but the Soviet has none ... It is about as complete a characterization as one could make of the modern 'liberal' mind today that it seems to think well of all this.”

IRT news: G. Dahl, chairman of BMT and advocate of unification with city transit lines, elected chairman of IRT, which had previously been putting off unification talks until other issues were settled. Some talk of quasi-public company to run all transit lines. IRT comptroller H. Berry testifies that removal of 6th Ave Elevated line without prompt compensation would put IRT into bankruptcy.

Rally partly attributed to long-term investment buying by insurance cos., banking interests, and investors, brought in by attractive prices and yields; bears may also have felt that a reversal was near and therefore covered shorts on a large scale.

Market value of 100 representative stocks was down 13.3% in Sept. to $25.9B; worst group was amusements, down 24.9%, best was rails, down 7.1%; value was down 41% from peak on Aug. 29, 1929, but 7.7% above lows of Nov. 13.

Conservative observers advise against following rally until it's maintained for more than a day or two; recommend stop loss orders to protect any long positions.

Fed. Reserve Bank of NY notes unusually small seasonal demand for credit and currency in Sept., resulting continued ease in money market.

Col. L. Ayres, VP Cleveland Trust, predicts large increase in savings in 1931 as business starts to recover from depression.

Commodities up strongly. Cotton continued recovery, closing up substantially though off day's highs. Wheat, most other grains up sharply. Copper buying was very active at 10 cents, with some producers no longer willing to sell at that price; 10 cents seen as possible long-term bottom. Rubber at new low.

Index of farm prices Sept. 15 was 111% of prewar level, up 3% from Aug. 15 but down 30% from Sept. 15, 1929, and lowest Sept. level since 1915.

Iron Age and American Metal Market reports: demand holding recent seasonal gains but not showing further improvement as would normally be expected at this time. Price picture mixed, with scrap and pig iron prices weaker but finished product prices showing some increases.

Dun reports 1,963 commercial failures in Sept., up 2.6% from Aug. and 25% from 1929; liabilities $46.947M, down 4.5% from Aug. and up 37.6% from 1929.

German index of industrial production for June was 85.7 vs. 109.8 in 1929 and 100 in 1928.

German marks stronger, stocks up, flight of capital reported down; attributed to relief over financial program.

US-Soviet trade for 1929-30 fiscal year was $177M, up 28% from previous year, of which US imports were $32M, up 3.5%.

Chicago wholesale gasoline prices continue to decline to 6 - 6 3/8 cents vs. 6 - 6 1/2 previously.

S.W. Straus reports building permits issued in Chicago for Sept. were $13.382M vs. $11.316M in Sept. 1929, and highest level of the year.

NY City property assessment for 1931 fiscal year is $19.791B, up $769.6M from 1930. Buildings started or completed were 8,416 vs. 16,515.

NY State in Sept. chartered 1,899 stock and no-par-value corporations with capital of $22.5M vs. 1,704 with $21.4M in Aug. and 1,708 with $68.9M in 1929.

IT&T was exception to the rally, declining to new yearly low on international political trouble.

NYSE seat sold for $260,000, down $5,000 from previous sale.

National City Bank adds $20M to reserves for unforeseen contingencies due to “world wide economic disturbances”; says has not experienced undue losses so far and is making good earnings. Action is praised as “ultra-conservative” in banking circles.

About 60% of all raw materials, fuel, and supplies are used in 1% of the US made up of about 80 highly industrialized counties. Largest are New York county (22 square miles), Hudson, NJ (43 sq.m.), and St. Louis (61 sq.m.).

US rayon production for 1930 about 130.4M pounds, up from 123.1M in 1929 but down 20% from estimate at start of year; world production about 420M.

US flour production in 4 weeks ended Sept. 30 was 6.985M barrels, up 140,000 from 1929; Q3 production was 20.933M vs. 20.821M.

Wednesday, October 1, 1930: Dow 204.90 -3.24 (1.6%)

Assorted historical stuff:

Editorial: Wheat futures have plunged from 99 cents/bushel to below 73 cents in less than two months. This is sheer panic: “Wheat is selling below its worth and there is nothing behind this drive but unreasoning and unreasoned fear.” There has been one story after another advanced to justify the decline, from depression to German elections to Russian short-sales; none of these hold up to examination. World wheat supply is larger, but this should be countered by use of wheat as feed due to shortage of corn. “Sometimes an elephant will take fright at a mouse and create a stampede in the herd. Market psychology seems about on the same order.”

