September 26, 2009

Friday, September 26, 1930: Dow 217.75 -4.35 (2.0%)

Assorted historical stuff:

Sec. Of State H. Stimson addresses NY State Republicans, says Hoover administration is most effective of any president in recent years, having fulfilled 34 of 35 campaign pledges. Says Hoover not responsible for depression, which has worldwide and and deep rooted causes; calls Hoover administration's actions in response “prompt, scientific, and courageous,” and serving to “greatly palliate what might otherwise have been a most disastrous situation.” Praises flexible tariff provision as eliminating politics and lobbying in tariff making. Also commends London Naval Treaty and Farm Board.

Fascist leader Hitler testifies at treason trial of three young officers accused of spreading fascism in the Reichswehr (military). Stresses that he intends to gain power in Germany by legal means; however once in power would employ every means including illegal ones to scrap treaties imposed on Germany. Believes that after two or three more elections, “a National Socialist uprising must come.” Informs court he is a citizen of no country; native of Austria but never obtained German citizenship due to political activities. German authorities in New York continue to believe Social Democrats will form a successful coalition excluding radical parties.

Lord Rothermere, London Daily Mail and Evening News publisher, says German Fascism is bulwark against Communism, will lead to “rebirth of German nation.”

England is one of few countries where birth-control information is freely and legally given out. Sir W. Lane, eminent physician, favors greater effort to spread this information to the poor. Social workers believe effort so far is main cause of recent decline in England's birthrate.

T. Woodlock on rail regulation: “We cannot have a successful hybrid between private enterprise and governmental operation – it must be one thing or the other.”

Cotton mill owners vote to end night (9PM-6AM) work for women and children starting March 1, 1931.

Production of the RCA Radiotron tube uses 57 of the 91 elements known to man, most used of any product currently made. Many materials used in making radio tubes were scientific rarities until demands of radio engineers made them commercially available.

Market commentary:

Market wrap: Stocks subjected to further heavy selling; much of the lists hit new lows for the current reaction. Stocks making 1930 lows included Radio, Gillette, and J. I. Case. Other stocks under pressure included both trading favorites and majors including Vanadium, United Aircraft, US Steel, GE, Johns-Manville, Standard Oil NJ. Banks and trusts, oils down sharply. Traction (mass transit) shares up on unification reports. Selling continued through the day, interrupted only by minor rallies, and picked up steam in the final hour. Bond market strong and active; Dow 40 bond avg at new 1930 high of 97.64; govts. firm, convertibles down.

Unconfirmed rumors have been common recently; “Speculative liquidation usually is accompanied by rumors of drastic developments pending. The general fears arise from the fact that the market moves downward under a heavy supply without much explanation for the selling.”

Recent action of certain stocks “sponsored” by stock pools indicates the pools may be giving up and liquidating.

Investment trusts (similar to mutual funds) have found it hard to take advantage of the recent market decline due to being almost fully invested already. Public has become disenchanted since they had the “curious” idea that investment cos. could “read market movements in advance and profit … by the ups and downs”; they possibly may have gotten this idea from brokers selling the trusts. As a result, many investment trusts are selling at large discounts from their net asset value.

European stock markets are echoing the recent steady liquidation on the NYSE.

AFL Pres. Green sees unusually good Sept. improvement in employment over July and Aug. based on trade union reports from 24 cities.

P. Clapp, Natl. Electric Light Assoc. director, says conditions in electric power industry very favorable, excellent prospects for uptrend in power output.

J.M. Keynes: “Course of interest rates will be steadily downwards and prices of first-class bonds steadily upwards.”

Economic news and individual company reports:

Ford and GM have been doing better than rest of the car industry; sales for first 7 months are down 14.1% from 1929 vs. 48.5% decline for rest of industry.

Fed. Reserve reports money in circulation in week ended Sept. 24 down $23M to $4.436B. Fed. Reserve member banks in NY city report brokers' loans unchanged at $3.222B vs. $6.761B in 1929, “all other” (commercial) loans down $15M to $2.414B.

Dow 8 iron and steel products avg. Sept. 23 was $45.46 vs. $45.52 last week, new low for 1930. Steel scrap activity down last week, prices almost unchanged.

US Steel average employees in first-half were 220,591, down 1.9% from average for all of 1929; “management ... has made every effort to keep the organization intact during the business depression.”

Tax joke:

A Lebanon man offers his simple formula for income tax. Dependents: one blonde wife, a sedan car, three goldfish and two children. Multiply grandfather's age by 6 7/8, subtracting your telephone number. Add hat size and subtract license plate number. With these preliminaries done, rest is easy. Deducting $1,000 for keeping wife a blonde the whole year, divide the remainder by number of lodges belonged to, multiply by number of electric lights in house, and divide by collar size, giving gross income, which, after dividing by chest measurement and subtracting blood pressure, leaves net amount owed to government.


A scene from Fine and Dandy, a musical starring Joe Cook: “A life-size steam shovel is in the center of the stage. Behind it on a platform is Joe with a saxophone. When he begins to play the saxophone ... a chimpanzee in a palm tree hits a man on the head with a cocoanut, an Indian shoots the steam shovel operator with an arrow, and the steam shovel operator drops the theatrical equivalent of a ton of ashes and crockery on the head of ... Dave Chasen, who completes the concordance ... with a sweet tinkle of his triangle.”

+ The Boring Stuff:

Rep. Hamilton Fish (R., NY) reports House committee investigating Communist activities and propaganda in the US to start hearings at 2PM; those subpoenaed include W. White, NAACP secretary; M. Olgin, The Morning (Jewish) Freiheit editor; F. Pease, Hollywood Technical Directors Assoc.; and brokers possibly involved in Russian short sales of wheat. Agriculture Dept. says solution of Russian shortselling problem will be left to CBOT, which is said ready to cooperate.

Editorial: Wheat for September delivery went from 76 3/8 cents on Sept. 20 and 82 1/8 cents Sept. 24; main cause of this wild fluctuation was the scare publicity that Russia would flood the world wheat market. This hit the already jittery futures market like “a cry of fire in a crowded theater.” We should consider using the prohibition method of padlocking doors on those who spread such erroneous news. On sober examination the Russian wheat situation isn't that scary; while the crop this year is larger, with an estimated exportable surplus of 56M bushels, world import needs are 736M, and European stocks about 200M less than a year ago.

Market letters from leading brokers generally cautious, recommend waiting to see whether Wednesday support level above Aug. lows would hold. This would be significant technically, being “a triple bottom on a gradually ascending scale,” indicating a definite change of trend.

Many market observers discouraged by recent action, keeping customers on sidelines; a few predict a technical recovery but warn against trying to catch it.

Those who advised the purchase of stocks because 'they are cheap' were right. Those who advised the sale of stocks because 'they were destined for lower levels' also were right. But the latter seem to have had a little the best of it so far.”

