June 2, 2009

Monday, June 2, 1930: Dow 275.07 +1.23 (0.4%)

Assorted historical stuff:

Sears is trying out a 5-day workweek, predicts some increase in hours worked Mon-Fri but employees would generally welcome this in exchange for fewer total hours and longer weekends.

Mass transit in N.Y. city exceeded 3B passengers at 3.356B passengers for 1929, with the largest increase in the I.R.T. lines. Subway lines were up while elevated and street rails were down.

Chrysler building formally opened last Tuesday, Walter P. Chrysler in attendance. Most of the ground floor and basement leased for a new Schrafft's store.

Interesting chart of General Motors subsidiaries, including of course Buick, Cadillac, Chevrolet, Olds, and GMAC, but also lots of other stuff including Fisher body, A.C. Spark Plug, Frigidaire, G.M. Radio Corp., Fokker Aircraft America, and subsidiaries in many countries including Japan, India, China, Brazil, New Zealand.

Unrest in India involving some Gandhi fellow. Difficulties at first dismissed by the British – “talk among the Conservatives of 'Communist propaganda,' which British politicians, like Americans, find useful in diverting attention.” Civil disobedience may be a fizzle, but the economic boycott hurts much more.

Market commentary:

National City Bank of New York anticipates an early recovery. Admits that so far recovery hasn't been marked, but “business has been on the down-grade for nearly a year and in the past 30 years depressions have rarely lasted for a longer period”. Says the danger now is excessive pessimism as opposed to a year ago when it was optimism. Admits serious problems including the worldwide business downturn and fall in commodity prices, but the country has repeatedly demonstrated ability to recover in the past. For the last 30 years, with the possible exception of 1914 (WWI), when business has begun a depression in one year it's always at least started the recovery before end of next year. True that if we look back further there have been some more prolonged depressions (panics of 1873, 1884, 1893). But U.S. business was much less diversified then, and “lacked the recuperative power demonstrated in more recent years”. Also, money markets were uncertain then, as opposed to current easy money conditions. With credit conditions this favorable and the past record of recoveries, predicts a recovery starting slowly in the summer and apparent by fall.

Abreast of the Market: Street generally optimistic, some leading traders who haven't been bullish for a while have bought stocks. The pending Smoot-Hawley tariff bill is causing uncertainty – when resolved and businessmen know where they stand, “considerable activity in many lines now marking time will develop.”

Executives in the financial district taking longer lunches – hard to find between 12:30 and 2:30 PM.

Economic news and individual company reports:

Fed. Reserve Bank of NY reports earnings of 257 companies now available show Q1 1930 earnings down 22% from 1929 but up 5% over 1928.

Natural gas use up 400% over less than 25 years. Originally produced in western Pennsylvania, soon after was in shortage, but “they did not know at the time the great wealth in natural gas hidden underground in other sections of the country”. Consumption in 1930 estimated at 2T cubic feet.

April auto production down 30% from 1929 but up 8% from 1928, but skewed to lower priced cars; part of the auto market is doing normal business but part is in an “acute state of depression”.

Atlantic, Gulf, & West Indies Steamship Lines Q1 income down 27% from 1929.

Columbia Pictures earnings for year ended 6/30 estimated up 125% from 1929.

National Dairy earnings doing better than 1929, Integration of Kraft cheese going well, ice cream up sharply.

Biscuit stocks are rising, which is as it should be.”


Seems there was “a man whose wife was always demanding money. 'She's after money all the time,' he complained to his pal. It's money, money, money – morning, noon, and night. One day it's twenty, the next a hundred, the next ten. Every day she is hounding me.' 'What does she do with it all?' asked the sympathetic friend. 'Blamed if I know,' was the answer. 'I don't give it to her.'”

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