Saturday, December 13, 1930: Dow 168.68 -1.63 (1.0%)

Assorted historical stuff:

Agriculture Dept. says 1930 to be remembered by farmers as year when weather, crops, and markets all went against them. Production of main crops was only 6% below 1929 in spite of severe drought year, but prices were lowest for years.

[Strangely unfamiliar.] Rep. Tilson, Republican floor leader, comes out against Senate's proposed use of drought relief loans to supply food, clothing, and other necessities; says this amounts to dole; if faced with starvation, farmers need relief not additional debt; relief should be supplied by Red Cross and local communities.

[Strangely familiar.] President's Emergency Committee on Employment reports at least 200,000 more employees working on public building projects than this time in 1929.

Clearing House banks considering raising loan offer from 50% to up to 75% of Bank of U.S. depositors' net balances if audit reveals enough liquid assets.

Germany has shifted from large trade deficit in prosperous 1927 to large surplus now; surplus should cover over 2/3 of reparations payments; bankers and economists believe German business may revive before other countries due to lower raw material costs and wages.

Reichstag adjourns to Feb. 3, assuring Breuning govt. of modified financial dictatorship without parliamentary interference until then.

F. Noyes, Assoc. Press pres., says public ignored newspaper warnings, both of 1929 inflation and overoptimism and of 1930 over pessimism. Says newspapers gave far better and more unbiased information then at any previous period.

Census Director Stuart says unemployment census will be undertaken in representative US cities.

[I guess Buffett isn't worried about this ... ] Editorial: So far the only congressional response to railway pleas for help has been indication that no important rail legislation can be expected in the current session. A weakness of our utility regulatory system, particularly for rails, is that even clearly deserved industry relief can only be obtained in an emergency. Rails will have to deal with poor business by cutting expenses; if this leads to unemployment it will be the consequence of the remorseless pressure for lower rates and excessive transport facilities. One bright spot is that the ICC for the first time seems to realize the severity of the problem and may be more sympathetic.

[Strangely unfamiliar.] So few citizens of the new Turkish Republic heeded the call to Mecca this year that no pilgrimage boat was chartered from Istanbul, as has long been the custom. Many Muslims from Iraq who had come to Istanbul to take the boat were forced to reach Mecca by other routes, along with a handful of Turkish faithful .

First direct commercial radio communication between Berlin and Shanghai.

NY-Washington air express package service to be started today by Western Union; will take 3 hours from sender to addressee.

Walking tests conducted by a rubber co. find average pair of galoshes good for about 100 miles of walking before being retired to the junk heap.

[They'll stop that one of these days.] S. Rothafel (Roxy theaters) says over-fast production and imitation of successful movies have harmed “talkies” popularity.

Market commentary:

Market wrap: Special groups including coppers, oil, and amusements were weak, but leading stocks showed good resistance, mostly holding steady around Thursday's closing levels. Some late irregularity on various rumors, particularly concerning Bethlehem Steel. Bond market liquidation eased; on lower volume, US govts. firm, foreign govts. and corp. mixed. Commodities weak; cotton hit another yearly low, and low since Aug. 1915; copper weakened to about 10 1/2 cents; silver hit record low at 32 1/4 cents.

“Large professional operators” reported doing extensive short covering yesterday, including “Bernard E. Smith, ... recognized leader of the bear crowd for some time.” Good support was seen some of the leading shares, including US Steel and American Can.

Brokers report few margin calls in spite of continued stock declines. Also report more bears in customers' rooms than at any time in months past.

Broad Street Gossip: Lower-priced stocks have suffered much greater percentage declines than “old-line” stocks. Some examples of 1930 high-low ranges: Glidden 38 to 8 1/2; Marmon Motor 30 7/8 to 5 5/8; Maytag 23 to 5; Warner Pictures 80 1/4 to 15 3/8; Zenith 16 3/4 to 2 5/8.

Dr. G. Frank, Univ. of Wisconsin pres., charges lack of leadership in US business; “our panicky present is the result of our planless past.”

