Assorted historical stuff:
J.B. Holohan, warden of San Quentin prison of California, reports large increase in young prisoners since prohibition was enacted. Number of prisoners has increased from 3,800 three years ago to 4,932; most of increase is in men under 25 years old. Warden attributes recent increase in prison population countrywide to “a marked increase in the number of laws.”
Chile President approves prohibition law under which 6-time violaters will have pay docked 50% by employer and turned over to wife or family.
Editorial: J. Lonsdale, Pres. of bankers' association, says banking system held “firm, sound, and unmoved” during the market crash. The system did hold up well to the crisis, helping in many ways. Now, it may have a different duty. Bankers are naturally cautious and prefer “no” to “yes” - this was more than justified last year, but now some “yes”es may be called for; “If they feel that conditions are fundamentally sound, as they say they are, they have a duty to perform ... By constructive advice and concrete assistance they can do more to start wheels in motion and end unemployment than any arbitrary measures can do.”
Governors of drought-affected states to meet with Pres. Hoover at White House to consider relief measures; Hoover has gathered “complete data” on situation. Red Cross says ready for immediate relief work. Congressman LaGuardia (Rep., NY) calls for daily bulletins on vegetable prices entering NY to detect profiteering.
M. Insull, Pres. Middle West Utilities, calls utility holding companies essential for development of electric industry, says not necessary to regulate them since operating utility companies are already regulated; “the electric industry never wins a debate and its critics never produce a kilowatt of electricity.”
NY Stock Exchange to support new high-speed ticker system starting Sept. 2; will operate at 500 characters/minute vs. current 300.
Current bill at the Palace is a true “all-star variety program,” including George Jessel as headliner, Bill “Bojangles” Robinson, and Burns and Allen, among others.
Market commentary:
Bears continued aggressive operations early, following up on Tuesday's sharp declines. Some liquidation seen from margin accounts. Majors and trading favorites hit new lows for current reaction. Some resistance to bears developed through morning, although bears renewed attacks on news of decline in steel production to 52% from 54% a week ago. However, a vigorous rally developed in final hour on strengthened “technical conditions” and possibly overcrowded short positions, with sharp rebounds in US Steel, American Can, J.I. Case, and leading rails; rally spread across general market. Bonds dull, steady; corp. slightly higher.
Dow last Tuesday was only 6 points above June 24 low, causing pessimism among traders and making further bear attempts at that level likely. Next week's action considered indicator of business sentiment; if businessmen foresee improvement, should be willing to support their own shares around June lows.
General market was irregular; many stocks closed with losses or small gains. Market made 3 new yearly highs and 61 new lows.
One trader's opinion: “We still have hope, and if one has health what more can one expect these days?”
One broker points out that “refrigerated” floor of the stock exchange could make overcoats desirable on very low-volume days.
Some grumbling from holders of rail securities about “why they alone are selected from all industries to sell their product (transportation) to the drought affected territory at reduced prices.”
More attention to possible dividend cuts seen than ever before; businesses being analyzed carefully, many stocks have declined due to concern about cuts.
Economic news and individual company reports:
Dept. of Labor reports cost of living down 2.1% between June 1929 and 1930; down 23% between June 1920 and 1930.
French cabinet votes to cut 1931 budget by 6B francs to 51B, same as 1930; 48% of which is debt service.
British trade improved in July vs. June, still below 1929. Imports 85.2M pounds vs. 83.4M June and 93.6M in 1929; exports 50.7M vs. 42.9M and 65.5M.
Companies reporting decent earnings: Jersey Central Power & Light, US Gypsum, Weston Electrical Instrument.
General Foods says not considering any wage reductions, business running about normal.
Hudson Motor Car cuts car prices $65 to $300 to lowest prices ever of $650 to $1,295.
Jokes:
“Professor (in engineering class) - What's a dry dock?
Student - A physician who won't give out prescriptions.
[Note: I think this is some kind of prohibition reference.]
“'The margin clerk is after me again.'
'Go out to lunch and forget it.'
'He lunches at the same place that I do.'
'Well, go home or to Coney Island.'
' My hat is in his office.'
'Well, tell him to credit it to your margin account.'”
+ The Boring Stuff:
Electricity companies handling drought better than earlier ones due to better planning of hydropower, and system interconnections allowing exchange of power.
Companies of the Niagara Hudson system (NY State utility) have planted 21.5M trees, plan additional 5M this year, mostly in Adirondacks. Trees reduce flooding of watershed land in spring, improving performance of hydropower.
NY City demands electricity rate of 4 cents/KWHr instead of utility-proposed 5 cents, and no monthly service charge.
US Chewing gum industry began as attempt to make artificial rubber from gum of the sapodilla tree. Product found better for chewing than tires; 1927 sales were over $62M.
Commodities generally lower; grains down sharply on some improvement in drought areas; cotton down to new season low, at lowest price since 1926; rubber down to new record low.
Conservative observers recommended taking profits on yesterday's rally and on any further recovery this morning.
Lawrence Stern & Co. report monthly survey of financial institutions anticipates good bond market and “slight but definite improvement” in general business conditions. Corporate bonds have been strong, but selective for high end issues; Dow average of 40 corp. bonds is 96.37, highest since Dec. 1928.
Decline in steel production blamed on drought; with extent of crop damage still uncertain, industries dependent on farm purchasing are curtailing steel buying. These include low cost autos, farm machinery, can companies. Structural steel remains strong. Some price declines seen in steel and iron products; steel down to lowest price since 1922.
Mail order stocks declining on fears drought damage will reduce business from farm states.
Rail freight loadings were down 16.9% for week ended Aug. 2, worst decline this year. However, this may not yet reflect reopened factories; Aug. 9 report is awaited with interest.
Refineries were operating at 69.1% of capacity last week, lowest level since weekly reports began in June 1929.
Synthetic nitrate producers reach agreement; German industry expects it's first step to forming cartel to bring production in line with consumption, but initial agreement considered unsatisfactory due to short duration and lack of commitments to reduce production.
US customs collections for first 9 days of Aug. were $9.988M vs. $16.281M in 1929.
Cotton fabrics imported in first 5 months were 16.3M sq. yards vs. 22.1M in 1929.
CIT Corp. volume of auto financing in first half was down 21.8% from 1929, but financing of industrial equipment was up. Collections remained satisfactory in spite of depression, though charge-offs were “somewhat above normal.” Reserves for losses June 30 were 1.86% of receivables vs. 1.83% in 1929.
NY City Mayor Walker's advisers continue to meet on city takeover of BMT (transit). Price seen likely to be $200M rather than $270M asked by BMT.
that seaplane video is great! especially the passengers with their little caged birdie... LOL
ReplyDeleteI've enjoyed your blog through the RSS feed, but realized I should really click through.
ReplyDeleteAlmost every day there's something which feeds my preconceptions:
One of the things current economic historians seem to forget is the significance of agriculture in 1930--note the adverse impact on steel of the depression on the farm.
Also, sounds like the nitrogen fertilizer producers already have a cartel going. Some organic/locavore writers today claim such fertilizer began as war surplus after WWII. Not so.
Keep it up.
fwiw, dry dock = dry doctor. a "wet" doctor would dispense "medicinal liquor" prescriptions. http://www.tinyurl.com/pm3uor
ReplyDelete