No Journal was published Sunday, Nov. 16, 1930. Once again, a collection of my favorite items of the week. These aren't a representative selection but just the ones that made me smile or take notice.
Nov. 15:
[Note: Sheer Genius Dept.] Pan American and Imperial Airways to collaborate on transatlantic service from New York via Bermuda and the Azores, possibly using “seadrome” floating landing fields being developed by du Pont to shorten “hops”; service will begin by carrying airmail only, flight time of three days hoped for.
[Note: Strangely unfamiliar Dept.] G. Charls, Nat'l. Assoc. of Flat Rolled Steel Mfrs. pres.: “Once it was considered necessary to reduce wages in periods of depression. Today the entire steel industry accepts the principle that such reductions only reduce purchasing power and delay the return of prosperity. Industrial buyers pushing for lower prices on steel should be mindful of their joint responsibility in helping the steel industry maintain the purchasing power of its employees.”
[Note: Ay Chihuahua! Dept.] Shearson, Hammill & Co. bullish: “not in sympathy with the extreme wave of pessimism which now prevails ... We believe a gradual improvement in business is under way.” Consumption has exceeded production for some time. Corporations have ample resources and have become more efficient. “The recuperative power of our country is great. The banking situation generally is strong.”. Credit is easy. Increased savings by individuals means latent buying power. Considering all this, “and that security prices generally are much below their real value, we unhesitatingly strongly recommend the purchase of” sound and well-managed stocks.
[Note: Perils of historical precedent Dept.] A recent indication of stocks passing into strong hands on a large scale: brokers' loans extended by NY City banks were down $987M in past 7 weeks, to $2.235B, while loans to non-brokers were up $150M, to $2.042B. “In the past, increases in loans to non-brokers, especially when accompanied by decreasing brokers' loans in a declining market, invariably have indicated buying to have been of better quality than selling, with an early upward turn in stock prices.”
Nov. 14:
[Note: I'd say that this sounds strangely modern in its concept of the Fed aggressively adjusting the credit supply to smooth out the business cycle. But the really eye-opening part is the fact that asset prices, including stocks and real estate, are part of the suggested price index to be used - for my money, this puts him miles ahead of the asset-bubble-oblivious central bankers of today.] Letter from T. Macauley, Sun Life of Canada pres., defending his proposal for Fed. Reserve to halt depression by buying $500M of bonds, increasing bank lending power by over $5B. Currently, dollar has no fixed purchasing power but varies with amount of currency credits outstanding as controlled by the Fed. “If we permit commodity price levels to go up and down with good and bad times, we are asking for trouble ... we shall automatically transform moderate depressions into severe ones and severe ... into disasters.” Suggests boom-bust cycle can be moderated by stabilizing value of dollar relative to broad price index of industrial and farm products, rents, real estate and security prices. Praises Fed actions in preventing inflation by selling bonds to absorb excessive gold imports in past years, and in already buying $450M of bonds to reduce effects of current depression; believes it may be hindered in acting more agressively by current criticism and opposition.
[Note: Slightly premature predictions Dept.] Editorial: “China, with its great population and low standard of living, offers a great potential market ... so too does all Asia.” China trade already has grown dramatically; from 1900-20, imports grew from $155M to $940M and exports from $120M to $670M; since then wars and depression have somewhat reduced trade. China needs both physical infrastructure for business and political stability, but latter will follow former. Rehabilitation should be a business benefit, not burden.
[Note: Slightly premature predictions Dept.] Sir Percival Dewhurst Perry, chair. of Ford Motor Cos. in Europe, makes bold call on Russia: “The Russians have seen the writing on the wall. With the collapse of their five-year plan there is no doubt that they will revert to capitalism. It is the only way in which they can avoid a revolution.”