Continued stock weakness in the face of improvement in steel, merchandising, and other commercial activity has generated theory that the economy may change before the market does, as it did last fall.

Junior bond demand continues; US Steel 7% preferred hits record of 150, yielding 4.67%, with many other preferreds making new highs; avg. of 10 second-grade rail bonds hits new yearly high.

Editorial: Railroads should be allowed to compete with Panama Canal shipping by charging low rates for coast-to-coast freight, with higher rates to interior points, as long as the coast-to-coast rates are still profitable.

J. Stone reports results of Farm Board survey concluding that price trend for wheat over the next few years will be down.

Commodities mixed. Grains dropped sharply from early rally to close up slightly. Cotton down moderately to new lows. Copper holds at 10 1/4 - 10 1/2 cents.

First 21 rails report Aug. net operating income $23.533M, down 28.1% from 1929 and down 19.5% from 1928.

Rails making progress in cutting maintenance expenses to match lower revenue; percentage of revenue spent on maintenance has been declining each month since March, and in July fell below the 1929 level for the first time this year (32.17% vs. 32.76%).

J Price, Pres. Newsprint Institute of Canada, resigns; claims members unwilling to abide by the terms of membership agreement. Resignation, together with new alliance of Hearst and Canada Power & Paper seen presaging new price or on newsprint.

New York Stock Exchange seat sold for $275,000, down $25,000 from previous sale.

American visitors to Britain in first half were 58,683, up about 4% over 1929.

Company reports since July 1: 256 companies reported higher earnings vs. 1929 and 522 lower; 1221 dividends unchanged, 61 increased, 127 cut.

Two nervously awaited dividend meetings turned out better than expected; Anaconda Copper only cut from $3.50 annual rate to $2.50, US Indust. Alcohol maintained $6. Many other copper producers have cut or omitted dividends.

Autostrop patent suit against Gillette to be heard in US District Court in Dec.

McCalls (magazines, sewing patterns) stock about 39, yield 6.5%, 1929 earnings $3.76/share, first half net $2.26/share vs. $2.23 in 1929.

September 25, 2009

Thursday, September 25, 1930: Dow 222.10 -4.65 (2.1%)

Assorted historical stuff:

Pres. Hoover calls for program to stimulate homeownership; says finances of homebuilding are inadequate, easier to borrow 85% on a car than a home, and home loan generally is at higher interest rate; also needed is safeguarding of home areas from “commercial invasion and destruction.” Doesn't want federal govt. to build homes directly, but believes adequate home-building program would be very valuable.

R. Spreckels, Pres. Sugar Institute of America, criticizes govt. view that “competition is the life of trade” as not applicable to current conditions where production capacity for all commodities is far above current consumption levels. Calls for govt. regulation of competition as was done during World War.

German update: more confidence seen; stocks and bonds rally; some reports Fascist leader Hitler to be tried for treason.

Archer Daniels Midland castor bean plant in Toledo ordered closed following two-year fight by 3,000 people claiming its operation caused asthma.

Goodyear constructing giant dirigible for US Navy; length about 800 feet, total of 6.5M rivets.

Experts debating whether “killer sharks” of Twofold Bay, New South Wales are using reason. Sharks drive whales into the bay, where whalers eventually harpoon them and reward sharks with “choice morsels ... such as liver”; sharks keep guarding mouth of the bay so whales can't escape.

Market commentary:

Market Wrap: After modest extension of Tuesday's rally in the first hour, stock prices collapsed abruptly toward noon, in spite of good business news from steel, GM, and retailers. Break attributed to nervousness over international situation and further weakness in wheat. “Convulsive selling” broke out in the general list, with “perpendicular drops” in trading favorites including Vanadium and United Aircraft; many stop-loss orders triggered. Weak rally was followed by another wave down. Market improved in last hour, possibly helped by sharp rally in wheat prices which made up early losses and closed higher. Major shares closed above day's lows. Bond market active, generally strong except speculative issues; German govts. rally; convertibles down sharply.

Rumors going around: Revolutions in S. America; disturbances in Europe; Russians moving bearish activities from grain markets to stock exchange (informed observers dismissed this as absurd); some stock pools forced to disband, particularly in Vanadium; Fed. Reserve advised banks to liquidate some loans on stocks.

Gasoline price cut of 2 cents/gallon by Standard Oil NJ seen as larger than expected seasonal cut, possibly discouraging for industry if it spreads to rest of US.

Market drop since Sept. 10 has exceeded even most bears' expectations; “Whether or not the market is destined for lower levels, no one can say, but many stocks are again on the bargain counter.”

A. Sloan, Pres. GM: “Business has turned a corner and is now on a slow but sure return to normal conditions. ... The automobile business has reached the bottom of the cycle ... This is apparent, and not only in the automobile business, but in all lines of industry.”

S. Reyburn, Pres. Lord & Taylor, says conditions in US generally improving, record Sept. sales in Minneapolis territory. Woolworth has also been improving.

D. Friday, prominent economist, sees modest recovery this year, decided improvement in 1931, and 1932 probably another record year.

Bank of Montreal monthly Canadian business summary: growing confidence business will improve, Canadian tariff revision expected to increase industrial activity.

Dr. F. Parker of Wharton School addresses Amer. Assoc. of Personal Finance Cos., says they have a chance for public service in the current trying times: “To reply that ... lack of current earnings power on the part of a prospective borrower immediately makes him a bad risk for personal finance companies is not a satisfactory rejoinder, for a credit policy worthy of the name should provide credit when credit is needed by the borrower not when it is deemed most profitable and expedient to be extended by the lender.”

Economic news and individual company reports:

Fed. Reserve reports total industrial production unchanged from July to Aug., contrary to usual seasonal rise.

Iron Age reports small but sustained improvement in iron and steel demand, firmer prices.

Rail freight loadings for week ended Sept. 13 declined 16.2% vs. 1929, worst decline since Aug. 23 (17.2%); decline of 15.1% vs. 1928 was worst this year.

Class 1 rails had $468.3M in capital expenditures in first half, up $118M over 1929, although rail traffic in that period was lowest since 1924.

Electric output for week ended Sept. 20 was 1,706 GWHr, down 3.7% from 1929.

Companies reporting decent earnings: American Can, American Tobacco (Lucky Strike cigarettes), McKeesport Tin Plate, Gleaner Combine.


“Judge - Were you sober at the time this accident occurred? Reckless - As sober as a judge, your honor. Judge - Six months.”

Appearing at the Palace (vaudeville):

Marion Sunshine does impressions of Broadway people ranging from “temperament of Lenore Ulric to the boop-boop-a-dooping of Helen Kane,” also does a good Maurice Chevalier. Also appearing are some of “Broadway's stars of the future” including Southern dancing pair Vilma and Buddy Ebsen.

