Assorted historical stuff:
Senate passes the Smoot-Hawley tariff 44-42; bill now goes to the House, where passage is very likely.
Passenger traffic on the railroads has been declining for many years. The number of passengers carried last year was down to the level of 1906 when the population was much smaller. Cars and buses have taken up the difference.
Oil producers in Oklahoma and California have agreed to curb production. This will help to deal with excessive oil supply, since they account for 50% of the nation's oil production. Producers in Texas (about 30% of production) may still be a problem.
The Southern Pacific Railway starts a new policy allowing blind people to be accompanied by seeing eye dogs on its trains.
Union at Opel Works in Germany, owned by GM, asks government to intervene to prevent further layoffs. Charges that American methods can reduce the number of employees required by over 50%.
New York City increases salaries for city commissioners, judges, deputy tax commissioners, etc. Increases range from $2,500 to $10,000.
Market commentary:
Editorial grudgingly saying that while it would be preferable for the Smoot-Hawley tariff to magically disappear, it may be better to approve it (as now appears inevitable) than to deal with another year of uncertainty.
Bears attempted to suppress the market in the morning, but encountered “stubborn resistance,” and prices gradually went up for the rest of the session.
The recent slump has happened on thin volume. The future is uncertain, but it is clear that many stocks have gone down enough to attract investors.
If you hold good stocks don't get discouraged about the recent slump. Every time since the Stock Exchange opened the good stocks have come back to make new highs, and it's safe to bet they will again, although you may have to wait a while.
Two weeks ago market observers were mostly bullish and optimistic about future business improvement before fall. Now that the market has gone down 20 or 30 points, “they see nothing ahead but continued depression.”
There isn't much change in business conditions to account for the recent market slump.
Some market writers have advised buying stocks of companies that will have better earnings this year (“depression-proof stocks”). Curiously these stocks have gone down even more than the general market in the recent slump.
Economic news and individual company reports:
Railroad traffic has declined in 1930 in response to the business slump, but not as badly as in the previous depressions of 1921, 1908, and 1894.
Inventories at large corporations are as low as they've been in years compared to consumption and production. This predicts better business when industry begins to stock up again. Companies have better balance sheets than in the depression nine years ago, so they won't need to borrow money to do so.
Total building permits in 588 cities and towns across the US showed encouraging trend in May, down only 3% compared to the usual 12% seasonal decline. However permits were still 35% below the 1929 level.
Total auto output for the six months ending June 30 is estimated at around 2.4 million units, down from 3.4 in 1929 but slightly more than 1928. However more low-cost cars are being produced than previously, especially by Ford, which had a market share of 44.2% in May compared to 32.5% in May 1929. GM also increased market share; remaining car companies are generally suffering.
Fox film reports earnings of $5.7M for the quarter ended April 26 compared with $3.9M in 1929.
After drastic cost cuts Western Union expects to earn over $5 a share in the first six months of 1930 and $12 a share for the full year, compared to $15 a share for the full year 1929.
Good joke cleaned up for racism:
The passenger went for a ride in a plane. When he came down he said to the pilot “Thank you, Guv'nor for those two rides.”
“Two rides?” asked the aviator. “You've only had one.”
“No,” said the passenger, “two. My first and my last.”
Strangely prescient market related joke about a soon-to-be major scandal:
“A customer announced that he was selling Krueger & Toll short as he heard they had bought a lot of dresses at a higher figure and could not get rid of them. When told that Krueger & Toll had nothing to do with dresses, he said: 'Oh, I was thinking of Kroger.'”
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