Assorted historical stuff:
[Strangely unfamiliar dept.] Pres. Hoover defends ending the 1% tax reduction, since it would cause another budget deficit in 1932: “I am confident that the sentiment of the people is in favor of a balanced budget. ... When we stop to consider that we are progressively amortizing our public debt, and that a balanced budget is being presented for 1932, even after drastic writing down of expected revenue, I believe it will be agreed that our government finances are in a sound condition.”
Congress seen acting quickly on Pres. Hoover's proposed measures for unemployment and drought relief; may also tackle immigration restriction and capital gains tax modification. Other major proposals will have to wait at least until the next session.
Senate seats James Davis, newly elected Republican of Penn., in spite of dispute over campaign spending; Senate as a whole apparently “no longer enamored with the idea of blackballing successful aspirants whose ... election may have entailed large expenditure unless there is a clear case of wrong doing.”
[This actually sounds like a pretty good idea.] Editorial by T. Woodlock with proposal from Public Utilities Fortnightly for utility rate regulation: utilities would be allowed to keep any profits made each year, but rates would be adjusted each year based on profits the previous year, to move closer to a “fair return” on investment. This would give incentive for lower costs over time; Potomac Electric Power Co. has been regulated this way since 1924, and rates have gone down from 7.5 cents/KWhr to 4.7 cents in that time.
Reichstag holds first session “amid intense excitement” and strong police guard. Communists protest police presence and shout “starvation minister” when Finance Min. Dietrich starts speaking. Little accomplished. Extremist parties may test strength in motion to set aside Breuning austerity program, but financial circles are optimistic; Berlin stocks were up.
Editorial: Disarmament Commission of the League of Nations has been a failure. The Versailles treaty promised that all the parties would reduce armaments; “Germany, disarmed, does not share the complacent indifference to these promises of her armed neighbors and the US. ... Twelve years after the peace was made and nearly eleven years after the League was born, disarmament has got no further than preliminaries to a conference about it.”
Mexican Congress gives Pres. Rubio extraordinary financial powers to deal with crisis.
H. Deterding, managing dir. of Royal-Dutch Shell [AKA the Napoleon of oil] responds to Moscow engineer's trial naming him as “criminal”; says trials intended to cloak imminent failure of Five Year Plan, shift blame from dictators in Kremlin; claims Soviet would fall in 3 weeks if deprived of credit and world markets.
Belgian businessmen suggest Belgium and Holland join economic and customs union being formed by Norway, Sweden, and Denmark.
Editorial: Decline in farm prices hurts the 22% of the population involved in farming, but helps the buying power of the rest of the population. While it wouldn't be good for the current low prices to be permanent, they should help start a recovery that benefits all, including farmers.
Copper industry believes antitrust laws should be modified to allow companies to cooperate in controlling production; cite bad consequences of drastic fluctuations in price, including more wasteful production, pressure on wages, and difficulties of users in guessing when to buy.
[Sheer Genius dept.] Pilots have been providing an unofficial lifesaving service - on clear nights, they can see fires from far away. “If the fire is unnoticed by persons on the ground, the pilot simply opens his engine wide” and dives at the burning building, “pulling up into a climb when he has come as close to the ground as possible with any degree of safety. He repeats this until the roar of his engine has aroused the neighborhood.”
United Aircraft begins first direct New York - Chicago air service, completing transcontinental New York - San Francisco route. To use new Ford tri-motor planes with 135 mph cruising speed. First plane carried 5 passengers and 500 pounds of mail.
[Add some zeroes dept.] New York State faces deficit of at least $3M in next budget according to report by Comptroller Tremaine to Gov. Roosevelt.
[Strangely unfamiliar dept.] The Rockefellers (John D. Sr. and Jr.) donate $1M to New York City's Emergency Employment Committee, bringing total to $4.133M. Between 13,000 and 14,000 men and women have already been given jobs.
Market commentary:
Market wrap: Stocks worked lower in dull trading on mixed business news. Bonds moderately active; US govts. dull, slightly lower; foreign govts. generally firm; corp. mostly higher. Commodities weak.