+ The Boring Stuff:

Rep. Bacon (R., NY) criticizes employment of “cheap alien labor,” suggests to White House that to further Pres. Hoover's desire to prefer US citizens and ex-soldiers on $315M public building program, govt. construction contracts should require this when possible.

Editorial: Grain Stabilization Corp. is now borrowing $30M from banks using its accumulated 60M bushel wheat surplus while attempting to “lend … a business aspect” to their operations which in fact have been disastrous. Banks now have a first lien for $30M on wheat that cost $70M to buy. Farm Board has in total spent and committed $240M and is asking for more; total cost of the “stabilization saturnalia” is unknown but sure to be colossal.

Govt. announces three steps aimed at stabilizing farm commodity prices; price declines seen as economic weak spot, so remediation is “attack upon current depression at its very base.” Fed. Intermed. Credit Banks to give loans on cotton of 9 cents/pound or 75% of market value, whichever is higher; Cotton Stabilization Corp. to maintain currently held 1.3M bale surplus; Fed. Reserve banks to inform communities of resources and credit facilities available to help market crops.

Grosvenor Jones, Commerce Dept. division chief, blames recent sharp commodity deflation on recent shift away from gold standard by some countries [reasoning was convoluted but seemed to involve countries having to pay in actual gold instead of currency]. Says economic structure sound; unknown if period of adjustment near end, but certain that “necessary adjustments will be made and that industry and trade will then resume their onward march.”

Chart students encouraged market met support at expected level; had advised against pessimism as “theoretical support points” approached; advise reserving judgement “until the standard stocks indicate conclusively the next move.”

Market technical position seen improved following increased short-selling and some liquidation by traders.

Increased foreign buying of US stocks reported in past few days; seen as seeking safer investments because of conditions abroad.

Conservative observers continued to advise staying on sidelines, using upturns to reduce long positions.

Vanadium has become a favorite bear target; heavy selling began early in the day, well before spreading to the general list.

Commodities mixed. Grains fluctuated widely; wheat broke to lowest levels since 1907 before rallying to close higher; corn and rye also closed higher. Cotton was irregular, dipping slightly to new season lows but closing almost unchanged. Copper offered by some smelters at 10 1/4 cents though most producers hold at 10 1/2.

Steel news: Production industry-wide in week ended Monday was 60% vs. 58% prev. week; last year production declined 2% to 83%. US Steel was 66% vs. 65% prev. week; independents were 56% vs. 52%.

Aluminum production likely to decline this year for first time since 1921; new uses including building not enough to offset declines, particularly in transportation.

July operating income for 103 telephone cos. was $20.315M vs. $20.774M in 1929; first 7 months was $157.3M vs. $159.2M.

Gasoline in Chicago resale market down slightly to 6 1/8 - 6 1/2 cents/gallon vs. 6 1/4 - 6 1/2 previously. Sinclair matches Std. Oil NJ retail cut of 2 cents/gallon.

Latest count of German unemployed up 100,000 to 2.983M.

Bethlehem Steel - Youngstown Sheet & Tube merger trail adjourned to Oct. 20 to allow time for preparing briefs and arguments.

Freight theft on NY Central lines reduced from $2.597M in 1920 to $32,720 in 1929.

Goodyear seen increasing dominance as leading tire manufacturer and low cost producer. Earnings suffering from writedown of rubber inventory, but seems strong enough to absorb these losses and maintain dividend; current yield 9%.

September 24, 2009

Wednesday, September 24, 1930: Dow 226.75 +3.97 (1.8%)

Assorted historical stuff:

Today is the 61st anniversary of Black Friday, on which Jay Gould and Jim Fisk engineered a corner of the gold market that the government had to break by releasing $4M of gold from its stockpiles. That number makes an interesting contrast with the $26B decline in security values in the fall of 1929.

Editorial: A number of leading British industrialists are calling for “a measure of common sense” to address the current depression. Britain's economic situation is difficult. Its national debt has been little reduced since the war at $37B; its budget has been steadily increasing and is now about $4.4B, up $500M over 6 years [US figures are about $16B debt and $4B budget]. “The greatest drawback to progress has been the dole ... as much a cause as it is an effect of the depression in England today. Once a dole system gets engrafted into a nation it is hard to dislodge it” since it's a great vote-getter. The Labor Party may in fact be lukewarm on protectionism because it would tend to raise wages and therefore operate against the dole. Inability of English politicians to try the logical way out of difficulties “explains why its businessmen are rising in desperation and crying for a return to sanity”; indications are that English workers may also be ready for new leadership.

There's been a dramatic turnaround from front-page talk of drought and famine a few weeks ago to plunging grain prices now.

Canada PM Bennett says will help US investigate Russian wheat short sales; Romania Min. Madgearu asks protection from Russian dumping of farm products.

J.H. Case, Pres. Natl. Assoc. of Community Chests, calls for “peace-time patriotism” and increased giving by those with wealth in this time of unemployment.

Radium is most costly mineral in the world; in Czechoslovakia a 300-man plant makes 3 1/2 grams a year, valued at about $2.5M.

Buster Keaton returns from Europe; reports continuous British propaganda against US films, says Germany more receptive.

Market commentary:

Market Wrap: Leading trading stocks rallied following a climactic selloff in final hour Monday when trading was at a rate of 5M shares. Market seemed in better shape technically, with larger short interest inducing some covering; also possibly helping was better feeling regarding Germany. Volume was lighter, possibly partly due to Jewish holidays, but became more active toward close; rally spread to most of list. Leading industrials including American Can, Steel, Westinghouse, rallied strongly from Monday's close. Coppers weak. Bond market less active; govts. generally steady; strength in corp. with Dow 40-bond avg. at new 1930 high.

German news more favorable: Reichsbank defends mark; German bonds up in most markets; German stock market up for first time in several days; leading Berlin bankers express confidence in economic soundness and favorable resolution of political situation, say no possibility of default on external obligations.

Better stock action considered especially impressive in view of continued commodities weakness.

Conservative observers insist that market was due for technical rally, advise taking advantage to reduce long positions, recommend waiting attitude.

Business men continue optimistic on conditions; retail and wholesale trade is gaining and inventories are low; more forward buying of raw materials seen. On the other hand, there is some nervousness over situations in Europe and South America, commodity price declines, and lack of automotive improvement.

Irving Bush, Bush Service Corp. Chair., returns from 3 month European trip. Says conditions still unsatisfactory; US is generally blamed for depression based on “bursting of the bubble of over-extended prosperity” and on tariff. However, tariff damage is “more sentimental than actual”; retaliation so far has not been serious. Optimistic on Europe, most encouraged by evident desire to raise workers' wages and living standards.

Powerful banking interests reportedly were buying stocks in the morning.

