Monday, June 30, 1930: Dow 219.12 +0.34 (0.2%)

Assorted historical stuff:

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).

German financial program includes cut in public employee salaries of 2.5%, income tax hike of 5%, and bachelor surtax of 20% of income tax. Approval of Reichstag not assured.

Indian imports of cloth in April 165M yards, down from 215M yards in 1929; decline attributed to Gandhi boycott.

Louis Guenther, publisher of Financial World, returns from trip to Asia. Says Japan is in grip of similar depression to US, China far worse. Labor problems in Japan caused by practice of paying large part of pay in bonuses, then recently having to stop said bonuses. Chinese political situation unsettled in spite of great natural wealth.

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.”

World annual electricity production estimated at 300,000 GW-hours, of which US produces 70%, Germany 11%, Canada 6%.

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.

Market commentary:

Saturday session very dull - total volume 586,500 shares, lowest since July 1928. Some bad news in car and steel production, but apparently news was priced in already. Little forced liquidation seen. Bears seen maintaining their positions, renewed attacks feared; observers recommend remaining on sidelines. Other observers point out that many who wait for the turn don't see it until stocks are at new highs.

Old market rules haven't applied in the past year: normally a dull market shouldn't be sold but past month had heavy liquidation following a dull May; normally market anticipates business conditions but this didn't happen for multi-month rallies starting July 1929 and last February.

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.”

Guaranty Trust reports that, after mild upturn last month, business is now trending slightly lower again. Seasonal recovery is probable in August, although it may be irregular and some factors are working against it, including continued decline in commodities.

Economic news and individual company reports:

Treasury again expected to close fiscal year ending June 30 with larger than expected surplus, probably over $200M, not including “sinking fund” operations used in-year to reduce debt by over $500M. Total public debt reduction for year expected $600M-$700M. Income tax slightly over estimate, customs duties slightly under.

E.B. Reeser, Pres. Amer. Petroleum Inst., hopeful program of curtailing oil drilling to reduce excess production and stabilize prices is working out. Oil drilling down sharply in Texas, bringing it almost in line with the program; Oklahoma, Kansas, and California are already in line.

Representatives for Western Electric and RCA are meeting in Paris to resolve a patent war concerning sound films with Klangsfilm-Tobis of Germany. Dispute has thus far prevented exhibition of talkies in Germany, except for Warner Brothers which bought 20% of Klangsfilm for $10M to gain access.

First National Bank of Farmland, Ind. closes after cashier embezzles $12,000.

Musical:

“Strike Up The Band - A Gershwin musical comedy, satirical of war, grade A milk and other subjects, further enlivened by the capers of Clark & McCullough.”

+ The Boring Stuff:

Editorial concerning “yellow dog” contracts in which employees agreed not to join unions. John J. Parker was rejected as Supreme Court justice because he had upheld the legality of such contracts. Editorial points out this is in agreement with Supreme Court interpretation of the constitution as described by the same Senate Judiciary Committee that recommended against Parker's nomination; therefore “Judge Parker was rejected because he failed ... to overrule the Supreme Court and amend the constitution all by himself.”

Florida League of Municipalities proposes plan to introduce a sales tax. Plan is designed to relieve burden on property owners now paying 80% of local taxes, and to help municipalities pay off defaulted bonds and meet obligations.

Indiana Supreme Court upholds Indianapolis law prohibiting advertising billboards within 500 feet of city parks or boulevards.

Total assessed value of New York State real estate for 1930 is $28.2B, up from $26.7B in 1929.

Paris and London stock markets also up over past week. Berlin continues down.

Business opinion more cheerful - no fundamental news, and seasonal business slowdown in progress, but confident of rebound in fall. Market students now expect a more sustained rally in near future, though bottom may not yet have been reached - bullish factors include: two up days in a row; $500M reduction in brokers loans past 2 weeks; recent large decline has discounted much of the expected bad news; low call and discount rates; coming influx of cash from Q2 dividend and interest payments; and high stock dividend yields. Optimism is, however, guarded due to expected bad Q2 earnings reports.

Rails over-ordered equipment in 1929, anticipating increased 1930 traffic; they then cooperated with Hoover's Business Conference and didn't cancel delivery; as a result, most have all equipment needed until well into 1931.

Rail stocks have been particularly beaten up, possibly due to failure of business to pick up so far in second quarter. Dow Rails average recently declined below November panic low; of 21 representative rails, 11 now yield over 6% and 5 over 7%.

Department stores (658 in 269 cities) report sales for May down 2% from 1929, sales for year through May down 3%.

Paul Shoup, pres. Amer. Electric Rail. Assoc.: Street railways still move 75% of all people in and out of urban centers, but are having financial problems due to city taxes, mandates to repair road damage mostly caused by cars, provide street lights, etc. Many are having problems borrowing money for needed capital spending; this is endangering an essential public service. Public ownership, if desired, should be undertaken by fair buyout of a functioning business, rather than out of necessity after starving out the private operators.

Youngstown district steel operations for largest 6 companies down to 55.5% of capacity from 63% last week; depressed by lower automotive demand.

Airplane inventory considered excessive; 1,468 planes for sale on Apr. 15 compared to 1,596 Jan. 15 and 1,143 last Oct. 15.

Production curtailment by cotton mills making progress toward reducing inventories.

US-sponsored Cotton Stabilization Corp. taking over 1 million bales from state cooperatives; market remains nervous about ultimate fate of all that cotton.

Golden State Milk Products earnings for year ended Feb 28 were $2.30/share vs. $1.74/share previous year.

Gilmore Oil net for year ended Mar. 31 was $2.31/share vs. $1.71/share previous year.

Nevada-California Elec. net for year ended May 21 was $1.019M vs. $0.976M previous year.

International Shoe net income for first half up 4% though sales down 13%; attributed to manufacturing efficiencies.

Packard (car maker) estimates Q2 earnings $3M vs. $2.7M in Q1. Sales stimulated by $400 price cut. Production for first half estimated 17,000 cars vs. 27,000 in 1929.