Monday, July 7, 1930: Dow 222.46 (no trading July 4-6)

Assorted historical stuff:

Editorial defending London treaty being debated in Senate [limited naval buildup among US, UK, Japan, France, Italy]. Treaty is an honest effort to relieve the world of “the oppressive burdens of competitive armament.” Opposition is not to flaws in the treaty but to any limitation at all; “That is a plea for armament without limit short of national bankruptcy.” Unthinkable that the US should stand in the way of measure to help lift world out of present depression.

Col. W.A. Starrett, President of Starrett Corp. (construction), travels to England as delegate of President Hoover, presents film of construction of Bank of Manhattan building in less than a year [70 story, 927 foot skyscraper at 40 Wall St].

Lewis Stone, film actor, obtains restraining order preventing oil drilling in the surf off Venice Beach (Los Angeles, California).

Commercial Solvents Corp. files patent infringement suit concerning Weizmann's [later Israeli president] patent for producing acetone using bacteria.

Great Britain continues copying American customs - London Times begins publishing crossword puzzles, “an American innovation which developed into a craze which is now almost gone.”

Market commentary:

Brokers' loans close to a record low as fraction of stock value; should be bullish; market caps of Std. Oil NJ + GM now greater than total of all brokers' loans.

Finch, Wilson, & Co.: “We believe that many stocks are now selling far below their real value and that purchases can now be made with a minimum of risk and a maximum of confidence of higher prices later.”

Wall Street offices deserted over the holiday weekend, a marked contrast to last year when extra holidays were needed to give office staff a chance to catch up.

Many observers believe Bears will attempt another market test in the near future. Response should be important to future sentiment.

Some complaints of unavailable credit for business and agriculture, in spite of low rates and high supply of funds at banks. Blamed on risks of particular loans.

Editorial criticizing Dept. of Agriculture's forecast that wheat prices will be lower over the next 7 years. Suspicious this fits into Farm Board plan to reduce wheat acreage; says this is doomed to fail since foreign growers will take up slack and farmers will convert to other crops, with resulting pressure on those. Compares plan to “taking a part of the load from one end of the wagon and piling it on the other end.” No alternative plan suggested.

Minnesota Gov. Christianson calls Farm Board a failure, says wheat problem can only be addressed by drastic production cut or keeping surplus off the market. Says main cause of problem is reduction in foreign demand due to problems selling their industrial products, and debt and reparation obligations.

Economic news and individual company reports:

Leading British financial figures call for a tariff wall around the Empire, with duties on foreign imports and free trade within the Empire.

Continuation of the 1% cut in income tax rates enacted in 1929 to help business looks more likely; prospects helped by the likely adoption of a compromise veteran's relief bill that will only cost $30M-$50M/year compared to the original $181M-$400M.

Great majority of retail outlets offer some form of credit; of 35,000 outlets surveyed, 75% offered open credit, 18.7% installment, 20% cash only.

At least 45 Florida towns and cities in default on bonds; committee recommends austerity, state sales tax on nonessentials.

Sugar prices now at post-Civil War low of 1.22 cents/pound, production cost estimated 1.72-1.97 cents. Big overproduction still expected this year.

Chase National Bank deposits as of June 30 were $2.065B, first bank in the world to pass $2B in deposits.

Hershey expects first half sales $21M vs. $20.5M in 1929; earnings over $4.70/share vs. $4.69. Wider profit margin and higher earnings expected in second half due to lower commodity prices. Currently selling for 11.7 time 1929 earnings, yielding 5.5%.

American Snuff has one brand that's been a leader for 148 years.

Joke:

“'Mr. Booley is certainly well read. He repeated an exquisite quotation last night.' 'What was it?' 'I can't give you the exact words, but he said he'd rather be a something or other in a something else.'”

+ The Boring Stuff:

About 44% of California natural gas production in 1930 was wasted (blown into the air), due to lack of practical storage. Wastage is being reduced somewhat by production curtailment and pumping some surplus gas back underground.

In the past year, oil companies have begun using pipelines on a large scale to transport gasoline instead of tank cars and river barges; this allows refineries located far from cities to be competitive with those close by.

Recent markets dullness taken as evidence that forced liquidation has been exhausted, and the market is now largely taking into account the admittedly unfavorable current business conditions. Many shareholders said reluctant to sell since shares have “declined to levels which in many instances represent intrinsic value.”

Commodities over past week generally ended little changed. Cotton trading slump continues in England. Investment bond prices generally higher in past week, volume light.

Many investment trusts now selling well below liquidating value, after selling well above in 1929. Lehman Corp. selling for $71.50, liquidating value $88.97.

New construction started in 37 states east of Rockies was $2.638B in the first half vs. $3.016B in 1929.

Total Florida building contracts awarded in May were $13.2M vs. $3.9M in April and $5.4M in May 1929.

Railroad locomotive shipments for first half were 419 vs. 319 in 1929.

North­west farm income for May estimated down 19% from 1929.

United Light & Power net for year ended May 31 was $2.37/share vs. $1.76 previous year.

Rainier Paper & Pulp net for year ended April 30 was $479,623 vs. $486,607 previous year.

Allis-Chalmers (farm and industrial equipment) expects net for first half to be over 15% above 1929 level; orders booked in first half were $29.5M, a gain of $1.5M over 1929.