Prices of art reportedly have declined much less than stocks or commodities.

Economic news and individual company reports:

Total internal revenue collections in Aug. were $77.2M vs. $87.0M in 1929.

Rail freight loadings week ended Sept. 13 were 965,713 cars, up 109,076 from previous week but down 16.2% from 1929. Loadings year to date were down 11.4% from 1929.

Total farm revenues were $11.851B in 1929 vs. $11.741B in 1928.

Cigarette production in Aug. was 10.577B vs. 10.931B in 1929.

Companies reporting decent earnings: National Biscuit, American Ice, Brown Shoe.

James Boring Travel Service files for bankruptcy.


The Spoilers, with Gary Cooper - story of corrupt officials in Nome, Alaska gold mining country; sentimental melodrama, but excellent acting and good production “represents a return to the best elements of the silent pictures... climax ... is the most vigorous and thoroughly realistic [fistfight] the talkies have yet shown.”

+ The Boring Stuff:

Editorial: Recent firestorm over Soviet short sales of wheat indicates function of the futures market in wheat is still not understood. It gives those who sell, mill, or distribute wheat and its products a way to insure themselves against losses from price fluctuations. Speculators provide this insurance, If they didn't speculate the merchant and the miller would have to. While there no doubt is irresponsible speculation, the only way to abolish it would be to get rid of the market itself. Finally, the idea that speculators can permanently affect the price of wheat by short sales “is so patently absurd that discussion on the point is a waste of time.”

Largest contributors to League of Nations are Britain $559,712; US $450,000, and Germany $429,728. Of US contribution about $430,000 is private, mostly from John D. Rockefeller, Jr. US is not a member of the League.

Editorial by Thomas Woodlock, formerly of Interstate Commerce Commission (ICC): Following a long history of rail regulation culminating with the US taking over the rails during the war and then returning them to private hands with the Transportation Act of 1920, the ICC now has approval power over every important decision by rail managements except dividends. This naturally leads to two major problems: “temptation to attempt an acceleration of the evolutionary process” and, more dangerously, “the bureaucratic spirit, ...[an] expression of the fundamental human instinct - the lust of power. It is the nature of this spirit ever to seek extension ... of its authority and ever to view with disapproval what is done within that sphere without its intervention or aid.” Policy should instead be “hands off management.”

Observers believe little liquidation of investment holdings has taken place in Sept.; market break is attributed to bull pools becoming discouraged and selling out stocks they were sponsoring. While business pessimism has returned in past 10 days, there doesn't seem to be reason behind it other than the market decline.

Department stores reportedly have shown improved volume business in the past few weeks, but are suffering from lower prices, since they operate on narrow profit margins and it's difficult for them to reduce overhead. Much will depend on next 3 months, in which 75% of profits are usually earned.

G. Cox of Cox & Jordan presents paper to Empire State Gas & Elec. Assoc. calling for clearer financial reporting by utilities; criticizes various accounting methods used by utilities making it impossible for investors to make fair comparisons.

Some foreign buying of US shares reported, particularly US Steel and Bethlehem.

Recent notable weakness in Kreuger & Toll (attributed to foreign conditions) and Vanadium (no indication of concerted support in spite of earlier rumors).

Norman J. Wall, USDA senior economist, predicts commodity price recovery based on low production, relatively high consumption, and depleting inventories.

Commodities weak. Wheat down sharply to new season low; other grains also down. Cotton dips to new season low. Sugar hits new record low at 1.01 cents, rallying to close at 1.10. Crude rubber hits record low at 7.70 cents, rallies to close up. Copper buying moderate, producers trying to make stand at 10 1/2 cents.

American Petroleum Institute reports refineries operated at 69.2% in week ended Sept. 20 vs. 69.4% previous week; gasoline stocks at refineries were 37.260M barrels vs. 37.832M previous week. Oil & Gas Journal reports crude oil production averaged 2.420M barrels, up 2,737 from previous week.

First 11 rails reporting Aug. earnings had net operating income down 24.3% from 1929, and down 10.8% from 1928.

Study of copper production finds about half of current output, or 1B pounds, is being produced unprofitably.

CBOT has started investigation of source of anonymous report that Canadian wheat pool was in trouble.

Registered British unemployed Sept. 15 were 2.103M vs. 2.140M Sept. 8 and 1.148M in 1929.

Increasing opposition to Montes De Oca Mexican debt settlement seen in both houses of Mexican Congress.

Standard Oil of NJ cuts gasoline prices two cents a gallon throughout its territory, probably to meet price cuts by independent dealers.

Beech-Nut Packing stock about 55, yield 5.5%, net for 1929 was $6.06/share, first half net $2.96/share.

September 23, 2009

Tuesday, September 23, 1930: Dow 222.78 -7.07 (3.1%)

Assorted historical stuff:

Editorial: Agriculture Sec. Hyde, trying to explain why the Farm Board has failed to support wheat prices in spite of $500M appropriated, “has uncovered a Russian bear's nest and from it dragged a diminutive teddy bear painted red.” Assertion that Russian sales of 7.5M bushels depressed prices seriously is ridiculous considering Farm Board has bought 70M itself and could easily buy more if prices were so easily influenced. “If an artist could put it on canvas that 7.5M bushels of wheat as compared with the annual sales on the Chicago market would be ... a mangy little bear dropping one kernel of wheat upon a heaped up bushel.”

Rep. Hamilton Fish (R., NY) to investigate Russian wheat short-sales; Farm Bd. Chair Legge speculates motive is depressing economy to promote Communism.

Hoover is first Quaker president; Quaker church custom of allowing anyone to speak at services has been modified to avoid “cranks and propagandists.”

H. McLaughlin, Pres. Ohio St. Fed. of Labor, calls for wealthy men to join John D. Rockefeller, Jr. in relieving unemployment by forming one or more $100M syndicates to tear down slums and build individual homes for workers.

New air mail route to be operated between Cairo and Cape Town by Imperial Airways Co.

Portrait of a Man by Franz Hals, valued at $250,000, bought by Mrs. B. Jones of Pennsylvania. Soviet govt. to sell four paintings by Rubens, Rembrandt, Van Eyck, and Van Dyck valued at $200,000 each from property of Hermitage Museum.

Market commentary:

Market wrap: With international markets showing sizeable losses on political uncertainty, bears found conditions favorable and were able to depress majors to new lows on the current reaction, including US Steel, American Can, Allied Chemical. Companies with large international business particularly weak, including IT&T, American & Foreign Power. Banks and trusts particularly weak. Commodity weakness was also attributed to the international situation. Trading volume was down from Friday, possibly due to Jewish holiday. Some sluggish rallies failed to hold; further declines on higher volume took place in final hour, with some stop-loss orders uncovered. Bond market active; foreign govts. weak, particularly German; US govt. dull, steady; corp. steady, convertibles down.