[Strangely familiar.] A number of retailers report sales are lower than last year, though the number of customers has been about the same; “consumers have been giving more attention to lower priced articles this year.”

[Wait 'til next year dept.] L. Miller, Willys-Overland pres., says auto industry should be first to recover, inventory situation good, general belief business will return to normal in early 1931. A. Reynolds, Continental Ill. Bank chair., sees general outlook for business “conservatively brighter”; forces at work for the past year, though “not easily detected by the general public,” will help return to normal conditions; businesses more efficient; 1931 “unquestionably” year of recovery; depression less severe than in 1921.

E. Beatty, Canadian Pacific Rwy. pres., speaking in Chicago: “Things look better to me. They certainly are in Canada, and I think they are here.”

Nation Electric Power (part of Middle West Utilities system) sees upturn in business conditions on East coast based on increase in Nov. electric output of 4.1% over Nov. 1929; output has trended higher each week since start of Nov.

Once again, all three Dow Jones stock averages, as well as the Dow 40-bond average, made new 1930 lows.

Dow made new post-panic low. There were no new yearly highs and 142 new lows.

Economic news and individual company reports:

Some explanation for recent bond market weakness may lie in New York banks increasing their liquid position in the past week to prepare for “substantial withdrawals of deposits which might develop.” In the week, they sold $46M of securities other than govts., reducing this category to $1.114B vs. $1.219B on Nov. 26; at the same time, govts. have gone from $1.204B to $1.271B. Further evidence of nervous conditions seen in increase of $41M in currency circulation, and increase in call money rate to 2 1/2%, first time above 2% since Sept. 16. Fed. Reserve acted to keep money easy through open-market buying of $25M in banker's acceptances and $15M in govt. bonds, bringing govt. bond holdings to a record high of $617M.

Stocks of refined copper Dec. 1 were 369,832 tons, vs. 364,930 Nov. 1 and 126,919 on Dec. 1, 1929; total stocks Dec. 1 were 594,363 vs. 605,075 Nov 1.

California oil situation seen critical, with further curtailment necessary to maintain price structure. Current output is about 600,000 barrels/day, with market demand for the next few months estimated at 450,000 - 475,000. Gasoline price situation unsettled, with some retailers selling at 14 1/2 cents/gallon, 1 cent below official wholesale price of major companies.

Dun's and Bradstreet's weekly reviews report continued seasonal uptrend in retail, though still below 1929; future course of general trade and industry unclear.

British banking authorities not overly worried about continued gold exports; while money rates are up slightly, credit remains easy and it's believed that eventually the “machinery of the free gold standard will bring about an automatic stoppage of the flow.”

US and Canadian newsprint shipments in Nov. were 307,304 tons vs. 324,556 in Oct. and 369,944 in Nov. 1929.

Oct. tire shipments were 3.499M vs 4.405M in Sept. and 4.650M in Oct. 1929.

Canadian experts say reduction in Western Canada wheat acreage would be economically unsound if not disastrous to agrarian interests.

Guaranty Building & Loan of Calif. suffers losses estimated as high as $8M due to “defalcation of an official.”

Companies reporting decent earnings: Liggett & Myers (cigarettes), American Home Products (medicines).

Company reports since Oct. 1: 250 companies reported higher earnings vs. 1929 and 424 lower; 795 dividends unchanged, 78 increased, 132 cut.

Joke:

[They also removed the additional dialogue by Samuel L. Goldwyn.] Chicago Civic Shakespeare Society to present Fritz Leiber in eight Shakespearean plays at the Ambassador Theatre, starting with King Lear on Christmas night. “ Many of Shakespeare's original scenes and speeches, which have been missing from the play as hitherto presented in America, have been reinstated, in the hope that the story will move with greater continuity and directness as a result.”

Joke:

A bootlegger refused a customer's request to deliver Liberty Bell brand whiskey. “The customer bridled at this, and insisted that a vice president of his company had patronized the Liberty Bell liquor sellers, found the quality excellent, delivery prompt, and prices reasonable. 'That ain't the point,' said the bootlegger. 'Lookit - usin' the flag in advertising. Why, man, that's a federal offense.”