January 13, 2010

Tuesday, January 13, 1931: Dow 167.99 -3.72 (2.2%)

Assorted historical stuff:

Editorial by T. Woodlock: A first look at the 1930 Census figures shows a steady growth in US population of about 1.6% annually; present enthusiasm for birth control may be partly due to this trend. However, a closer look by Dr. Dublin of Met. Life Ins. shows that the past trend reflects two conditions that don't exist anymore - a past large influx of immigrant children who are now of childbearing age, and the relatively higher fertility of US natives a generation ago. Were it not for these conditions, our population might be roughly stable. This would cause profound changes in national life, some of them hard to foresee; in particular, our business psychology has been "created in an atmosphere of great expansion."

Undersec. of Treasury Mills says outstanding govt. achievement of past 10 years is management of public finances: when Republican administration took office, it faced a war debt of $24B with early maturities of $7.5B and high interest rates; debt has been reduced $8B, annual interest $430M, and annual taxes $1.8B.

Editorial: An increasing number of American business leaders is calling for revision of Allied war debts. Notably, Pres. Wiggin of the Chase National Bank recently joined the movement, advocating it without reference to fairness, as an expedient business decision. Matter is likely to become urgent when Germany decides to delay the postponable part of itsYoung Plan payments; Allies are likely to insist on similar forgiveness.

Editorial: After failing to do its constitutional duty in 1920, Congress has made a reapportionment under the 1930 census. The National Civic League [a dry organization], concerned this will increase representation of "large wet cities" by about 30 congressmen, is attempting a desperate end run in the form of a new constitutional amendment to undo the reapportionment. "Apparently hope springs eternal in the Prohibition breast."

The Senate will never learn; “Periodically it has to go barging up Pennsylvania Ave. ... until it reaches the White House. After calling numerous political epithets at the occupant thereof, it sticks out an uncovered jaw at an angle so inviting that even the most docile could hardly resist putting a haymaker in the vital spot. Very frequently the Senate has been so dazed by the result ... that it did turn to the prosaic business of legislating for several days. Perhaps Pres. Hoover's power commission statement [refusing to resubmit the nominations] will have that result.”

Sen. Couzens (R, Mich.) disagrees with Chase pres. Wiggin's advocacy of cuts in Allied war debts and US wages.

Chinese Fin. Min.. Soong says China doesn't favor proposed loan of silver, would not help trade situation; Shanghai bankers say difficulties not due to lack of metal but to its deflated value.

Total US fire losses in 1930 about $465M, up 10% from 1929.

Port of NY Authority recommends construction of new Midtown Hudson Tunnel at 38th St and 9th Ave.

Average NY City temperature in Dec. was almost exactly normal, a little below 40 degrees; there were two days of 20-degree cold.

Nathan Straus, Jewish-American leader, dead at 83; successful in department store business, pioneered use of pasteurized milk in large cities, Zionist.

A Cleburne, Tex. man has concluded there is no future in the snake oil business, after two years of experiments with rattlesnakes. Thirty years ago, snake oil was commonly listed on patent medicine labels, but the food and drugs act changed all that; now the product is a genuine white elephant.

Sydney, Australia is making beach swimmers safer from shark attacks by flying an airplane patrol that drops a red flag upon spotting sharks.

New York electrical experts are reportedly working on an apparatus to electrocute flies. Plan is similar to Edison's cockroach eradicator, one of his first inventions. Plagued by roaches in his room over a Boston restaurant, Edison hooked two strips of tin foil on a wall to a battery; the device killed so many roaches that he decided to leave the idea unpatented for the benefit of humanity.

Market commentary:

Market wrap: Stocks opened weak on accumulated sell orders, and worked lower for most of the session; rails declined, with weakness then spreading to industrials and the general list. Bond market quieter; US and foreign govts. firm; corp. generally lower, rails weak. Commodities mixed; grains mostly higher; cotton lower; copper unchanged at 10 cents with moderate buying.

Conservative observers more cautious; while still advising accumulation of standard stocks on reactions, advise stop-loss orders to protect against sharp decline.

Industrial authorities expect seasonal improvement in Jan. and Feb., but are unwilling to predict results after the spring bulge; results depend considerably on world conditions in coming months.

Long operators reportedly have been supporting their favorites on a scale during recent reactions; a contest is in progress between bulls and bears, and market observers are watching developments closely to anticipate the near future.

