Wednesday, November 26, 1930: Dow 185.47 -2.80 (1.5%)

Assorted historical stuff:

Increased “dumping” of Russian products generally attributed to need for foreign exchange to pay for equipment with which to carry out Five-Year Plan. Decline in prices received for many goods and increased imports in first year of Plan (starting Oct. 1, 1928) has led to policy of exports at any cost and inflation of rubles. This may cause withholding of produce by independent peasants, who still account for most of harvest in spite of Soviet plan for socializing agriculture. Govt. considered “wedded” to Five Year Plan; “belief grows that on the fate of the plan the fate of Sovietism may well depend.”

G. Frank, Univ. of Wisconsin pres., says current depression not an indictment of the “machine order” (“array of processes by which we make goods and produce wealth”) but of the “economic order” (“array of policies by which we use goods and distribute wealth”).

Pres. Hoover says agrees fully with Senator Reed's proposal to suspend immigration for 2 years after July 1 to relieve unemployment; points out that recently tightened visa procedures on his orders have already reduced immigration from 24,000 a month to about 6,000 in Oct.

Pres. Hoover says no new Federal laws needed to cover “racketeering” activities of gangsters; can be adequately dealt with using existing state laws.

Frankie Dunn, “racketeer and late leader of the North Jersey beer-runners” leaves estate of $413,558, mostly in stocks and bonds.

New Chinese language “Pei-Hua” invented to consolidate hundreds of existing dialects; mixture of Mandarin and other Northern dialects. Language is compulsory in every public school; use is “expected to abolish the language trouble after a generation or two.”

A weather balloon filled with hydrogen recently released from Roswell, New Mexico was recovered 242 miles away in Texas; it had reached a height of 12 miles.

Market commentary:

Market wrap: Substantial buy orders accumulated overnight following Monday's impressive late rally. Major stocks showed a strong tone through the morning led by US Steel and American Can, which hit new rally highs; good gains in other majors including AT&T and Consolidated Gas; merchandising shares and trading favorites strong. Selling on profit taking appeared going into the afternoon, encouraging “bear crowd to make a test of the market's position.” These operations kept the market heavy through the last hour; leading shares generally gave up their gains and worked below previous closing prices. Bond market more active, prices irregular; US govts. continued firm, near high prices for year; foreign govts. mixed; corp. irregular, with highest grade steady.

Market movements in standard stocks in past 2 weeks “have been under the domination of some of the most important and powerful industrial and financial interests. Their efforts have been directed toward stability, not only in the stock market, but also in various other directions.” While these interests don't desire any spectacular movements, they do believe a reasonable advance in stock prices is warranted.

Broad Street Gossip: Bull “tips” are on the rise; rumors have also been heard of new bull pools being formed in certain stocks, including some low-priced issues.

While there have been few signs of substantial improvement in business, “all reports indicate a better feeling in trade circles at present.” Local observers have maintained a better stock market might result in improved business sentiment; if this is happening now, “a long step in the right direction will have been taken.”

Car industry opinion mixed; while it's considered certain the first few months of 1931 will bring higher production, opinion differs on whether the increase will carry past the first quarter through the whole year; more conservative authorities say this will depend greatly on the reception given new models.

W. Gifford, AT&T pres., sees end of depression in near future, followed by a sustained period of prosperity such as the world has never before seen.

Economic news and individual company reports:

Oct. output of cars and trucks in US and Canada was 154,585 vs. 224,834 in Sept. and 394,540 in Oct. 1929; first 10 months was 3.215M vs. 5.269M.

Rail freight loadings for week ended Nov. 15 were 829,251 cars, down 52,150 from prev. week and down 153,675 or 15.6% from 1929 week.

First 19 rails report Oct. operating income 24.1% below 1929.

US Steel and large independent producers establish minimum sheet steel prices for Q1 1931, following recent similar action by Carnegie Steel for bars and plates.

Sen. Caraway (D., Ark.) proposes banning short sales in agricultural commodities; ban would not apply to “legitimate hedging” but to “pure gambling operations.”

Highest full page advertising rates: Ladies Home Journal $9,500; Woman's Home Companion $9,400; Delineator $9,200; Pictorial Review and McCall's $8,800; Saturday Evening Post (highest circulation) $8,000; Collier's $5,500; True Story $4,500; Liberty $4,250.

Companies reporting decent earnings: IBM, American Ice, US Gypsum, Scott Paper.

Biscuit makers generally have reported good 1930 earnings; attributed to “inelastic demand,” brand recognition, efficient distribution, and lower raw material cost.

Jokes:

“'How long will it take to fix that car?' Mechanic - I'm afraid it will take a long time, sir. That's the only job we have at present.”

“Reporter - Are you in favor of prohibition? Senator - Are you going to offer me a drink, or do you want a statement for the paper?”

+ The Boring Stuff:

Editorial: New regulations putting burden of proof on importers to show goods aren't produced using forced labor are effectively aimed at Russian exports; they are “a reasonable approach to an extremely difficult problem, while leaving the door open to Russian trade providing it can meet certain essential conditions.” How much Russian labor is literally convict is doubtful, but “that much or all of it is under some degree of compulsion and prevented from bargaining for terms is the general testimony of observers on the spot.”

Pres. Hoover states new regulations not directed against Russia, US doesn't intend to start trade controversy. Details on enforcement not completely clear.

