Wednesday, December 17, 1930: Dow 157.51 -5.83 (3.6%)

Assorted historical stuff:

[Strangely familiar.] Editorial: The Senate's fight with the President continues, unfortunately for the country; “many members of the Senate consider it the foremost duty ... of that body to put Mr. Hoover in his place.” Current dispute is on whether the administration will control the $116M emergency public works appropriation. Mr. Hoover has the weakness of “excessive sensitiveness, amounting at times to an intolerance of criticism.” He therefore made his unfortunate “playing politics” remark, leading to Senate retaliation. It's clear the public works spending should be under executive control; hopefully the Senate will “some day” return to its duty of public affairs.

[The Fed as Antichrist dept.] Rep. McFadden (R, Pa.), House Banking and Currency Committee chair., opposes nomination of E. Meyer as Fed Reserve chair. on grounds he has “international financial connections” and so putting him in charge of the Fed. would turn it over completely to this “international financial group.” McFadden also wants committee to investigate cause of 1,100 US bank failures this year.

Bank of U.S. branches opened Tuesday to allow depositors to request loans of up to 50% of balances; loans will be made next Monday. Thirteen small to medium banks in Carolinas closed, along with one in Iowa.

Washington report: Increasing sentiment in House against railways for opposing waterway development; “anti-railroad bloc” seen possible. Fate of $60M Senate drought relief uncertain. Federal employee wage raise likely. Extra session of Congress still seen unlikely.

Editorial by T. Woodlock: Solution for “wheat problem” must lie in combination of tariff, strictly controlled production, and more efficient “industrial” farming using fertilizer.

Dept. of Justice investigation of bread prices [why they haven't gone down as much as wheat] seen unlikely to seriously affect business of large baking cos.

US manufacture of toys this year will be about $100M.

The renowned old Mason and Dixon line between Pennsylvania and Maryland was run by the two famous British mathematicians in 1763-67. The original stones used as five-mile marks on the line were carved in England from limestone, and are still there, with the Penn arms on Pennsylvania side and Lord Baltimore's coat of arms on the Maryland side. [Some are still visible.]

Columbia Broadcasting system subsidiary obtains permit from Federal Radio Commission for experimental television station.

Chicago making plans to entertain at least 75M visitors at its “Century of Progress” exposition in 1933.

At the galleries: Museum of Modern Art presents works by US painters and sculptors; most distinguished pieces are “huge burnished aluminum 'Wrestler' done by Dudley Vail Talcott and an even more monumental plaster by Gaston Lachaise entitled 'Man, 1930'.” Roerich Museum exhibits 100 old master drawings from private collection of Prof. Frank Jewett, including drawings by Raphael, Tintoretto, Titian, and Correggio. Exceptionally fine jade collection of E. Kukutani of Shanghai to be sold Dec. 17. ['Wrestler' was shown at this exhibit in 2001. And, a week ago, Christie's sold a single Raphael chalk drawing for $48M.]

Market commentary:

Market wrap: Stock liquidation broadens, with bad breaks throughout the list. “Brave attempt” at early rally wiped out by fresh flood of liquidation in late morning. Bond market generally weak; US govts. firm and highest grade corp. issues steadier. Commodities mixed; Farm Board hard pressed to maintain wheat support.

Particular weakness in banks and trusts, oils, rails, utilities.

[Profound analysis dept.]
No news seen to account for the decline, which was “generally attributed to the desire of additional holders to get out of the market entirely at least for the time being.”
Baar, Cohen & Co.: There's currently so much bad news and uncertainty that “the big moneyed interests ... are husbanding their resources to be ready to take care of any possibilities or eventualities that may arise. If new uncomfortable situations develop, therefore, the 'powers that be' are in position to handle them. ... On the other hand, if most of the fears at this time are groundless, those reserves which are being held in readiness will be free to enter the market. That is why we think we are very close to the bottom, and would rather buy than sell stocks here.”
Broad Street Gossip: Stocks have been declining for 15 months, in the most severe downtrend in Street history. The fourth quarter has been particularly bad; there have been few rallies, and the Dow has lost 81.75 points since Sept. 10, while even the Dow 40-bond average is down 4.68 points since Oct. 1. “With hundreds of stocks selling far below their respective book values and giving very high yields, this is no time to sell.”
Precedent indicates we're in “culminating phase of the prolonged depression”; conditions are similar to those in 1907 and 1921 that “marked the climax of the dislocation in business and securities.”