One man's opinion on why wheat prices are down: “some people consider it a disgrace to be fat. It is a hipless, thin limbed age, and that means a big falling off in the consumption of wheat.”

French Foreign Min. Briand advocates aid to Germany; predicts 4M German unemployed this winter; “It is an inevitable law that misery and suffering push people toward extremes. ... Germany crushed is a danger for peace.”

Breuning cabinet in Germany proposes drastic budget cuts along lines advised by S. Gilbert, former Amer. Agent-General for Reparations; calls on the people to subordinate party politics to good of the nation. Plan approved by Pres. Von Hindenburg; Fascist leader Hitler attacks Von Hindenburg, demands his indictment if he establishes a dictatorship to force the reform package through. German stocks up following plan.

Japanese income tax returns show 11 individuals earning income of $500,000 or more; top income is Baron Hachoroemon Mitui with $1.403M.

M. Blondeau, dir. French tobacco monopoly, authorizes production of cigar specialized for feminine demand.

Market commentary:

Market wrap: In spite of good rally in grain markets, stocks continued to plunge for the fifth consecutive day, making the longest streak since the collapse last fall. Many margin accounts forced to sell. Monday's decline had taken leading industrials to new yearly lows, and rails below the panic lows of last fall. This encouraged bears to launch further aggressive drives across the list. Two attempted rallies in the morning gave way to renewed pressure. Volume increased to highest level since June. Bad breaks in trading favorites; whole market showed weak tone, was irregular at close. Bond market unsettled, moderately lower.

National City Bank monthly business review: Thus far business in Sept. has shown some improvement, but not strongly enough to convince that the uptrend is here to stay. However, without minimizing the depression, which is caused by serious and fundamental maladjustments, we also shouldn't “magnify the difficulties out of all due proportion.” While it's true no two depressions are identical, they have been studied for many years and general characteristics are fairly well understood; business activity indexes in July and Aug. touched lows of 1921, “warranting the assumption that the decline must have nearly, if not entirely, run its course.”

Broad Street Gossip: “It is a very wealthy country, and remarkable in the fact that the consuming power is still large notwithstanding a severe contraction in business. In time the country will emerge ... stronger and healthier than ever, and that means [good stocks] will soar to levels above the peak prices of last year.”

G.M.P Murphy & Co. point out year-over-year comparisons should start looking better in the fourth quarter since this is when the business slump intensified in 1929. Point to a series of unlucky events as delaying recovery, including drought, tariffs, political unsettlement, and unusually hot weather in September.

Oil industry seen facing test of continuing to balance production with consumption in seasonally period now starting.

Dow closed at a new yearly low, and within 6.21 points of the Nov. 13 panic low of 198.69. There were 5 stocks at new yearly highs and 312 new lows.

Economic news and individual company reports:

Aug. exports were $293.9M vs. $381.4M in 1929; imports $218.4M vs. $369.5M.

NYSE transactions in Sept. totaled 53.544M shares vs. 100.135M in 1929 and 90.232M in 1928.

J.A. Sisto suspended from NYSE due to insolvency; stocks they sponsored fluctuated wildly, for example Cuneo Press went from 31 1/2, to 16, back to 23 1/4.

Rail freight loadings for week ended Sept. 20 were 952,512 cars, down 13,201 from previous week, down 18.4% from 1929, and down 16.7% from 1928.

Wholesale gasoline in Chicago market down to 6 - 6 1/2 cents/gallon from 6 1/8 - 6 1/2 cents previously.

World crude oil production for 1930 estimated 1.444B barrels, down 44M from 1929; US about 937M, down 69M.

Companies reporting decent earnings: American Machine & Foundry (machinery for producing 5-cent cigars).

Joke:

“'What time do you get up in summer?' 'As soon as the first ray of sun comes in my window.' 'Isn't that rather early?' 'No. My room faces west.'”

+ The Boring Stuff:

Editorial: Current system has Treasury Sec. as chair of the Fed. Reserve Board. This makes the Fed's decisions subject to political criticism; for example, Sen. Wagner is accusing Sec. Mellon of preventing the Fed from applying the brakes in 1929, as the New York Fed wanted. Regardless of whether Sen. Wagner's accusation is true, the fact it can made is bad for the banking system. Considering the immense power the modern Fed wields, they must be as immune from political attack as the Supreme Court; this should be ensured by ending the Treasury Sec.'s influence over the Fed.

