Tuesday, December 16, 1930: Dow 163.34 +0.0 (0.0%)

Assorted historical stuff:

Washington report: Pres. Hoover and Senate remain at odds. Senate has modified some Hoover proposals; particularly objected to is expansion of $25M drought relief to $60M and making it usable for buying human food, which administration considers a virtual dole. Rhetoric has become heated, with Hoover's accusation of playing politics at expense of human misery met by strong counterattacks, including Sen. Lafollette's resolution to “put human suffering in this emergency over consideration of wealthy taxpayers.” Prominent Republicans reportedly have been discussing drafting Coolidge to run again in 1932; this appears unlikely to go ahead.

[Reassuring commentary dept.]
Editorial: The NY Clearing House [assoc. of banks] is housed in a small building on a downtown side street that few know about. At times it has seemed antiquated and no longer useful. But every now and then, when a crisis erupts, this independent association of bankers plays a very important part in correcting the situation. Its recent measures [after Bank of US failure] are an outstanding example of how the Clearing House, aside from its everyday functions, acts to protect its members and to maintain banking on a sound economic basis.
NY Mayor Walker urges public not to withdraw funds needlessly from banks; “financial structure of the country and the city ... is organized to safeguard the deposits and savings of the public.”

Children's Bureau reports steady increase in child labor in 3 years before current depression.

National Economic League (organization of business leaders) reverses position on Prohibition, with 55% voting in favor of repeal.

Hoover dam construction work advanced about 6 months to March 1931.

[Says it all ...] Reminiscence of the 1907 panic: A reporter asked one of the most prominent brokers what started the panic and received the terse reply: “Somebody asked for a dollar.”

[Kind of amazing if “bucket shop” had the same fraudulent connotation it does now.] Lehman Brothers presented one of the first amateur sound movies at its annual dinner; seven “actors” from the firm took the parts of 42 different characters in a film entitled The Old Oaken Bucket Shop that “burlesques the course of an issue through the various departments of a banking house.”

Market commentary:

Market wrap: Stocks under pressure early, with many leaders hitting new bear market lows; pressure lifted after accumulating sell orders had been absorbed in the first hour, with good rebounds in leaders; late action irregular but renewed bear drives resisted. Bond market active, prices irregular but generally improved; US govts. strong; foreign mixed; corp. mostly higher. Commodities mixed; cotton down again to new season low on little news; copper prices back to about 10 cents.

Conservative observers warn against adopting short side, advise waiting to buy until market shows ability to rally “more than a day or so.”

Considerable selling reported from uptown locations served by Bank of US; depositors with funds tied up may be liquidating to raise funds.

Local banking situation seen improved; uptown branches that underwent heavy withdrawals last week were reported practically normal.

Short interest considerably larger based on demand in loan market and greater loan activity between brokers.

Weakness seen in copper shares, oils, banks and trusts, insurance shares, and Krueger & Toll.

NY traction (mass transit) shares up on tentative unification agreement of IRT and BMT into public or semi-private corp.

[Profound analysis dept.]
Otis & Co. see reason to believe “market is entering its final phase of concentrated liquidation”; liquidation forced by financial developments may run ahead of the fundamentals and “result in discounting the worst that lies ahead in the business depression.” Experience varies as to whether bear market low is reached before or after business hits bottom.
Jackson Bros., Boesel & Co. see signs 15-month bear market has reached “culmination phase” characterized by “concentration of unfavorable news items with attendant liquidation. ... There is a wealth of evidence ... the great bulk of liquidation needed to square away the credit structure has been completed.”

[Conservative optimism dept.]
F. Sargent, Chicago & Northwestern Rwy. pres., says doesn't expect immediate business upturn, but confident recovery will be in full swing in second half of 1931.
Fourth quarter earnings are expected to be unfavorable, but a number of cos. are expected to show increases in Q1, and general improvement is expected in Q2.
Harvard Economic Society sees better farm outlook for coming year due to lower costs and likely moderation of drought. “By 1932 the depression influences on agriculture are likely to be in considerable part spent.”

