October 30, 2009

Thursday, October 30, 1930: Dow 190.73 -4.22 (2.2%)

Assorted historical stuff:

Treasury Sec. Mellon gives first radio address of election campaign. Says current depression mainly caused not by stock speculation but by worldwide overproduction of commodities. Uncertain how long readjustment will take, but can be certain US will be among the first to recover. Govt. has kept its house in order and held itself ready for unexpected emergencies, including the depression; “The scope of governmental activities was necessarily limited, but within those limits the President acted with decision and courage.”

British PM MacDonald states if US used same system as English in figuring unemployment, they would show unemployed of 10M-12M.

Editorial: An analysis by Banker's Monthly finds that of the many small bank failures in the past 9 years, a large portion happened due to the communities themselves “melting away” rather than bad banking. Nonetheless, speculation in real estate and other unsound practices were also large factors. It's a good thing this dead wood was cleared away before the current depression; “one of the reassuring aspects of the situation today is the stable banking position.”

R. Kelley attempts to resign from Interior Dept., but is instead fired by Interior Sec. Wilbur.

Western rail execs submit statement to ICC saying revenue situation is now “sufficiently serious to menace the maintenance of adequate transportation facilities.”

Calif. State Dept. of Public Works announces will use no mechanical devices at four construction camps in order to provide work for more men.

Federal Tariff Commission begins new streamlined process of tariff review set up by Smoot-Hawley law by considering protest of high duty on straw hats.

Russians are exhibiting weapons captured from the Chinese in fighting on the Manchuria-Siberia border last fall; these include many weapons of medieval type including “arquebuses, culverines, lances, falchions, and missile throwers.”

Inventor has created fireproof paper money that will not tear or wear out; produced by spraying paper pulp with minute particles of tin, copper, and aluminum.

Tonawanda, NY merchants agree to sell their goods at costs from Nov. 6 - Nov. 8 as their contribution to drive against business depression.

Market commentary:

Market wrap: Market showed some steadiness in the face of multiple pieces of bad business news, including declines in steel operations and rail freight, and failure of US Steel to declare rumored extra dividend. US Steel opened sharply lower and continued to decline, while substantial liquidation came into rest of the market. However, volume declined as prices were lower and trading settled into a very narrow range in midday. Volume continued low in afternoon, but tone improved. Some further weakness in the final hour as Bethlehem Steel broke on prospect of poor earnings report after the close. Bond market moderately active; investment grade corp. firm, rails strong; South American govts. rally, other foreign govts. firm; US govts. dull, up slightly and near year's highs.

In spite of recently declining operating income, US Steel is still expected to earn about $10/share in 1930 (first 9 months was $8.44), comfortably above dividend.

Some rumors of recent market support by “interests that desire to see the market display a firm tone” until after the election Tuesday.

As in the past, some tax-loss selling in the year's final two months is expected.

Continued sizeable short covering reported during the session.

Economic news and individual company reports:

Car makers seen likely to lower prices for 1931 models, with one of the largest low-price manufacturers already having decided on a lower price list. In the past year, lower-priced manufacturers including Ford and Chevrolet have done better.

US Steel ingot production for week ended last Monday was at 55% vs. 58% previous week and 82% in 1929; independents were at 47% vs. 49% and 77%.

Weekly reviews for iron and steel industry find unpromising picture: cautious sentiment, slight drops in finished steel prices, and significant weakness in scrap prices. There was some hope ingot production was at the low point for the year.

Electric output by US light and power industry for week ended Oct. 25 was 1,725 GWHr vs. 1,710 in prev. week and 1,799 in 1929.

US new car registrations in Sept. were 175,286 vs. 203,737 in Aug. and 304,452 in Sept. 1929; first 9 months were 2.287M vs. 3.269M.

Previously reported drop of 21.4% in freight loadings for week ended Oct. 18 was largest percentage drop this year, contrary to expected improved trend.

Bethlehem - Youngstown merger trial continues; F. Wood, attorney for Bethlehem, currently in fifth day of his closing argument. Since several other attorneys for either side have yet to present arguments it's considered unlikely arguments will conclude before Nov. 6.

Eastman Kodak was weak on reports of wage cuts and layoffs; co. stated that while hours had been cut back for some workers due to curtailed output in some lines, co. was carrying out an extensive construction program and employing 25,000 workers, 1,000 more than last year.


“Dr. Bottle - How is your patient doing since his operation? Dr. Knife - Fine; I think he can afford another before the year is out.”

“'Why is he so sad?' 'Didn't you know he had gone bankrupt?' 'Yes, but I didn't know he had lost money over it.'”


The Noble Experiment - “Almost the entire array of racketeers is present, including bootleggers, gamblers, gangsters, dope-peddlers, hijackers, prostitutes, and corrupt sheriffs and judges, yet they are all unbelievable and at best only laughable caricatures.” Protagonists final words: “When you see my people in Europe, tell them I died in a country where the people have bathtubs for their bodies but none for their souls!”

+ The Boring Stuff:

Editorial: British Empire conference fortunately appears to be failing at creating a new tariff system for the Empire. Last spring, the Smoot-Hawley tariff advocated as improving US business instead coincided with a worsening of depression; while the tariff “could not fairly be called more than a minor factor in causing the present situation,” it does show “economic restoration does not lie in that direction.”