Commodities very weak. Grains down, with some wheat futures hitting new post-1914 lows. Cotton hit new season low at 10.85 cents. Crude rubber hit new record low (7.70 cents), as did cocoa (5.15 cents) and raw silk in Japan. Copper unchanged at 10 1/2 cents.

Recent market decline has taken place in spite of some good business news; attributed to bear attacks, rumors concerning German situation. Another factor may be anticipated poor third-quarter earnings; recent tendency has been for lowered forecasts.

Bank of America reports recent more active demand in many lines of business, though construction and automotive still lag; “while the increase in the volume of trade is of moderate proportions the improvement has been sufficient to be reflected in a more optimistic business sentiment and in greater confidence in the general economic situation.” Criticizes popular tendency to go to extremes of optimism and pessimism as obstacle to recovery, calls for “even balance, and patience.”

Royal Bank of Canada on commodities: “Judging by the course of events in other apparently similar cycles of the past, and giving due weight to the effect of the present worldwide policy of cheap money, it is reasonable to suppose that the present average of prices has about reached the bottom of the cyclical movement.”

Slackness in the car industry seen as “leaving a wake of unemployment” since industry is a large consumer of other products and raw materials.

Economic news and individual company reports:

Income tax receipts for fiscal year through Sept. 19 were $488.8M vs. $558.7M in 1929.

Federal spending for construction in 1930 is expected to be considerably above the $352.4M in 1929.

Commerce Sec. Lamont reports some encouraging business news including gain in exports in August that was broad-based and higher than usual seasonal pattern; gains in retail trade together with low inventories; and increased buying ahead of raw materials by industry.

Chicago Society of Commerce reports wholesale and retail buying improved in past week, with moderately priced goods doing better. Inventories low, with active restocking by merchants country-wide. General opinion that business will continue to improve up to and including holidays.

Reports of improved business from Republic Steel, Minnesota Steel, National Cash Register, and Oakland-Pontiac (cars).

Cars produced were 223,046 in Aug. vs. 262,363 in July and 498,628 in Aug. 1929; first 8 months were 2.705M vs. 4.225B.

Companies reporting decent earnings: Loews (movies and theaters).


Africa Speaks, extraordinary documentary; scenes include lion killing a boy guide, then turning on the two photographers, “swarms of billions of locusts flying over the earth, devouring every green thing for miles around and sending herds of wildebeest running,” and “the duck-lipped women of Ubangi.”

+ The Boring Stuff:

Editorial: Manchester Chamber of Commerce's revolt against the gold standard is a shocking reversal. “Manifestly the national nerves of Great Britain are in a state of great disturbance ... Gold is, first of all, the ultimate measure of price, and second, the ultimate form of money ... Thirdly, as banks reserve money, it is the limiting governor of bank credits. ... A pound sterling is 113 grains of fine gold and nothing else. ... Apparently the chamber wants a pound which is something else” so that scarcity of gold won't depress prices, and to overcome limits on bank credit imposed by the gold supply. While it's unsafe to be dogmatic about these things, experience suggests the result would be “merely a possible relief of unemployment for a time by a hidden but real expropriation of the tax paying class.”

German situation “while disturbing, is by no means alarming”; confidence that stable govt. will be arrived at, though continued nervousness likely until result is known. Some reports of capital flight. Stock market down. Bonds down sharply on continued rumors of renegotiation of obligations. Swiss market and bonds more active in past month on investors' desire for “countries characterized by stable political conditions and a cautious financial regime.”

Harvard Economic Society says depression has been worse than originally expected, but now sees moderately better than seasonal recovery.

Julius H. Barnes, Chamber of Commerce of US Chairman, says believes number of unemployed higher in 1921, when there were 32M workers compared to 42M now. Also relays report by S. Sears, Pres. Natl. Council of Traveling Salesmen, predicting shortages of consumer goods as buying improves.

Scrap steel price strength has historically been useful leading indicator since it's a raw material for steel production.

Bulls believe current break can still be explained on technical grounds; if Aug. support around 217 holds, “it would strengthen indications that the windup of the bear market was seen on the June break.” Strong evidence of this was already seen in the early Sept. rally above the July-Aug. top; it's also considered highly significant that volume on the current break is lower than on the breaks in June and Aug., with little “genuine liquidation” seen.

Many market letters that were bullish two weeks ago are now bearish; however, since the start of the year the market has acted against the consensus.

Conservative observers favor taking profits and reducing long commitments on any rally; popular attitude is to wait to buy until market establishes new resistance.

Traction (mass transit) issues benefiting from improved prospects of city transit unification with BMT and IRT.

Fed. Reserve member banks report for week ended Sept. 17 loans on securities up $72M to $8.404B, “all other” (commercial) loans down $3M to $8.477B.

Production at 875 lumber mills was 273.8M feet, new orders were 98% thereof and shipments 95%; a week earlier 901 mills reported production of 248.3M feet, new orders 97%, and shipments 93%,.

Illinois industrial employment in Aug. was down 0.9% from July and 16% from Aug. 1929. Payrolls were down 0.2% from July, and hours worked up 0.3%.

NYSE seat to be sold for $300,000.

Frazier, Jelke, & Co. compare dividend yields on high-grade common stocks at different times. Aug. 1921, commonly cited as a great buying opportunity, had yield of 8.15%, vs. Aug. 1930 yield of 4.42% and Sept. 1929 yield of 2.88%. However, general rates were much higher in 1921, so the return now is relatively more attractive compared to other options; in 1921, dividend yield was 36% higher than commercial paper rate, whereas now it's 47% higher.

Canada's Aug. exports were $69.3M vs. $96.3M in 1929; imports were $78.2M vs. $111.6M.

Oil, Paint, and Drug Reporter says shipments of some types of chemicals to industry have recently increased.

Company reports since July 1: 244 companies reported higher earnings vs. 1929 and 498 lower; 1174 dividends unchanged, 57 increased, 113 cut.

September 22, 2009

Monday, September 22, 1930: Dow 229.85 +0.83 (0.4%)

Assorted historical stuff:

Agriculture Sec. Hyde charges Russia with short-selling wheat to drive prices down, prompting blizzard of activity. CBOT Pres. Bunnell asks for evidence; CBOT member Bennett ridicules idea that Russia would do this since they have wheat to sell; Iowa Sen Brookhart looks into closing the CBOT; Farm Board member McKelvie says believes the CBOT could stop short-selling by Russia; Russian Rep. Belitsky denies large-scale short-selling.

Russia announces 8 executed and 438 exiled to concentration camps for gold hoarding and counter-revolutionary activity.

International Paper says have received official assurance that convict or forced labor not used to produce imported Soviet lumber or pulp wood.

