September 25, 2009

Thursday, September 25, 1930: Dow 222.10 -4.65 (2.1%)

Assorted historical stuff:

Pres. Hoover calls for program to stimulate homeownership; says finances of homebuilding are inadequate, easier to borrow 85% on a car than a home, and home loan generally is at higher interest rate; also needed is safeguarding of home areas from “commercial invasion and destruction.” Doesn't want federal govt. to build homes directly, but believes adequate home-building program would be very valuable.

R. Spreckels, Pres. Sugar Institute of America, criticizes govt. view that “competition is the life of trade” as not applicable to current conditions where production capacity for all commodities is far above current consumption levels. Calls for govt. regulation of competition as was done during World War.

German update: more confidence seen; stocks and bonds rally; some reports Fascist leader Hitler to be tried for treason.

Archer Daniels Midland castor bean plant in Toledo ordered closed following two-year fight by 3,000 people claiming its operation caused asthma.

Goodyear constructing giant dirigible for US Navy; length about 800 feet, total of 6.5M rivets.

Experts debating whether “killer sharks” of Twofold Bay, New South Wales are using reason. Sharks drive whales into the bay, where whalers eventually harpoon them and reward sharks with “choice morsels ... such as liver”; sharks keep guarding mouth of the bay so whales can't escape.

Market commentary:

Market Wrap: After modest extension of Tuesday's rally in the first hour, stock prices collapsed abruptly toward noon, in spite of good business news from steel, GM, and retailers. Break attributed to nervousness over international situation and further weakness in wheat. “Convulsive selling” broke out in the general list, with “perpendicular drops” in trading favorites including Vanadium and United Aircraft; many stop-loss orders triggered. Weak rally was followed by another wave down. Market improved in last hour, possibly helped by sharp rally in wheat prices which made up early losses and closed higher. Major shares closed above day's lows. Bond market active, generally strong except speculative issues; German govts. rally; convertibles down sharply.

Rumors going around: Revolutions in S. America; disturbances in Europe; Russians moving bearish activities from grain markets to stock exchange (informed observers dismissed this as absurd); some stock pools forced to disband, particularly in Vanadium; Fed. Reserve advised banks to liquidate some loans on stocks.

Gasoline price cut of 2 cents/gallon by Standard Oil NJ seen as larger than expected seasonal cut, possibly discouraging for industry if it spreads to rest of US.

Market drop since Sept. 10 has exceeded even most bears' expectations; “Whether or not the market is destined for lower levels, no one can say, but many stocks are again on the bargain counter.”

A. Sloan, Pres. GM: “Business has turned a corner and is now on a slow but sure return to normal conditions. ... The automobile business has reached the bottom of the cycle ... This is apparent, and not only in the automobile business, but in all lines of industry.”

S. Reyburn, Pres. Lord & Taylor, says conditions in US generally improving, record Sept. sales in Minneapolis territory. Woolworth has also been improving.

D. Friday, prominent economist, sees modest recovery this year, decided improvement in 1931, and 1932 probably another record year.

Bank of Montreal monthly Canadian business summary: growing confidence business will improve, Canadian tariff revision expected to increase industrial activity.

Dr. F. Parker of Wharton School addresses Amer. Assoc. of Personal Finance Cos., says they have a chance for public service in the current trying times: “To reply that ... lack of current earnings power on the part of a prospective borrower immediately makes him a bad risk for personal finance companies is not a satisfactory rejoinder, for a credit policy worthy of the name should provide credit when credit is needed by the borrower not when it is deemed most profitable and expedient to be extended by the lender.”

Economic news and individual company reports:

Fed. Reserve reports total industrial production unchanged from July to Aug., contrary to usual seasonal rise.

Iron Age reports small but sustained improvement in iron and steel demand, firmer prices.

Rail freight loadings for week ended Sept. 13 declined 16.2% vs. 1929, worst decline since Aug. 23 (17.2%); decline of 15.1% vs. 1928 was worst this year.

Class 1 rails had $468.3M in capital expenditures in first half, up $118M over 1929, although rail traffic in that period was lowest since 1924.

Electric output for week ended Sept. 20 was 1,706 GWHr, down 3.7% from 1929.