Broad Street Gossip: Part of recent stock rally attributed to hasty rebuying of tax-loss selling. Nov. rail earnings show rails getting better control of expenses; for the first 6 months, gross was down 12.27% while net operating income declined 33.11%; for Nov., gross declined 20.21% while net only declined 28.36%. Some bulls are disappointed in the slowness of the recent market rise, but conservatives would prefer a moderate rally as we've had so far; from Dec. 30 to Saturday, the Dow industrials have recovered 11.55 while the rails were up 11.98. This compares with a decline from high to low of 1930 of 136.56 in the industrials and 66.29 in the rails.

Harvard University disclaimed any responsibility for forecasts made by the Harvard Economic Society.

J. Barringer, Nat'l. Cash Register GM: “In the not distant future, we will be enjoying an era of prosperity equal to that of 1929.

R. Dunlap, Asst. Agriculture Sec.: “The outlook for agriculture in 1931 is certainly brighter than it has been in the year just passed.”; demand should improve in second half; “probability is good for more favorable climactic conditions - certainly there will be no such drought as was experienced in 1930.”

Col. A. Woods, chair. of President's Emergency Employment Committee, says depression has reached its worst point and next move will be upward; employment conditions aided by public works totaling $2.5B in process.

Economic news and individual company reports:

Dr. M Winkler recommends changes in banking practice and supervision for greater depositor protection, most importantly that all banks be required to pay a percentage of earnings annually to the state to be held as a "Depositors Guarantee Fund."

Bank of US bankruptcy hearing continues, delving into complex transactions between the bank, its officers, and various affiliates. D.A. Crain offers to appoint Max Steuer as Special Assistant D.A. to investigate the Bank.

Dominick & Dominick note unexpected success of oil curtailment efforts in 1930: world production was about 1.404B barrels, down 6%; US production 900M vs. 1.004B; only country to substantially increase production was Russia, up 23M. Prosperity of oil industry in coming year to depend on curtailment by refiners; with a 7% cut by refiners, it's believed gasoline could be stabilized at a profitable level for the summer.

About 1,549 chain store units opened in the US in 1930, about 50% fewer than in 1929.

Record high of $347.6M in corp. industrial bonds to mature in 1931 vs. $338.8M in 1930 and $242.2M in 1929.

Canadian Bank of Commerce Jan. letter reports business in Canada in past 2 months followed smoother course than world business; activity relatively stable at levels somewhat below Nov., some irregularity in industrial operations. Canadian industrial production lower in 1930 than in 1929 or 1928, but compares favorably with any previous year; in first 11 months steel production down 27%, construction contract awards down 20.6%, commodity index Nov. was 79.8, down 16.6% from 1929.

British Dec. imports were 89.6M pounds vs. 79.4M in Nov. and 106.6M in Dec. 1929; exports were 38.5M vs. 44.1M and 58.4M. Sweden has moved from trade surplus of 42M kr. in 1929 to deficit of about 130M in 1930.

F. Perkins reports NY State index of factory employment declined 4% from Nov. to Dec., reaching new low of 77.5 (average of 1925-27 = 100).

Virginia leaf tobacco sold at new low record of 9.48 cents/pound for season through Dec. 31, vs. $18.03 in 1929.

American Furniture Mart at Chicago had record opening-week attendance of 3,370 buyers.

American Stores Dec. sales were $13.3M, up 1.1% from 1929; full year $142.8M, down 0.4%. Kroger Grocery sales for 5 weeks ended Jan. 3 were $25.4M, down 5.4%; full year $267.1M, down 6.8%.

Texas Corp. (oil) expects 1930 net under $1.52/share vs. $5.12/share in 1929; current annual dividend is $3. Western Union expects 1930 net about $9.30/share vs. $15.11 in 1929; lowest since at least 1921. Curtis Publishing (Sat. Evening Post) reports advertising is now running behing 1930 pace; earnings in first half 1930 were above 1929.

Companies reporting decent earnings: Continental Can, A.G. McKee (engineers/contractors).


"Movie Director - Now, here is where you jump off the cliff. Nervous Actor - Yeah, but suppose I get injured or killed. Movie Director - Oh, that's all right. It's the last scene in the picture."

Waiter - You sometimes find a pearl in an oyster stew. Customer - I'm looking for oysters.

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