Note: For those of you in the New York area, the New York City Junto will be having a lecture and discussion Thursday evening featuring Amity Shlaes, author of The Forgotten Man: A New History of the Great Depression. I haven't read the whole book yet and have had a mixed opinion on what I've read so far, but there might be some interesting discussion. The NYC Junto is a free monthly discussion group sponsored by famed speculator (his term) V. Niederhoffer - the format is a short intro talk by the speaker, then a long period of pretty free Q&A. Click here for information.
Assorted historical stuff:
[Note: Audit an agency responsible for bailing out a large embattled sector of the economy? That's crazy talk!] Editorial: “Without the slightest wish to embarass the Farm Board, ... an accounting of its activities is due and owing to the taxpaying public.” Board has gone through $250M of appropriated $500M so far and failed badly at all its assigned objectives; “No public servant has carte blanche to use huge sums of money and give no accounting therefor.”
[Note: I thought this was an urban legend ... ] Metropolitan Life Ins. Co. reports death rate for first 10 months of 1930 was 8.3% lower than 1929.
[Note: Well, I guess even a maniacal dictator is right twice a day ... ] J. Stalin, Communist leader, says present world depression will get worse; one of periodic crises that mark progressive decay of capitalism; sees capitalist countries drifting surely toward war to crush weaker competitors and control markets; calls League of Nations impotent, predicts Versailles treaty can't endure.
Washington's current main interest in Communism is in reports from Moscow of melodramatic trials of anti-revolutionary plotters. “Curiosity is expressed as to the reason no American interest was named in the purported confessions of the Moscow plotters.”
Reichstag expected to approve Breuning financial program of 26 laws decreed using semi-dictatorial powers, due to reluctance to face new elections following large Fascist gains in municipal elections Sunday. Berlin stocks rally.
Interior Sec. Wilbur calls for conservation of nation's resources; criticizes waste of oil, gas by overdrilling; points out that in Kettleman Hills area of Calif. alone, 450M cubic feet of gas is wasted daily, making the total yearly waste of energy over twice the expected output of Hoover Dam. Conservation rules are currently subject of several ongoing litigations in process of appeal.
Much speculation on whether Congress will manage to pass needed legislation and avoid an extra session, as strongly desired by leaders of both parties. Little new legislation was proposed by Cabinet members - Labor Sec. Davis requested immigration restriction, while Postmaster Gen. Brown wanted higher rates. Some surprise at Pres. Hoover's determination to send World Court protocol to the Senate, which may provide an ideal excuse for “days and weeks” of debate.
[Note: Sheer Genius dept.] Champagne produced by Spanish chemist from Cuban sugar cane said to be “equal in every way to the French vintage.” Lord Inchcape, shipowner, predicts time when ships will be propelled and lighted by wireless transmission of power.
Shimizu tunnel completed through “mountain backbone of Japan”; at over 6 miles, is longest rail tunnel in Asia, will cut Tokyo-Niigata travel time by 4 hours.
Proceeds from Army-Navy football game to be played at Yankee Stadium Dec. 13 will be donated to Salvation Army Relief Fund; close to $1.3M expected.
New School to present unusual finance course by F. Vom Saal developing principle that “average investor can and should train himself to become his own investment counsel.”
Mother Jones, radical and one-time leader of United Mine Workers of America, dead at 100.
Amusing story of Hetty Green [died 1916 at 81, one of world's richest women, subject of many rumors of miserly eccentricity] blackmailing a newspaper publisher who had printed a story saying she was holed up in Hoboken to receive suitors for marriage. Mrs. Green showed up at the publisher's club the next day carrying some of the publisher's love letters stolen by his valet and threatening to read them aloud to all comers. They quickly came to an agreement, though Mrs. Green kept the letters, since “Down in Wall Street I have learned that it never hurts to hold a little collateral!”
Market commentary:
Market wrap: Stocks firm on very light trading, with traders awaiting Pres. Hoover's State of the Union address to Congress. Bond market also dull; US govts. firm, foreign govts. show rallying tendencies; domestic corp. mostly lower.
Conservative observers confident, believe recent reaction only of technical proportions; recommend buying standard stocks “on a scale” during setbacks.