Editorial supporting yesterday's speech by K. Hogate, VP Dow, Jones, that recommended distribution of corporate surpluses to shareholders. If the surplus was paid out to its rightful owners (the shareholders), almost $4B would flow into the economy, relieving unemployment and stimulating business. Money can be piled “mountain high and yet, if ... not moved into consumption, nothing but stagnation will ensue. Goods and services ... cannot be moved into consumption unless there is individual purchasing power. ... A dollar in an individual income travels much faster and works harder than one held in a surplus account.”

P. Cherington, of J. Walter Thompson, addresses Financial Advertisers Association meeting: “The banker has only recently come to realize that he has marketing problems as pressing as those of the manufacturer or distributor of merchandise.” Calls for application of marketing approach to selling of securities.

Commerce Dept. optimistic on soundness of German economy; notes resistance to severe depression, well-maintained export trade.

While Friday's rumors of German revolution turned out to be baseless, there are now increasing reports that results of the German election might cause reopening of the reparations issue and possibly of Allied war debts to the US.

Former French Premier A. Briand summons 27 European nations to confer on his project for European union; 8 nations propose reciprocal trade program.

Experimental secure wireless telephone tested; device transforms spoken words into unintelligible state and retransforms them on receipt.

Market commentary:

Market wrap: Some early selling attributed to professionals and margin calls sent out after Friday's close. Selling was easily absorbed and good support came in to US Steel, spreading to other leading issues and moderately to the rest of the list. Volume slackened on the recovery and stocks backed and filled for some time; near the close, market tone improved again. Rubber stocks up on reported industry understanding. Bond market active and strong; US govt. firm; foreign govts. steady, including German; rails strong; convertibles firm.

Week in review: “Recrudescence of gloom” blamed on disappointment over pace of recovery, anticipated poor Q3 earnings, German rumors, and renewed bear pressure. Still uncertain if correction is merely technical.Credit remains easy. Some improved steel buying. Wheat hits new post-1914 lows.

Market has continued to confound the majority; less than two weeks ago vast majority of brokers were bullish on both technical and fundamental grounds following advance past 241 resistance level, but between Sept. 10-19 Dow has declined from 245.09 to 229.02.

Conservative observers see continued bear pressure this week until resistance is hit. Advise using rallies to sell long positions and strengthen margined accounts.

Henry Ford says economic crisis is worldwide, but still has great hopes for the future; particularly optimistic about market possibilities of Africa, China, and Japan.

E. Kulas, Pres. Otis Steel: “Underlying conditions affecting prices and demand in the steel trade have changed for the better and the outlook is steadily improving.”

E. Loomis, Pres. Lehigh Valley Rail., notes improvement in business conditions and general outlook, although sentiment is a little ahead of actual improvement.

Economic news and individual company reports:

Trade reviews showed moderate expansion in fall buying, though early September spurt in trade lost some momentum.

Irving Fisher's index of 200 wholesale commodities for weekend ended Sept. 19 was 83.6 vs. 83.4 previous week and 96.0 average for Sept. 1929.

GM reports retail sales by dealers in the past three months were 263,891 units, or 29,440 more units than GM shipped to dealers. This contrasts with 1929, where GM shipped 14,928 more cars to dealers than they sold; encouraging indication that stocks of unsold cars are being depleted rapidly.

August new car registrations in 21 states and were 55,968 vs. 74,290 in July and 106,081 in Aug. 1929.

Company reports since July 1: 242 companies reported higher earnings vs. 1929 and 494 lower; 1165 dividends unchanged, 55 increased, 112 cut.


“Impatient Man (outside telephone booth) - Can I help you to find the number you want?
Young Woman (sweetly) - Oh, I don't want a number. I'm looking for a pretty name for my baby.”

+ The Boring Stuff:

Perhaps as long as cotton is traded in, the cotton market will be linked with the name of Daniel J. Sully,” dead at 69. In a remarkable one-year career in the cotton market in 1903-04, he raised the price of cotton from what was already a bull-market peak of 9 cents to 16 cents, before collapsing in March '04.

German Chancellor H. Breuning and Prussian government deny reports of coup d'├ętat, putsch, or military preparations by any political group.

[Note: for clarity, I marked the sarcastic parts of this next editorial with a *]
Farm Board should improve its already good prestige* by saving our vital* domestic sugar industry that supplies almost a fifth of our needs. Beet sugar farming must he helped, being so well suited* to US conditions that under tariff protection and using thousands of poor Mexican workers, production has declined over the past 10 years. The brilliant, simple* cure is to simply raise the sugar tariff; the burden of this will fall only on the luxury loving wealthy*. Luckily* the existing tariff, having only been doubled in the last nine years, is still a modest* 174% on Cuban imports. Cuba is clearly profiting* by dumping sugar, as the “handsome receivership melons” handed out to stockholders of Cuban sugar companies demonstrates. We can clearly ignore* future prosperity of a strategically important country in which the US has $1.5B invested.

Tokyo tests new radio station broadcasting to San Francisco; preparing for celebration of Japan's ratification of London Naval Treaty.

Car motor being constructed designed to propel racing car at 300mph, develop 1,200 hp; to be used for attempt at world speed record of 231mph.

League of Nations budget for 1931 estimated at $5.7M.

ILGWU threatens strike of 4,000 Fifth Ave. custom dressmakers; would affect Bergdorff-Goodman, Henri Bendel, others.

C. Nash, Pres. Nash Motors, says solutions to depression is not “high sounding theories” or “political promises,” but building things people need at the lowest possible cost; this is “the one way to increase the value of the dollar to the point where buyers will reenter the market”

Recent strange increase in brokers' loans as market declined attributed to tax payments made from brokerage accounts.

Copper was considered a “well-regulated industry” up to a year ago, but “someone kicked over the traces” and price has declined from 18 cents to 10 1/2.

Commodities weak. Cotton down slightly. Wheat down slightly after sharp fluctuations following charges of Russian short-selling; other grains mostly down.

Bureau of Labor reports total cost of building permits issued in 291 cities in Aug. was $137.9M, down 16.2% from July.

Youngstown District steel operations to be at 57% of capacity this week, unchanged from last week.

British iron and steel market reports improved demand although consumers still not inclined to commit far ahead.

First half exports of rubber tires by 8 leading countries were down 12% vs. 1929.

US exports of electrical equipment in July were $9.6M in July vs. $10.8M in June and $12.7M in 1929; first 7 months were $81.2M, down $1.8M from 1929.

Sugar Beet and Sugar Cane Advisory Committee considering measures to help sugar industry, including clearinghouse and raising tariff.

Annual expenditures on miniature golf estimated at $228M.

IRT continues fight to avoid being forced to buy 289 new subway cars.

Companies reporting decent earnings: Lambert (toiletries and medicinals), American Ship Building, Chesapeake and Ohio (rail, against general trend), Traung Label & Lithograph (canned goods labels).