Market observers again are looking for “selling climax” of sharp declines on high volume.

Foreign liquidation of securities said heavy in recent sessions; attributed to European political unsettlement and unwarranted rumors concerning banking conditions.

Brokers reported increased investment buying on a scale (gradually) down. This is expected to increase due to year-end dividend and interest payments.

Bond weakness attributed to bank liquidation, tax selling, selling to protect stock accounts, fear, and lack of usual buying from life insurance cos.

[Another interesting data point on banks.] In past two weeks, Fed. Reserve member banks have increased holdings of govt. securities by $51M and reduced other securities by $89M, probably to “fortify their liquid positions.” However, banks don't appear to be pressuring customers to reduce loans on securities.

Agriculture Dept. notes business has declined from peak as much or more as in other major depressions of past 50 years. Sees seasonal improvement in many lines of business following holiday season possibly developing into general upward swing, but expects slow and irregular recovery.

Short interest has reportedly increased over the past week or two, but many of the big professional bears are cautious or have moved to the sidelines.

[I would have lost big on that one ...] Canada Dry cut annual dividend rate to $3 from $5 due to sales and profit drop in current quarter; stock sold off sharply, other soft drink producers also weak including Coca-Cola and White Rock.

[Pretty sobering ...] Highest-rated stocks on the Berlin market now have dividend yields of 10%-12%; “lack of confidence” blamed.

Dow made new post-panic low. There were no new yearly highs and 403 new lows. All three Dow Jones stock averages, as well as the Dow 40-bond average, made new 1930 lows. Many majors hit multiyear lows, including US Steel, New York Central, Texas Corp.

Economic news and individual company reports:

[The percentage decline vs. 1929 is actually improving here, mostly because at this point in 1929 the economy was already down substantially.] Rail freight loadings for week ended Dec. 6 were 787,173 cars, up 86,088 from prev. week and down 146,136 or 15.6% from 1929 week.

Commerce Dept. reports Nov. merchandise exports $289M vs. $442.3M in 1929, imports $204.7M vs. $338.6M; first 11 months exports $3.568B vs. $4.815B, imports $2.853B vs. $4.090B.

[Green shoots dept.]
GM reports sharply higher Nov. sales to dealers; 57,257 cars and trucks, vs. 28, 253 in Oct. and 60,977 in Nov. 1929; attributed to resumption of Chevrolet manufacturing following model changeover.
Recent advance in steel prices reported holding well; price “shading” (discounting) has almost disappeared.
Large department store sales have apparently been holding up well, although profits are likely to be down due to constant inventory write-downs.

Farm Board gives no indication of resuming cotton stabilization in spite of decline to new lows; attributed to belief prices are near bottom.

Spain declares martial law; latest revolutionary movement apparently fails.

Silver down to new record low of 31 5/8 cents; Chinese currency down sharply.

Bank of France continues support of sterling.

“Ivar Krueger, Swedish match king,” to lend Poland $30M at 7% in return for extension of Polish match monopoly to 1965. Price of matches to be raised 25% and all lighters subject to special tax to service the loan.

World sugar producers conference ends with “gentleman's agreement” to restrict production and exports, excluding Germany.

Crude rubber consumption by US mfrs. in Nov. was 23,479 tons vs. 27,659 in 1929; stocks of crude rubber in mfrs. hands ending Nov. 189,925 tons vs. 92,219.

Companies reporting decent earnings: National Power & Light.

Universal Pictures increases 1931 production budget to $18M from $15M in 1930.

Joke:

“Caller - When is the best time to see Mr. Smith? Stenographer - That's hard to say. He's grouchy before he has his lunch, and afterward he has indigestion.”