“'We just have to grin and bear it,' remarked one trader to another. 'I can bear it all right,' replied the other ... 'but grinning is out of the question.'”
Note: It's interesting to see how much of current commentary is similar to the next two items, i.e. looking for patterns in past recessions and expecting them to more or less mechanically repeat.
Car industry observers see striking similarities with last serious depression in 1920-21, though decline has been more severe this time. Based on this, see Nov. and Dec. as turning point; most authoritative estimates have production in 1931 Q1 about 15%-20% below 1930, but “even on this conservative basis” production would nearly double from current quarter; possible sharp recovery in spring if pattern holds. This year's production will be lowest since 1923; Oct. production is at 1916 levels, which “cannot long continue to supply a normal present market.”
Harvard Economic Society says business declined in Nov., and is likely to continue down in immediate future, but “experience during past depressions indicates that the decline is nearing its end, and that recovery will begin in the first half of next year and probably in the first quarter.”
Economic news and individual company reports:
Western rail executives make long list of requests to ICC for relief of current difficulties, including postponement of lower grain rates for at least a year, increase of some long haul rates, support of regulation on motor transport, and requiring waterway transport to be profitable. Claim that their operating profits fell short of “fair return” defined in law even in record year of 1929.
Fed. Reserve member banks weekly report for Nov. 26: loans on securities down $77M to $7.761B, “all other” loans down $86M to $8.766B. Investments held by banks are up $400M in the past 8 weeks and $1.4B since start of Oct. 1929.
Fed. Reserve reports department store sales up 9% in Oct. over Sept., more than the usual seasonal increase, but down 8% vs. Oct. 1929.
Oct. meat sales up 4% from Sept. but down 18% from 1929.
Agricultural exports in Q3 were $423.2M vs. $592.1M in 1929; imports were $401.8M vs. $688.0M.
1930 Automobile Salon opens at Commodore Hotel; 90 “motor cars de luxe” on exhibit, featuring “artistic designs, beautiful color schemes,” new safety and comfort features, and the “maximum in luxuriousness.”
Many states and cities will seek to increase gasoline taxes; estimated total gas taxes in 1930 are $515M vs. $431M in 1929.
Four banks close in Ill. and one in Conn.; largest was First Nat'l Bk. of Marion with $2M deposits, one of largest and oldest banks in coal mining area of Ill.
[Note: These match monopolies were no joke. According to John Train's account, some countries had squads of agent provocateurs roaming the streets asking people to light their cigarettes. Those who offered a non-monopoly match were subject to large fines. ] Ivar Kreuger to negotiate loan to Italian govt. in exchange for match monopoly.
England continuing to experience drain of gold to France, “slow but steady” capital flight. French experts suggest extension of credit to Bank of England by Bank of France; issuing British loans in the French market seen impossible due to “demoralization of the market.”
Canadian report: Index of employment Nov. 1 was 112.9 vs. 116.2 Oct. 1 and 124.6 Nov. 1, 1929. Oct. exports $84.3M vs. $121.4M in 1929; imports $76.2M vs. $116.3M. Trade boards “swamped” with inquiries from US and British industrial cos. on establishing Canadian plants after Sept. “emergency tariff.”
Companies reporting decent earnings: United Light & Power, Electric Power & Light, Lambert, US Pipe & Foundry (gas and water pipe, benefitting from easier municipal financing), De Beers, Bourjois (cosmetics).
Prohibition joke:
“A candidate for office ... was confronted by a woman, a strong advocate of prohibition. 'Now,' said the lady, 'it is vital that you express your views on prohibition; are you dry?' 'Madam,' replied the candidate, 'nobody knows how dry I am.'”
Film:
The Lottery Bride, operetta produced by Arthur Hammerstein, set in Norway. Designing villain interferes with young couple in love. The girl “seeks Nirvana in becoming a 'lottery bride,'” and by sheer coincidence is matched with her lover's brother. Lover happens to be there when she arrives. Villain arrives later as captain of a dirigible bound for the North Pole. Happy ending at the Pole, “on some of William Cameron Menzies' most exquisitely carved ice blocks.”
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