Observers remain conservatively optimistic; believe standard stocks can be bought on setbacks, though market likely to move in narrow range for some time.
[Ay Chihuahua! dept. Also note the decline in total security loans isn't nearly as dramatic as that in brokers loans.] Dull trading confirmed recent opinion on thoroughly liquidated position of market. Most comprehensive estimate of total loans on securities by Fed Reserve is currently $10.5B vs. $17B on Oct. 4, 1929. Figures on security loans suggest “most of the long road toward reestablishing the market on a sound basis has been traveled.”
[Note: Major banking crisis is in process of erupting.]Comptroller of the Currency J. Pole says general banking situation hasn't changed much in past year; metropolitan banks generally not a problem, but country banks having a difficult time in some cases.
Considerable importance seen in persistent recent support for pivotal issues; attributed to “important industrial and financial interests” that were out of the market for 7 or 8 months.
Market seen mostly in professional hands, with little outside interest; good-sized short interest remains outstanding.
Yesterday's rail freight report considered disappointing; 17.6% drop from 1929 was largest since Oct. 18, and drop from 1928 was 24.2%, largest this year.
C. Gordon, Bank of Montreal pres., says Canada less affected by depression than almost any other country; “In this virile country of Canada with its abounding resources there can be no permanent depression.” Sees benefit from turn to domestic markets, believes Canada will lead recovery when the turn comes.
Christmas shopping optimism: Christmas club savings this year will total a record $600M-$700M, to 9M depositors. Stores on Fifth Ave reportedly as crowded as a year ago.
Industries generally free from overproduction: steel, chemicals, food, tobacco, electric power, meat packing, shoes.
Agriculture Sec. Hyde sees remedies for farm depression as production adjustment, national land use policy, organizing cooperative groups of growers for collective action, cutting farmers' tax burden, and improving rural credit conditions.
Electric Power & Light stock has declined from a yearly high of 103 1/2 to 37 1/2, even as earnings increased from $2.79/share in 1929 to $2.94 this year.
Economic news and individual company reports:
Pres. Hoover sends Congress 1932 fiscal year budget of $3.933B, up $221M from prev. year; 1% income tax reduction won't be continued in 1931.
US electric production in Oct. was 8,161 GWHr, down 6.3% from 1929. Avg. daily production in Oct. was 2% over Sept. vs. usual 3.5% seasonal rise. However, earnings are running 1%-2% ahead of 1929 due to successful campaign to increase domestic and commercial use.
US Steel ingot production for week ended last Monday was at 45% vs. 45% prev. week and 68% in 1929; independents were at 35%, vs. 37% and 65%; industry total was 39%, vs. 40% and 66%. Carnegie Steel (subsidiary of US Steel), Bethlehem, and others raise prices of steel bars, shapes, and plates for Q1 delivery by $1/ton; price rise came sooner than expected. Scrap prices continue to weaken.
Payments by US Veterans Bureau for year ended June 30 were $452.2M, up $19.4M from prev. year. Of this total, payment to disabled World War veterans was $155M; as of June 30, these payments were being made to 279,539 veterans, up 17,401 from prev. year.
[Add some zeroes dept.] Soviet oil production in year ending Sept. 30 was about 120M barrels, up 27% from prev. year.
Number of shareholders in 113 miscellaneous industrial cos. (chemical, drug, food, leather, paper, rubber, tobacco) was 382,975 on Mar. 31, 1930 vs. 268,865 in 1929 and 178,524 in 1925. Most popular: General Foods, American Tobacco, du Pont, Armour, Drug Inc., Texas Gulf Sulphur.
Rail equipment cos. organizing one or more finance cos. to finance increased equipment purchase by railroads.
State with the largest highway paving program in 1930 was Iowa, with 1,040 miles.
Companies reporting decent earnings: Hershey Chocolate.
Political joke:
“'No,' I said to him, 'I can't let you have 50 cents, because I'm broke and was going to ask you for it myself. And I haven't got any old clothing. I'm wearing all I've got. And I'm in such a tough way that I don't see how I can help you at all.' 'Well,' said he, 'I was going to ask you to vote for me for the House.' 'I can't,' said I. 'I'm running myself.'”
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