September 21, 2009

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Favorites of the week Sept. 15-Sept. 20, 1930

No Journal was published Sunday, Sept. 21, 1930. Once again, a collection of my favorite items of the week. These aren't a representative selection but just the ones that made me smile or take notice.

Sept. 20:

[Note: Hey! This guy is actually making sense! dept.] Editorial: The Berlin Institute for Studying Trade Fluctuations predicts from historical analysis that commodity prices will continue declining until 1940. This may or may not happen. In any case, all other things being equal, a period of commodity deflation benefits most people provided it's not so rapid as to produce serious economic dislocation. However, we now have the serious complication of huge war debts (about $12B) loaned by us to allies when prices were much higher. We should consider adjusting these debts based on commodity prices, since if we do get long-term deflation the current debt level won't be sustainable.

[Note: Total ripoff of The Sixth Sense dept.] Outward Bound - Leslie Howard makes “auspicious film debut” as drunk passenger in eerie tale of “ocean liner which is the modern equivalent of Charon's boat.”

[Note: I believe Greenspan is working on a new helicopter design for Bernanke... the rotor stands still while the aircraft turns.] Thomas Edison visits Newark Airport, hints he is working on new approach to developing helicopter.

[Note: It's the town that Billy Sunday couldn't shut doowwn ...] Statue of Venus de Milo in public square of Rev. Billy Sunday's hometown was subject of a shocked protest by a visitor from Chicago who planted poison ivy at the base. Townspeople called the fire department to wash the ivy away; said they couldn't understand why anyone from Chicago should be shocked at anything.

[Note: Hey! This guy is actually making sense! dept.] A. Reynolds, Cont'l. Ill. Bank & Trust Chair., criticizes Fed. Reserve easy-money policy as ineffective in reviving business, says it may cause banks to buy bonds that have “not always turned out fortunately” in the past; “it is a serious question as to whether a commercial bank should be a large purchaser of such bonds.”

Sept. 19:

[Note: Strangely unfamiliar dept.] Editorial: Brazil is facing severe economic crisis. Almost 80% of export trade is coffee. However after many years of being almost the world's sole source, other countries have started raising competitive grades of coffee. The resulting oversupply has slashed coffee prices by more than half, resulting in huge losses for growers, labor discontent because of lowered wages, outflow of gold to pay for loans, and a huge surplus still to be disposed of. “Brazil must realize that it is now at the crossroads”; it must diversify into some other source of income.

[Note: Poorer available quality ... thank God he didn't live to see Miller Lite!] Dr. Frey, Dir. German Dept. of Health, reports on German alcohol consumption. Says current level is far below prewar years but has increased since 1916; alcohol-related diseases are much milder than at the turn of the century. Believes US mortality from alcohol is as large as German due to poorer available quality. Also believes number of brutal crimes in a country is directly proportional to rise or fall in alcohol consumption.

[Note: Perils of relying on historical performance dept.] Trusteed Share News reviews history of severe market reactions in past 30 years, including those in 1903, '07, '17, '21, and '29. Points out that every market low was higher than the previous one, and therefore that buying after the market reaction “would have rewarded the investor in the highest degree.”

Sept. 18:

[Note: Strangely familiar dept.] Wild gorillas are becoming so rare that a sanctuary has been declared in southwest Uganda.

[Note: Strangely familiar dept. ... but thank God he didn't live to see Lehman Brothers!] Arthur Lehman of Lehman Brothers: “improvement in business is slow but is nevertheless gaining; recent trends indicate no lines of business are getting worse, while a few are getting better.”

Sept. 17:

[Note: Interesting ... I'd bet the most important nanotech application in 30 years will be one we aren't even thinking about now.] O. Caldwell, Electronics editor, says “vacuum or electron tube” will be third great electric revolution following Edison's incandescent lamp and Westinghouse's introduction of alternating current. Greatest benefit to utility industry will be transmission of direct current over existing high tension lines, allowing 3 - 6 times as much power. Use of tubes also greatly reduces size of equipment; “a vacuum tube switch the size of a gallon bottle” can replace a 2 - 3 ton oil switch the size of a room.

[Note: Strangely familiar dept.] Many are now watching unemployment closely, including BLS Aug. report of 1.6% decline in industrial employment and 2.6% in wages. Reversal in this trend would be considered very encouraging.

[Note: Strangely familiar dept.] Recent banking trend has been to higher deposits, higher investments and flat to lower loans (commercial and on securities).

Sept. 16:

[Note: Strangely familiar dept.] Today is 10th anniversary of deadly bombing at Wall and Broad Streets; bomb exploded 12:01PM, closing Stock Exchange and almost all financial operations.

[Note: Pretty amazing number considering how much smaller the US population was then.] American Motorists Assoc. estimates car accident deaths for 1930 at 36,000, vs. 33,060 in 1929.

Sept. 15:

[Note: Good luck with that dept.] Standard Oil of California calls for cooperation of industry and public in conservation of oil resources aiming at “a stabilized ... price over a long period of years rather than low prices during the periods of excessive production with high prices when the time of shortage arrives.” Cites President Coolidge letter from 1924 to Oil Conservation Board: “overproduction in itself encourages cheapness ... wastefulness and disregard of essential values.”

[Note: For you non-Depression buffs, this was a few months before the banking system started to collapse after Bank of the United States failed. I guess bankers saw the iceberg coming about as well back then as they did in 2008 ... ] American Bankers Assoc. to meet in Cleveland Sept. 29. Topics of first three general sessions are “Problems We Bankers Must Meet” (expected to cover branch and group banking developments), controversial topics in bank taxation, and “The World Today.” President Hoover to address fourth session.

[Note: Strangely familiar dept.] The great debate: Bears argue that past month's rally has already discounted the mild improvement in business, and that decline in steel production in past week indicates weakness. Bulls counter that steel decline was due to Labor Day, that August steel and car loading figures show more than seasonal improvement, and that recent retail figures and company outlooks have been improved. On the technical side, bulls believe the recent rally has “definitely broken” the downtrend since last Sept., indicating future support should come in well above the June bottom of 212.

September 20, 2009

Saturday, September 20, 1930: Dow 229.02 -5.16 (2.2%)

Assorted historical stuff:

Editorial: The Berlin Institute for Studying Trade Fluctuations predicts from historical analysis that commodity prices will continue declining until 1940. This may or may not happen. In any case, all other things being equal, a period of commodity deflation benefits most people provided it's not so rapid as to produce serious economic dislocation. However, we now have the serious complication of huge war debts (about $12B) loaned by us to allies when prices were much higher. We should consider adjusting these debts based on commodity prices, since if we do get long-term deflation the current debt level won't be sustainable.

France to spend additional $29M on armed forces this year, increase of 6%; German election seen as factor in $470M defense program.

