July 18, 2009

Saturday, July 19, 1930: Dow 240.57 +1.50 (0.6%)

Assorted historical stuff:

White House says expenditures for fiscal year starting July 1 will be $4.203B, up $209M, or 5%, over previous year. Main increases are to speed up public works and for increased veterans relief. Cabinet directed to find cost savings to reduce expenditures below these estimates.

Pres. Von Hindenburg dissolves Reichstag and installs Chancellor Breuning as temporary dictator; new elections within 60 days, new Reichstag to meet within 30 days afterward. Action taken to enable economic reform program, after Reichstag continued opposition by revoking "tax reform dictatorship" given to Breuning. Fin. Min. Deitrich says high unemployment must be solved to avoid social breakdown, defends program: "A German able to consume so much beer and tobacco can stand higher taxes."

French Fin. Min. P. Reynaud calls for world cooperation, says high tariffs are outdated and futile.

Editorial against proposal for Farmer's Grain Corp. to support wheat prices by cutting production and effectively cornering the domestic wheat supply, then using the $0.42/bushel tariff on foreign wheat to raise domestic prices by the same amount.

AFL President W. Green says priority is to maintain current wages; points out current depression is first in which wage scale “has not been assaulted.”

United Mine Workers and anthracite coal mine operators agree to continue present wage scales until April 1936, and to settle all disputes by committee.

Over 75% of employees vote to join GE company-sponsored unemployment insurance plan; equal contributions by company and employees.

Market commentary:

Main trading stocks continued up; traders and banking interests buying. Some resistance to bad news, particularly in copper stocks. U.S. Steel, Westinghouse, GE, Consol. Gas strong, some trading favorites (Radio, J.I.Case) had action reminiscent of the Coolidge market. Oils and utilities strong. Banks and trusts down.

Increased public participation in the market is seen by the larger numbers of shareholders and smaller floating supply for major companies. This buying is for long-run investment; “It is a well informed public now, informed because the well managed corporations are liberal in dispensing information to their shareholders,” unlike the case 25 years ago when “many big industries believed secrecy was the better business policy.”

Some short covering and increase in brokers' loans; conservative observers advise taking some profits and waiting for technical reactions to buy.

E.J. Taber of National Grange says farm commodities close to bottom: "Just as soon as we can get business and financial America to realize that farm prices are at the bottom, there will be an upturn." Cooperation with Farm Board urged by Taber and E.H. Cunningham of Federal Reserve Board, although Cunningham has "no assurance as to what they have in mind as a solution of the farm problem."

Large department store sales said holding up well, particularly in New York area. Said to have adjusted to competition from chain stores. Most successful stores include R.H. Macy (now expanding to remainder of 34th St. block), May Dept. Stores, Best&Co.; more speculative stores include Federated, Bloomingdale, Filene, Gimbel Bros, Hahn. Trend is to decentralized management of local stores.

Bradstreet's Journal and Dun's review report slightly more cheerful opinion in many lines of trade, though "not translated as yet into much apparent activity."

Economic news and individual company reports:

May auto financing was $146.2M on 346,515 autos vs. $183.6M on 398,561 autos in 1929.

Wheat farmers in most of grain belt estimated to have production cost of $1.24/bushel, will get about $.68/bushel when sold.

Standard Oil of Calif. says it will no longer sell gasoline to price cutters; calls on refiners and marketers to cooperate with producers to maintain reasonable prices.

Sears, Roebuck sales for 4 weeks ended July 16 were $26M, down 14.9% from 1929; largest decrease this year.

GM shipments of cars and trucks in June were 87,595. This was 10,000 below sales, 35% below May, and 46% below June 1929.

West Rutland, Vermont Trust Co. closed following run started when director W.A. Thrall was found dead in barn from bullet wound.


A judge was reproving a man for deserting his wife. “Wife desertion is something that I must deal with severely, and I feel very strongly on this subject.” “But judge, you don't know that woman. I'm no deserter, I'm a refugee.”

+ The Boring Stuff:

Editorial: Opponents of London Naval Treaty are trying all means, including the pretense of improving it by introducing various amendments that would make it unworkable. Senator Johnson more honestly argues the treaty would make the US unable to protect foreign commerce, but rejecting it would lead to "the old race for armed supremacy."

Agriculture Dept. says cutting wheat production will result in higher prices; admits effect might be offset by increasing production elsewhere. Worldwide production of wheat has increased almost 60% in last 30 years; average annual increase in 1920's excluding Russia and China was 72M bushels. Suggests switching some wheat acreage to other crops or livestock where feasible.

Commodities mixed; grains generally higher, cotton up, but copper down to postwar low. Treasury bonds down, foreign bonds and convertibles up.

E.B. Reeser, pres. American Petroleum Institute, says oil oversupply situation is improving thanks to production and refining curtailment, although distributors continue to sell retail gasoline at unsustainably low prices.

Technical analysis: market is close to reclaiming half of ground lost in June break. A further advance (above 245 on the Dow) would be a strong indication the upswing is due to fundamental factors, not a technical rally.

S.W. Straus reports building permits in 578 main cities and towns were $1.039B in first half, down 49% from 1929; June was $181M, down 33%. Sees this as positive, in that previous excessive building is being absorbed. [Note this disagrees with increase reported July 14 - maybe doesn't include public construction?]

Polished plate glass production in June was 9.128M square feet vs. 12.278 in 1929.

New England Tel. & Tel. first half net $4.40/share vs. $5.34 in 1929.

Houston Oil and Pipe Line Q2 net $1.43/share vs. $1.20 in 1929.

US Pipe & Foundry first half earnings estimated over $1.75/share vs. $.59/share in 1929. Benefitting from low money rates stimulating public works, and somewhat from 5% tariff increase on imported pipe.

Hudson Motor Q2 net $.65/share vs. $1.45 a share in Q1. First-half 1929 net was $6.65/share. Car shipments in the first half 90,000 vs. 225,000 in 1929. Inventories now about five cars per dealer.

Motor Products Corp. first half net $3.05/share vs. $8.55/share in 1929.

Lehigh Valley Coal first half net loss $288,414 vs. profit of $305,049 in 1929.

J.I. Case (tractors) business said slowing after good start to year; June down 20% from 1929; first half up 13%.

Chesapeake Corp. (paper) net for first half $1.65/share vs. $2.08 in 1929.

Kendall Co. (hospital supplies) net for first half $148,640 vs. $554,070 in 1929.

Detroit Steel Products first half net loss $145,828 vs. profit of $469,425 in 1929.

General Baking net for 27 weeks ended July 5 was $2.6M vs. $4.1M in 1929.

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