Companies reporting decent earnings: American Can, American Tobacco (Lucky Strike cigarettes), McKeesport Tin Plate, Gleaner Combine.


“Judge - Were you sober at the time this accident occurred? Reckless - As sober as a judge, your honor. Judge - Six months.”

Appearing at the Palace (vaudeville):

Marion Sunshine does impressions of Broadway people ranging from “temperament of Lenore Ulric to the boop-boop-a-dooping of Helen Kane,” also does a good Maurice Chevalier. Also appearing are some of “Broadway's stars of the future” including Southern dancing pair Vilma and Buddy Ebsen.

+ The Boring Stuff:

Rep. Bacon (R., NY) criticizes employment of “cheap alien labor,” suggests to White House that to further Pres. Hoover's desire to prefer US citizens and ex-soldiers on $315M public building program, govt. construction contracts should require this when possible.

Editorial: Grain Stabilization Corp. is now borrowing $30M from banks using its accumulated 60M bushel wheat surplus while attempting to “lend … a business aspect” to their operations which in fact have been disastrous. Banks now have a first lien for $30M on wheat that cost $70M to buy. Farm Board has in total spent and committed $240M and is asking for more; total cost of the “stabilization saturnalia” is unknown but sure to be colossal.

Govt. announces three steps aimed at stabilizing farm commodity prices; price declines seen as economic weak spot, so remediation is “attack upon current depression at its very base.” Fed. Intermed. Credit Banks to give loans on cotton of 9 cents/pound or 75% of market value, whichever is higher; Cotton Stabilization Corp. to maintain currently held 1.3M bale surplus; Fed. Reserve banks to inform communities of resources and credit facilities available to help market crops.

Grosvenor Jones, Commerce Dept. division chief, blames recent sharp commodity deflation on recent shift away from gold standard by some countries [reasoning was convoluted but seemed to involve countries having to pay in actual gold instead of currency]. Says economic structure sound; unknown if period of adjustment near end, but certain that “necessary adjustments will be made and that industry and trade will then resume their onward march.”

Chart students encouraged market met support at expected level; had advised against pessimism as “theoretical support points” approached; advise reserving judgement “until the standard stocks indicate conclusively the next move.”

Market technical position seen improved following increased short-selling and some liquidation by traders.

Increased foreign buying of US stocks reported in past few days; seen as seeking safer investments because of conditions abroad.

Conservative observers continued to advise staying on sidelines, using upturns to reduce long positions.

Vanadium has become a favorite bear target; heavy selling began early in the day, well before spreading to the general list.

Commodities mixed. Grains fluctuated widely; wheat broke to lowest levels since 1907 before rallying to close higher; corn and rye also closed higher. Cotton was irregular, dipping slightly to new season lows but closing almost unchanged. Copper offered by some smelters at 10 1/4 cents though most producers hold at 10 1/2.

Steel news: Production industry-wide in week ended Monday was 60% vs. 58% prev. week; last year production declined 2% to 83%. US Steel was 66% vs. 65% prev. week; independents were 56% vs. 52%.

Aluminum production likely to decline this year for first time since 1921; new uses including building not enough to offset declines, particularly in transportation.

July operating income for 103 telephone cos. was $20.315M vs. $20.774M in 1929; first 7 months was $157.3M vs. $159.2M.

Gasoline in Chicago resale market down slightly to 6 1/8 - 6 1/2 cents/gallon vs. 6 1/4 - 6 1/2 previously. Sinclair matches Std. Oil NJ retail cut of 2 cents/gallon.

Latest count of German unemployed up 100,000 to 2.983M.

Bethlehem Steel - Youngstown Sheet & Tube merger trail adjourned to Oct. 20 to allow time for preparing briefs and arguments.

Freight theft on NY Central lines reduced from $2.597M in 1920 to $32,720 in 1929.

Goodyear seen increasing dominance as leading tire manufacturer and low cost producer. Earnings suffering from writedown of rubber inventory, but seems strong enough to absorb these losses and maintain dividend; current yield 9%.

1 comment:

  1. Very interesting stuff to go through.Commercial steel buildings are the results of technology,art.Bird proof buildings are even better.