Nov. 13:
[Note: Strangely unfamiliar Dept.] Editorial: Pres. Hoover's Armistice Day speech makes his concept of the US role in world politics clearer; he favors building up the “moral obligation” to avoid hostilities through agreements such as the London Naval Treaty and agreements to use “arbitration and conciliation” to resolve disputes, but believes US role in promoting cooperation must stop “short of any implication of the use of force.” This is advisable; an obligation to “preserve peace by making war,” in the current state of world politics, “would merely throw the nations back upon the ancient European system of competitive alliances.”
[Note: Strangely familiar Dept.] Rep. Eaton (R, NJ), following meeting with Pres. Hoover, criticizes banks for not taking more active part in relieving depression: “Idle money is lying in the banks, piled up, yet the banks refuse to give loans to those who need them, with some exceptions.”
Nov. 12:
[Note: Strangely unfamiliar Dept.] Halsey, Stuart study reports newspaper circulation up 39% in past decade, advertising revenue up 60%.
[Note: Sheer Genius Dept.] Recent trend of odd-lot investing may have found its ultimate example in one broker's customer who in the last year bought 192 shares of 192 different companies.
Nov. 11:
[Note: Strangely familiar Dept.] F Sargent, Chicago & North Western Rwy. pres., attacks Agricultural Marketing Act as unconstitutional; “I strongly criticize the establishment of government agencies to compete with private business as constituting unlawful confiscation of property.”
[Note: Stimulus Dept.] Pres. Hoover to ask Congress for special emergency appropriation to expedite public works for unemployment relief.
[Note: Perils of contrarianism Dept.] Experienced observers believe recent increase in short-selling by small traders is hopeful: “Just as a rapid expansion in brokers' loans heralds the culmination of a bull swing, general switching from long to short positions by inexperienced speculators is a familiar feature of the final stages of a prolonged decline.
[Note: Something to take note of.] Many stocks are depression-proof based on increasing earnings, but in the recent decline no stocks have been bear-proof.
[Note: They should have gotten Maurice Chevalier Dept.] Sentiment in France said better, but “still nervous despite reassuring statements by the Premier, the Finance Minister, and the Governor of the Bank of France to which wide publicity was given.” Rumors persist about some banks, may result in mergers.
[Note: Words to live by Dept.] “'There is nothing so satisfactory as a clear conscience.' 'No,' answered Senator Sorghum; 'and the next best thing is a good lawyer.'”
Nov. 10:
[Note: Strangely unfamiliar Dept.] Editorial: Gesture by Dems. is sincere, but may be passing: “Before an election politics is at its height. The men in the heat of the fight honestly regard the opposition as either fools, criminals, or both ... Once the ballots are counted ... the pendulum swings to the other extreme ... even the politicians are eager for a rest from politics for a time.” Statement is still encouraging since it suggests Dem. leaders will curb the wilder schemes and more radical proposals of some of their party members.
[Note: Possibly strangely familiar Dept.] Executives in wide variety of industries agree future earnings will depend mostly on sales volume, since costs have been cut as far as possible.
[Note: Stimulus Dept.] Col. A. Woods summarizes reports on unemployment from governors: main problem is in Great Lakes and US industrial centers; almost all states reported they're “stimulating public works and pushing ahead work which had been planned for a later date”; general feeling is to provide work for unemployed rather than relief.
[Note: Morality can never be accomplished by law - that's crazy talk!] Editorial: People may disagree on the meaning of Tuesday's elections, but one result is absolutely clear: public sentiment against Prohibition is rapidly increasing. People are starting to understand “morality can never be accomplished by law.” Instead, the effects of the “noble experiment” have been seen in “an increase in crime, the placing of almost unlimited wealth in a criminal class, and the spread of drinking among young men and women. ... People have been revolting against our prohibition laws; the elections show the revolt is changing to revolution before which this legislative tyranny must fall.”
[Note: Ay Chihuahua! Dept.] Broad Street Gossip: Patient investors will, in the long run, make a lot of money buying good stocks at current prices. Some people are in fact doing this, as seen in record numbers of shareholders in US Steel, AT&T, GM, and others; “The little fellow has been getting in on the ground floor while the big fellow with the big income has been busy seeking ways and means to cut down his 1930 tax payments.”
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