November 13, 2009

Thursday, November 13, 1930: Dow 177.33 +4.03 (2.3%)

Assorted historical stuff:

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.”

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.”

NY Gov. Roosevelt says public utilities supplying “daily needs of a people have long been recognized as” differing from ordinary trade; “must not be made the instrument of unreasonable profit of private individuals” who are much smaller in number than users of the service.

Chinese flappers” said responsible for increased popularity of coffee; while girls aren't carrying coffee in hip flasks, younger generation of Chinese is reportedly taking to foreign style food and drink including coffee, in spite of immemorial reign of tea drinking there.

NY City basic tax rate for 1931 estimated at $2.69 per $100, 16 cents over 1930 rate.

A pawnshop on Second Ave specializes in war medals. It has scores on display in its show window, all left in the past 10 years by World War veterans who had to raise a little money. “The question is, to whom does this pawnshop sell these badges of bravery that others risked so much for?”

US Circuit Court of Appeals sustains Irving Langmuir's vacuum tube patent in suit by GE against De Forest Radio; if decision stands in Supreme Court will give GE exclusive control of production of vacuum tubes used in radios, etc. Litigation has lasted over 10 years in patent office and nearly 5 years in court.

Market commentary:

Market wrap: Yesterday gave “some relief from the monotonous picture of a market harassed by unremitting liquidation.” There was early pressure on US Steel on lower current and anticipated production; “widely advertised drives” were also launched on GE and AT&T, driving them to new bear market lows; however, volume dried up on the reaction. News that copper had been marked up to 10 cents sparked sharp advance in producers including Kennecott and Anaconda; this was followed by a broad rally in the general list; “market as a whole was on its best behavior in nearly two weeks”; active short covering seen, and stocks closed at day's highs. Bond market moderately active and irregular; US govts. firm; foreign issues slightly lower; corp. irregular - high-grade rails steady, others irregularly lower but closed with strong tone.

During recent market declines, reports have resurfaced that bank are liquidating security loans, partly prompted by the Fed. Reserve; these continue to be denied.

View in “speculative quarters” was very optimistic on turn in copper, seeing it possibly presaging improvement in general conditions; conservative interests maintain recovery should “prove its ability to hold.” Stocks had clearly become “heavily oversold,” and short covering was said an important influence in rally.

Economists note yield on representative dividend paying stocks now averages almost 6%, almost double commercial paper rate of 3% - widest gap since 1924. By contrast, in Aug. 1929 commercial paper rate was 47% higher. More aggressive investment buying is anticipated, particularly of stocks with safe dividends.

P. Mazur of Lehman Bros. sees business recovery by last half of 1931; blames depression on overproduction, says construction now in gradual recovery.

R. Stephenson, Amer. Bankers Assoc. pres., sees business still considerably curtailed, but confidence beginning to return, and “no one other element is so forceful to stimulating recovery”; sees current caution as presaging a more dependable advance.

Economic news and individual company reports:

Several car makers report sharp increase in dealer buying since Nov. 1; attributed to new models and low inventories.

Justice Dept. “has resisted all efforts to elicit any indication as to what its attitude might be in case the copper companies went ahead with some cooperative plan.”

Western rails face “revenue dilemma” after ICC refusal to reconsider lower grain rates; may resort to the courts, claiming failure of the ICC to provide legally guaranteed 5 3/4% return on property.

Youngstown steel producers said cooperating with Carnegie Steel in efforts to stabilize prices.

Texas Railroad Commission says will continue to enforce oil proration (production control) order in spite of 4 current Texas lawsuits against it.

Several cos. cut Pennsylvania grade crude oil 15 cents to $2.15/barrel. Gasoline in Chicago wholesale market is 4 1/2 - 5 1/4 cents vs. 4 5/8 - 5 1/4 previously.

Companies reporting decent earnings: Amer. Ice, Amer. Safety Razor, Amer. Water Works & Electric.


“You would not knock the jokes we use, could you but see those we refuse.”

“Angry Widow (after learning her husband left her nothing) - I want you to take 'Rest in Peace' off that tombstone I ordered yesterday. Stonecutter - I can't do that, but I can put something underneath. Widow - All right, put on 'Till I Come.'”

+ The Boring Stuff:

Editorial by T. Woodlock on Socialism: Marx's doctrine of “economic determinism” (which he of course “borrowed” from Feuerbach, much as Spengler borrowed his central idea from Goethe) has only partially come true; he was to some extent right in predicting concentration of capital and cooperative effort into large industrial units, but, “at least so far as this country is concerned,” wrong that this would condemn the workers to hopeless slavery; instead, living standards have increased, and the predicted workers' revolution doesn't seem much nearer than 60 years ago. Modern Socialists have turned to the goal of “egalitarianism,” condemning relative inequality. Their main target seems to be a group Marx didn't even consider, but which now might be more important than his Capital and Labor, to wit: Management; the Socialist objective, which also seems to be turning into the major issue separating Democrats and Republicans, is increased public control of economic power now exercised by business leaders. The merits of this objective are doubtful; the gift of excellent “management,” like “violin playing, ... mathematics, metaphysics, etc.” may be concentrated in a select few.

Youngstown district steel producers taking measures for relief of unemployed steel workers; most are using system of distributing available work to minimize number of unemployed, while some including Carnegie Steel and Youngstown Sheet & Tube provide food and necessities for employees in extreme need.