Sir R. Borden, Canadian wartime PM, links present business depression to US refusal to cancel world war debts.

Sir C. Addis, director of Bank for Int'l Settlements and of Bank of England, stresses need for international stabilization of commodity prices to end worldwide depression; not calling for rigidity or fixed prices, but for world prices to be “kept fairly stable without attempting to control particular prices.”

Sec. of War Hurley criticizes railroads' opposition to inland waterway development, says govt. support is similar to subsidies granted to railroads in their early days, as well as Federal support for development of the merchant marine and highway building.

At the galleries: At French & Co., a 17th century “state bed” once occupied by King Charles II, “generally regarded among connoisseurs and collectors as one of the greatest of its kind” and valued at $50,000. At the Van Diemen galleries, exhibition of Venetian art including works by Titian (Portrait of a Nobleman), Bordone, Tintoretto (Resurrection), and Canaletto. Rains galleries continues sale of property of Mrs. Charles V. Bob, this time of furnishings from her Montauk Point home.

Adam Opel Works of Germany to build world's smallest six-cylinder car, producing 3,000/month to sell at $785.

NY City Merchants' Assoc. endorses building of waterfront highway along East side of Manhattan, withdrawing earlier insistence on elevated highway.

Conservative observers still advise picking up standard stocks on a scale during reactions, but recommend keeping part of funds liquid until “market has definitely shown that a resistance level has been reached.”

Demand by short sellers for stocks in the loan market was fair.

The Old Timer: “I have known people in Wall Street who refused to be optimists even in times of prosperity. They all die poor. Lately that has been the trouble with the general public; entirely too much pessimism. The atmosphere has been streaked with indigo blue. Even people with good jobs and with no shrinkage in income contracted the disease. Better action of the stock market and a little more business cheer has dissipated much of the pessimism, and if stocks do not take another nosedive, the improvement will continue and we will soon be back on the road to prosperity.”

Several Wall Street brokers report increased foreign buying, much of it investment but also some “speculative business particularly on the part of French, Dutch and English accounts.” While quantity isn't important yet, it's interesting that some of those buying have been out of the market since the summer of 1929.

C. Abbott, Amer. Inst. of Steel Construction exec. dir., sees “indications that the long continued decline in the building industry is drawing toward its end”; notes increased residential construction in Sept.; calls for “cooperation and more scientific management” to enable industry to help in “present national emergency.”

Commodities weak. Grains substantially lower. Cotton down slightly. Copper buying remains small, with large producers holding at 12 cents but moderate amounts available at 10 1/2 cents from smelters and second-hand.

Gasoline stocks at refineries Nov. 22 were 36.532M barrels, down 731,000 in week; refineries operated at 64.1% vs. 64.2% prev. week; oil production was 2.282M barrels/day, down 22,700 from prev. week and down 351,400 from 1929.

First 37 states reporting new car registrations for Oct. totaled 109,771 vs. 200,535 in 1929. Ford accounted for 37.5% vs. 34.8%; GM for 34.4% vs. 34.8%.

Six railway shop unions of US and Canadian rails propose demand of 5-day week with 6-days pay to relieve unemployment.

Savings bank meeting postpones action on relaxing requirements for railway bonds they may legally invest in. Current law is that roads must cover bond interest charges by margin of 1 1/2 times for 5 of past 6 years, including last year. A few months ago it appeared many rails might be dropped from the list due to lower earnings, but now market observers think only two rails are in serious danger. In addition, rails that look to be falling close to the minimum coverage can generally reduce maintenance or other expenses to avoid dropping below it.

Farmer's representatives say won't agitate for debenture or extra session of Congress at this time, will give Farm Board a chance.

American Machinist reports continued dull machine tool markets, though inquiries have improved in past week.

Bank of Montreal monthly letter reports “barometer” of Canadian business little changed in Oct.; mild weather helped construction, but drought and falling grain prices cut farmers' income; Oct. foreign trade down sharply vs. 1929 due to new Canadian tariff, which has also stimulated cotton, silk, and wool industries.

British registered unemployed on Nov. 17 totaled 2.286M vs. 2.262M previous week and 1.274M in 1929.

G. Harrison, NY Fed. Gov., leaves Paris for Berlin after discussions with Gov. Moret of Bank of France; believed to have discussed gold question. Influx of gold to France expected to continue due to nervousness over Oustric failure and German political developments.

Hope for German situation to improve if govt. can withstand radical attacks after Reichstag opens next week; Chancellor Breuning has offered penalty-free return for German capital sent abroad illegally.

Italian bank Credito Veneto closes; has 65 branches and deposits of 300M lire.

Dec. butter and egg futures hit new record lows on continued reports of heavy production.

Oct. sales of candy were $31.0M, up 10.6% from Sept. but down 14.1% from Oct. 1929. First 10 months' sales were down 8.7% from 1929.

More rails reporting improving results: Union Pacific and Atlantic Coast Lines.

Cash dividends paid by Standard Oil group of cos. in 1930 was new high record of $286.7M, up $17.0M from 1929.

T. Watson, IBM pres., says increased IBM earnings this year due mainly to more worldwide exports, not census; co. now operates in 77 countries. Earnings have increased steadily over past decade, with record earnings of about $11.50/share expected this year; stock is about 148.