L. Horowitz, Thompson Starrett (builder) chair., invited by Pres. Hoover to review govt. building program, says doing everything reasonably possible to advance work while properly safeguarding public funds. Commerce Sec. Lamont says Boulder [later Hoover] Dam construction accelerated 6 months to aid unemployment.

Bond issues to be decided in Tuesday's election include $100M each in Louisiana and New Jersey, $75M in California (including $35M for proposed Golden Gate Bridge), $50M in New York, and $25M in Illinois.

Brazil revolutionary govt. says will pay all national debts except those incurred after outbreak of the revolution on Oct. 3.

NY City Emergency Employment Committee will take 43rd floor of 40 Wall St.; Space donated by Col. W. Starrett.

New Orleans and Chicago announce plans to register unemployed as first step toward relief.

L. Rogers of Columbia Univ. reports to Mayor Walker's committee on taxation; says city can't finance cost of new subways using short-term (4 year) bonds while maintaining the 5 cent fare; says depressed conditions in real state market will reduce taxes collected below early estimates.

Largest poultry plant in the world is at Reseda, Calif.; sells over 150,000 hens a year, maintaining a flock of at least 500,000.

GM main research lab located in Detroit; budget $1.5M/year; highlights of research include developments in fields of engine design, metal alloys, chromium plating, and lacquer finishes.

J. Gerard, former ambassador to Germany, proposes Stock Exchange rule preventing broker from lending the stock on margin without written consent of the owner for each particular loan. Recommends corporations issue more understandable reports to investors, citing US Steel as model.

Some technical market watchers expect a rally recapturing at least 25% of the ground lost since Sept. 10 before any further liquidation.

Experienced observers” now watching for ability to hold recent support levels, including 148 3/8 for US Steel, 51 1/2 for GE, and 35 1/4 for GM; if these levels are effectively supported, “chances of early resumption of the recovery would be materially strengthened.” Recent market performance has aroused hope the market is preparing for a more sustained rally than seen since early Sept.

Bulls encouraged by appearance of strength in some specialties in the midst of market irregularity, particularly in coppers on curtailment prospects.

The frequent remark that Wall Street business is now carried on by a “new generation” of traders is verified by the fact that 934 of the current 1,346 NYSE memberships were acquired after Jan. 1, 1920.

More conservative market students have recently been recommending stocks with well-maintained earnings this year rather than those that will only make high returns when business has recovered.

Commodities weak. Grain markets mostly quiet; corn down substantially, other grains down moderately. Cotton down substantially. Copper buying continues good at 9 1/2 cents, but long-range situation remains doubtful as production still exceeds consumption.

W. Wood, Amer. Inst. of Meat Packers pres., says total production of meat for the year will be about equal to 1929; prices have strengthened somewhat since the summer but are off substantially (13%-35%) from a year ago; stocks of meat in cold storage relatively low.

Lloyd's Register of Shipping notes drop of over 50% in orders for new ships over past 3 months, increase in number of idle ships. Number of ships approved in year ended June 30 was 601 for 2.082M tons, largest since record year of 1920.

Strike of Berlin metal workers ends; seen as initial success in campaign to cut wages; dispute will be settled by arbitration, expected to lower cut to 3%-5%.

Italian unemployed were 394,630 at end of Sept., up slightly over Aug. but less than last Jan.

Registered British unemployment Oct. 20 was 2.199M vs. 2.189M on Oct. 13 and about 1.225M on Oct. 21, 1929.

Recent persistent decline in Spanish currency (peseta) reportedly increasing public support for stabilization, possible shipment of gold from Spain.

Manitoba Premier J. Bracken says unless price of wheat improves Canadian govts. may lose $10M on wheat pool.

Rail freight shipments from Chicago had a 95% on-time delivery rate for the 6th month in a row; 95.39% were on time, 3.74% one day late, and 0.86% more than 24 hours late.

Tire makers to advance prices 2.5% - 5% Nov. 1, with all of the increase going to dealers.

Over 2,000 new businesses opened in Chicago in the first half, almost 10% higher than 1929.

Delaware Gov. Buck requests indictments against all oil companies selling gasoline in state, charging price-fixing.

NY State reportedly set to relax requirement on interest rate coverage for rail bonds that savings banks may invest in.

PG&E conducting large, long term, and complex campaign to expand use of natural gas in its territory (Northern California) in competition with fuel oil.

Four-bank merger reportedly under discussion between Manufacturers Trust, Bank of United States, Public National, and International Trust.

Companies reporting decent earnings: Arundel Corp. (sand and gravel), Interlake Iron (lower profit margin but expanded production).


  1. British PM MacDonald states if US used same system as English in figuring unemployment, they would show unemployed of 10M-12M.

    Now that resonates with today because I hear people saying if we calculated unemployment the way they did during the Depression, it would be as high now as it was then. (The U6 measure I believe is what they want to use). So in this case is the British PM trying to lowball our unemployment or saying it should be counted as higher? I don't know whether it actually was 10-12M or not.

  2. Noumenon -
    The British PM is clearly saying US unemployment is much higher than official US figures at the time, which were in the low single digit millions range. As far as I know it's hard to say what the correct number was then since unemployment wasn't counted very accurately and there was no general unemployment insurance. There's a popular belief that we have much better economic and company information now, but as I've said I haven't seen this to be the case in general. However, it does seem to be true of unemployment stats at the time.

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