Treasury Sec. Mellon rumored to have bought “The Annunciation” by Van Eyck from the Hermitage collection for $800,000.

Esperanto slowly gaining adherents; seen benefitting from talking pictures and wide dicussion of Briand's plan for United States of Europe.

J. Lonsdale, Amer. Bankers' Assoc. Pres., addresses annual convention. Sees signs of business improvement including better buying, increase in employment, and higher savings; speed of recovery in hands of bankers who control flow of credit; largest obstacle to business progress is high taxes. Suggests it may be time to modify Sherman (antitrust) law; says present business conditions are result of wartime and postwar overproduction without developing markets sufficiently.

Caldwell & Co. note increasing amount of bank buying of bonds due to weak credit demand from business; a year ago leading banks had 41.7% of outstanding credits in business loans and this has declined to 36.5%; Fed borrowings at these banks have gone from $761M to $79M. This is believed a large factor in current and expected future bond market strength.

Bears reportedly successful at short covering in recent sessions due to extensive liquidation; at times, only buying has been from shorts.

Conservative observers still advise against going long; believe stocks not yet at attractive buying levels.

Rumors that Fed. Reserve was forcing banks to liquidate security loans dismissed; no evidence of liquidation seen, and this would be against recent Fed policy.

American Can finally succumbed to market weakness in spite of good earnings and yesterday's announcement of extra $1 dividend in addition to regular $1 div.

Woolworth has been finding support on theory that lower merchandise cost and cheaper items should benefit it in times of depression.

J.C. Penney said planning to place large orders in next month for staples for early spring delivery; seen as reflecting confidence in next year's business prospects.

Hudson Motor Car said planning aggressive campaign for 1931 model year, after having cleared decks this year by slashing inventories from $16M to $6.4M.

Corn Belt Farm Daily says only serious farm problem currently is wheat, but says crisis is overblown; points out it only accounts for 10% of farm income, with livestock alone at least 5 times as valuable.

S. McKelvie, Farm Board member, says main goal of the Board is an efficient private distribution and marketing system controlled by farmers, reducing the current large spread between producer and ultimate consumer.

Commodities mixed. Grains up, corn and wheat rallied sharply. Cotton touched new lows below 10 cents but rallied to close up. Copper reduced 1/2 cent to 10 cents/pound, with some producers withdrawing from the market for the present. New lows were hit in sugar and rubber.

More trade stats: First 8 months exports were $2.596B vs. $3.407B; imports $2.175B vs. $3.009B. First half exports increased to only 7 of 69 major markets; imports from only 13 of 68. Automotive exports in Aug. were $18.559M vs. $18.977M in July and $39.922M in Aug. 1929; first 8 months were $233.6M vs. $440.1M.. Grain exports in Aug. were $26.4M vs. $30.7M in 1929.

Amer. Petroleum Inst. weekly report for Sept. 27: refineries at 71%, up from 69.2% prev. week; gasoline in storage 37.222M barrels vs. 37.260M prev. week and lowest since Nov. 1929; crude oil production 2.390M barrels/day, down 32,050 from prev. week and down 510,650 from 1929.

US Bureau of Mines reports storage of crude and refined oil in Aug. declined 7.0M barrels vs. decline of 4.4M in July and increase of 4.9M in 1929; amount in storage at end of Aug. was 685.9M barrels, up 7.2M from 1929.

Independent US oil producers call for oil tariff; several Senators pledge support.

German exports in first 8 months were 8.025B marks; imports were 7.405B. Aug. showed a surplus of 175M marks vs. a deficit of 116M in 1929.

British registered unemployed on Sept. 22 were 2.110M vs. 2.103M on Sept. 15 and 1.175M on Sept. 23, 1929.

European wheat crop estimated down sharply from last year, and of lower quality; France down from 320M bushels to 209M-239M; Italy from 261M to 213M.

London Rubber Growers' Assoc. calls for cutting production as much as possible to expedite balancing supply and demand.

Net indebtedness of 250 cities with more than 30,000 pop. in 1928 was $5.828B, or $134.07 per capita.

Detroit making effort to relieve unemployment by construction of public buildings; Fisher Bros. also proceeding early with construction of large office building.

Locomotive orders down sharply, with little prospect seen of improvement until spring 1931; may be problem since manufacturers have large factory investments.

198 commercial airplanes were produced in Aug. by 61 major aircraft manufacturers; 217 were delivered, with total value of $945,719 not including motors.

NYSE seat sold for $260,000, down $5,000 from previous sale.