C. Teague, Farm Board member, says Board acted to stabilize wheat due to prospect of fall to 50 cents/bushel or lower, which would have caused disaster not only for farmers but for banks and merchants throughout agricultural states. Sees much better chances for successful stabilization than earlier this year or in 1929.

Broad Street Gossip: Many “blue but not bearish” traders have been buying good stocks, though that requires courage in this market. They know “certain stocks are selling far below their respective intrinsic values”; while they don't know how much further down the stocks may go, they are confident of “handsome profits in time. ... They are bulls on the country and are backed ... by the fact that after every depression of the past good stocks have ascended to new high levels.”

100 shares each of United Corp. (utility), Pennsylvania RR., Standard Oil of NY, and Westinghouse would have cost $52,625 at the bull market high, but can now be bought for $18,450, and yield 6.1%.

Dow made remained at post-panic low. There were no new yearly highs and 342 new lows.

Economic news and individual company reports:

BLS report on 15 major industrial groups with 4.7M employees finds Nov. drop in employment of 2.5% and payroll of 5.1%; decrease said mostly seasonal.

[Pretty dramatic drops.] New stocks and bonds listed on the NYSE in Nov. were $141.7M vs. $346.3M in Oct. and $607.4M in Nov. 1929; first 11 months $7.6B vs. $14.5B.

Editorial: The National Foreign Trade Council report on world trade for 1930 makes better than expected reading; total world export trade in 1930 will be down about 8% from 1929, with worst declines in countries producing raw materials. Canada and Japan were down about 10%. [Not sure what this is based on - these figures seem very out of line with the official ones reported previously.]

Fed. Reserve member banks weekly report for Dec. 10: loans on securities unchanged at $7.769B, “all other” loans down $91M to $8.656B. Time deposits were down $17M in the week, to $7.355B.

Savings banks in NY [I think these mostly served smaller accounts.] reported Nov. gain in deposits of $6.8M to $4.607B, reversing Oct. decline of $4.4M and vs. $4.247B in 1929.

Canadian report: Ordinary revenues for 8 months to Nov. 30 were $261.7M, down $57.5M from 1929; expenditures were $252.5M, up $12.6M. Largest decline was in customs revenues at $95.9M, down $34.7M. Wheat problem considered serious; in 1929, wheat and flour exports totalled $493.6M, or 36.2% of all exports; dramatic decline in wheat threatens farm earning power and export surplus.

Japan reportedly suffering increasing number of strikes as companies break precedent and lay off workers due to deep business slump.

General strike reported in main centers of Spain; report in London that King Alfonso had been deposed and a republic declared.

Argentina exports for first 11 months $567.2M vs. $886.8M in 1929.

Sugar down sharply to 1.30-1.40 cents/pound after Germany withdraws from worldwide producer's stabilization conference.

Armour & Co. notes lower demand and prices for most leading meat lines; “even smoked meats eased off.”

Call money remained at 2 1/2%, up from 2% previously, but observers expected the rate to ease shortly.

Movie:

[This is probably the most famous case of an actor failing to make the transition to talkies - Gilbert was a rival to Valentino as romantic lead in silent movies, then was a bust in talkies. It was rumored that he was deliberately sabotaged by Louis B. Mayer. This supposedly happened because, at Gilbert's wedding to Greta Garbo for which Garbo failed to show up, Mayer made a snide remark and Gilbert knocked him down.] Way for a Sailor - John Gilbert “still entirely unconvincing” in talkies; “his voice is rasping and he exaggerates both his pantomime and his reading of lines.” He is also miscast as a tough sailor battling with his companions, including Wallace Beery.

Joke:

“Applicant (to magistrate) - I want some advice about my husband, sir. He left me 25 years ago and I ain't seen him since.” Magistrate - Well? Applicant - what about me 'aving a separation?”