NY City Emergency Employment Committee expands campaign to include investment and commercial banks, trusts, and brokers; target is now $6M for unemployment relief. Initial efforts encouraging; committee has already assigned 3,000 men and women to work in city parks and other nonprofit institutions; and jobs pay enough to “maintain their families and to regain their independence.”

Figures from 36 of 57 New York non-municipal hospitals show 10% increase in demand for free treatment.

Rail worker unions gathering in Chicago say will ask Congress to favor six hour day as one means of relieving unemployment.

Imperial Conference in London reportedly will end without satisfactory results; however, Canada, Australia and New Zealand rumored considering formation of economic union, giving each other tariff preferences denied rest of the empire, including Britain.

Cuban Pres. appoints military supervisors for six provinces due to recent disturbances caused by “students and other elements.”

US manganese producers file another petition for embargo on Russian manganese, claim Russian dumping at 50% of cost to break down the US industry; deny testimony from steel producers that US manganese is unsuitable for use in steel industry. Sen. T. Oddie says will introduce bill completely prohibiting Soviet imports.

Sec. of Agriculture announces lifting of all restrictions on Florida fruit and veg. exports due to Mediterranean fruit fly; govt. has spent $6.4M in exterminating it.

Twenty radio stations report average cost of $12,500 a month for talent, total monthly operating costs of $22,000; income of $23,500, of which $21,000 is from advertising; 30% of programs were paid.

A well-known bear says stocks haven't been sold short in big blocks lately; while recent market has been a liquidating one, it has also been an accumulating one, with stocks passing from weak to strong hands; “At this stage of the game, the bear is more in need of caution than the bull.”

Some previous tax sellers now reportedly rebuying after 30 days at generally lower prices.

Stop-loss orders reportedly still popular among traders buying for a technical recovery.

Demand by short sellers for stocks in the loan market remains fairly high, though more stock was available, with few issues loaning at a premium.

Most brokerage houses now in very strong position, with total brokers' loans at 4.65% of total market value of NYSE-listed stocks vs. the peak of 9.82% in 1929; however, traders are timid about buying due to the continued declines, with those that have bought so far “hung up” with stocks bought much higher.

Recent gain in US Steel unfilled orders considered possible turning point. Steel operators are expecting an upturn in the first quarter of next year; scrap prices and steel operations will likely decrease seasonally for rest of the year, but this is thought to be already discounted. Inventories at year-end expected to be lowest in many years; price announcement by Carnegie seen aimed at stiffening prices for next quarter's contracts.

Statement by W. Donovan, former Asst. Att'y General, that oil industry could restrict production within antitrust laws, was considered timely for other industries.

Commodities strong. Wheat was weak most of the day but closed up sharply on a late rally; other grains closed up moderately. Cotton also closed up substantially after early weakness; heavy short covering reported. Copper up 1/2 cent to 10 cents/pound; some good buying at that price, but little more seems available from producers now.

Firms most active in bond offerings in first 9 months were National City, $1.253B; Harris, Forbes $1.214B; Halsey, Stuart $1.102B; Guaranty $1.086B.

Administration remains opposed to farm debenture plan in spite of election results. Plan would give farmers a percentage of the value of exported products as certificates usable to pay import duties; administration believes this is equivalent to dumping surplus abroad.

Revised Sept. exports $311.9M vs. $437.7M in 1929, imports $226.3M vs. $351.4M; 9 months exports $2.952B vs. $3.844B, imports $2.401B vs. $3.360B.

US electric output decline of 4% Sept. vs. 1929 was improved from 6% decline vs. 1929 in Aug.

Stocks of refined copper Nov. 1 were 364,930 tons vs. 360,650 on Oct. 1 and 88,401 in 1929; Oct. production was 118,229 vs. 116,004 and 152,840.

Farm Board reports loan repayments so far “running quite satisfactorily.”

Newsprint produced by Canadian mills in Oct. was 213,817 tons vs. 195,490 in Sept. and 251,914 in 1929; US produced 105,450 vs. 95,261 and 122,009.

Tire casing shipments in Sept. were 4.405M vs. 5.175M in Aug. and 5.623M in 1929; inventories Sept. 30 were 9.812M vs. 10.848M and 12.875M.

FTC resumes investigation into public utilities after recess of six weeks.

British trade figures for Oct.: imports 90.9M pounds vs. 78.7M in Sept. and 110.3M in 1929; exports 46.9M vs. 42.7M and 64.6M.

British registered unemployed on Nov. 3 totaled 2.263M vs. 2.238M previous week and 1.252M in 1929.

R. Benson & Co.: “So far as London is concerned, the money market situation is as bright as the industrial position is gloomy.” Bank of England's reserve position much stronger than a year ago, gold holding also considerably higher.

Private Paris bank Bernard, Freres fails, submits to judicial liquidation.

Cuban House of Representatives approves Chadbourne plan for stabilizating sugar prices.

World production of Ford cars and trucks in Oct. was 78,347 vs. 97,885 in Sept. and 177,483 in Oct. 1929.

Some stocks currently yielding 5%-6%: Eastman Kodak, Otis Elevator, Westinghouse, Union Pacific; yielding 6%-8%: Liggett & Myers, New York Central, Standard Oil NY; yielding over 8%: GM, American Ice, Allis Chalmers, Hudson & Manhattan.

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