Workers in Camden take a day off to stage a “back to work parade”; participating were thousands of workers recently added at the R.C.A.-Victor plants here, and at the New York Shipbuilding Co. Attendees included Gov. Larson, Labor Sec. Davis, and Senator Baird.

A restaurant in the Wall St. area has begun attaching lists of current leading stock prices to its menus so brokers keep in touch with the market while eating.

Statue of Venus de Milo in public square of Rev. Billy Sunday's hometown was subject of a shocked protest by a visitor from Chicago who planted poison ivy at the base. Townspeople called the fire department to wash the ivy away; said they couldn't understand why anyone from Chicago should be shocked at anything.

Thomas Edison visits Newark Airport, hints he is working on new approach to developing helicopter.

Market commentary:

Market wrap: Stocks broke badly on heavy volume. Initial selling attributed to rumor that German Fascists planned to overthrow existing regime. Following reports that Berlin was peaceful, another German rumor broke out, this time that the Young plan was threatened. Bears were able to force extensive declines in stocks throughout the list; many stop loss orders triggered; further weakness may also have been caused by declining grain markets. A moderate recovery set in around two o'clock. Domestic bond market firm; US govts. dull and steady; corp. higher, Dow 40-bond avg. at new 1930 high; foreign govts weak, particularly German.

Market sentiment upset; observers advise reducing long positions on upturns and waiting to buy until “the market itself indicates that prices have reached resistance points and can rally in a more impressive manner than in recent weeks.”

K. Hogate, VP Dow, Jones & Co., decries “fetish of a corporation surplus” leading to current accumulation of billions of cash on corporate balance sheets which are “passively at work, but have no velocity.” Questions idea that large surpluses increase safety, suggesting they may instead lead to speculation and sloth. Calls for substantial distributions of “frozen” surplus cash to shareholders as means of helping to restore prosperity. J. Fayne of Hornblower & Weeks hails proposal.

R. Graham, VP Graham-Paige Motor, believes industrial depression has reached its end; belief is based on record savings banks deposits, low commodity inventories, and perception that “mental attitude of the general public is changing ... people are becoming more optimistic and willing to spend money.”

A. Reynolds, Cont'l. Ill. Bank & Trust Chair., criticizes Fed. Reserve easy-money policy as ineffective in reviving business, says it may cause banks to buy bonds that have “not always turned out fortunately” in the past; “it is a serious question as to whether a commercial bank should be a large purchaser of such bonds.”

Economic news and individual company reports:

Bank bond holdings July 31 were a new record at $6.290B; necessity for income has increased buying.

Treasury reports income tax receipts for fiscal year-to-date (July 1 - Sept. 17) were $335.3M vs. $428.5M in 1929.

Bradstreet's and Dun's weekly reviews note continued modest improvement in fall purchasing. Bradstreet's reports slowness in some areas with warm weather.

Manchester cotton market reported improved; anti-boycott campaign started at Calcutta; increased inquiries from India and China.

German marks were stable (attributed to support from the Reichsbank). However, German bonds were down sharply, foreign stock markets were generally weak, the German market dropped to lowest level since 1926, and German capital is reportedly flowing abroad to “Switzerland, Holland, and even France.” Public seems unnerved by the delay in agreement between Social Democrats and conservative parties, but “well-informed circles” increasingly believe the current government will reach an agreement giving it the support of the new Reichstag.

American Chicle (chewing gum) has recovered from near bankruptcy in 1920 to post eight years in a row of increasing profits, with a ninth expected this year.


Outward Bound - Leslie Howard makes “auspicious film debut” as drunk passenger in eerie tale of “ocean liner which is the modern equivalent of Charon's boat.”


“Bertie was proudly showing his friend his new car. 'Well, what do you think of it?' asked Bertie. 'Humph,' growled his friend. 'I should have thought you would have had something more uncommon.' 'It's dashed uncommon,' retorted Bertie. 'It's paid for.'”

+ The Boring Stuff:

Editorial: Results of the German election combined with misunderstanding of its significance have caused some fear that German political system has “undergone a lasting change that threatens parliamentary rule.” Gain in strength by radical parties was to be expected as a result of discontent and unrest caused by the depression and govt. incompetence, though extent of the gains was surprising. The conservative parties are in a heavy majority; they must take the radical gains as a warning and put aside small politics to form a more harmonious government.

The new high-speed ticker ran behind for the first time, but only for a short time when the market was most active around 11 o'clock.

Some traders discouraged by failure of market to rebound following the expected technical reaction early in the week.

Short interest is reported growing based on indicators including borrowing demand for stocks.

Some bear operators prominent in the Oct.-Nov. collapse were reported in action again, including Bernard E. Smith, John W. Pope, and William E. Danforth. Targets included US Steel, American Can, and J. I. Case.

The recent large decline in US Steel's unfilled orders would have caused havoc 10 years ago when it was the general policy to buy far ahead. It's not as significant now because the steel industry along with many others is operating on a low-inventory “hand to mouth” basis.

Rubber is selling below cost of production. So are copper, sugar, and other commodities. Things can sell below cost of production part of the time, but not all the time. Selling below cost means that production soon will fall below consumers requirements, which is the real remedy for bringing things back to normal.”

Commodities weak. Grains down substantially but staged late recovery off worst levels. Cotton down moderately. Cocoa touches new record low at 5.30 cents/pound, closing at 5.34. Copper has been reduced to 10 1/2 cents by large producers (lowest in over 30 years), and buying has picked up.

Volume of new bond offerings this week was $80.9M, down from $134.3M last week but up from $39.1M in 1929; level of bond borrowing since June has consistently been higher than in 1929.

G. Milner says Grain Stabilization Corp. will not reduce its 60 million bushel stock of surplus wheat for drought relief; any wheat sold will be replaced.

Life Insurance Sales Research Bureau reports on sales trend for the year. Life insurance sales were up verses 1929 in every month to April; months since May have shown declines, with the August decline sharper at 10.4%.

S.W. Straus reports building permits in 585 cities and towns in Aug. were $160.8M vs. $188.9M in July and $255.1M in Aug. 1929.

Leading tire manufacturers hold conference, reach understanding to cut down on recent excessive discounting that has “agitated the industry.”

Panama Canal tolls for 15 days drop below $1M for first time since 1927; total for Sept. 1-15 was $995,655 by 224 ships.

Mexico attempts to stabilize silver peso by withdrawing 10M silver pesos from circulation and cracking down on illegal exports of gold to US.

Australia total govt. debt is $5.592B, of which $1.945B was owed by Commonwealth and $3.647B by States [total production was about $2.3B].

Company reports since July 1: 241 companies reported higher earnings vs. 1929 and 493 lower; 1155 dividends unchanged, 55 increased, 109 cut.