Friday, October 10, 1930: Dow 192.00 -8.56 (4.3%)

News flash:

Prince & Whitely, a prominent Wall Street house with branches in many cities and member of the NYSE since 1878, suspended by NYSE for insolvency. Partners and attorneys expressed belief the firm is solvent and creditors will be paid in full. Firm's difficulties said due to “a frozen condition which resulted from attempts to support the market in securities in which the firm was interested.” Reaction to suspension was much greater than to the Sisto failure last week.

Assorted historical stuff:

Rep. Byrnes (D., Tenn.) charges Treas. Sec. Mellon is exaggerating budget surplus for political ends; Mellon defends record, says accusation is itself political.

Editorial: Some leading industrialists are calling for recognition of Russia for business reasons. While these reasons may be correct, they are superseded by Pres. Wilson's stand in 1919: “We cannot recognize ... a government which is determined and bound to conspire against our institutions.” Since Russian govt. is pledged to world-wide revolution, recognition would, as Elihu Root put it, be a “formal and solemn lie.”

Col. L. Smith of Better American Federation, tells Congress 20,000 firearms have been bought in US by Communists.

J. Barnes, US Chamber of Commerce Chair., says recent plunges in commodity prices are mainly caused by previous govt. efforts to support prices at artificially high levels; “the forces of economic law may apparently be temporarily elastic, but in the end will break under the strain.” Calls for stronger cooperation between government and business to tackle depression. Criticizes excessive tariff competition, says tariffs only justified to protect against cheap labor.

Agriculture Sec. Hyde defends spending billions on road construction as economically justified; “besides cheapening transportation ... they bring educational opportunities to many, relieve the tedium and isolation of the country, and develop national and state patriotism.”

V. Bello, Cuban Congress Pres., suggests taking care of sugar surplus by mandatory use of gasoline-alcohol mix as motor fuel.

France cracking down on US jazz musicians by requiring working permits; said due to increasing unemployment among French musicians.

Cure for pneumonia by electrically-induced fever of 116 degrees presented at Amer. Phys. Therapy Assoc. convention.

Market commentary:

Market wrap: Market continued to drift down early, with several leading issues hitting new yearly lows. Bears focused particular attention on US Steel, targeting the final support level at 150 (the panic low last fall), and succeeding in penetrating that level slightly after a tough fight. A broad selling wave then spread through the list, and the downtrend intensified following announcement of suspension of a major brokerage; many stop-loss orders triggered; many majors hit new yearly lows, including New York Central (rail), GM, AT&T, GE. Prices closed near the day's lows. Bond market down on high volume; almost all bonds classes weak; Brazil and German bonds plunged, with substantial declines spreading to other South American and European bonds.

In spite of large selling volume and signs of forced liquidation, trading was generally orderly; most stocks had plenty of bids under the market and there were few wide-open breaks except in stocks sponsored by Prince & Whitely.

German stocks and bonds down on unexpected Reichsbank discount rate hike from 4% to 5; first rate increase by major banks since the fall panic. Step attributed to desire to reduce capital flight, though it hadn't yet reached serious proportions; German industry has shown market seasonal improvement in Sept.

F. Corley, Marshall Field VP, says inventories have been cleaned up, general business and industry on eve of recovery.

Automotive industry seen planning significant price cuts on 1931 models; in past year carmakers who held or reduced prices have done much better than those who tried to increase prices to maintain profit margins; recent drastic price cuts to clear old models have also shown public willing to buy bargains.

Dow closed below Nov. 13 panic low of 198.69. There were 3 new yearly highs and 321 new lows.

Economic news and individual company reports:

Dow steel average of 8 finished products was $44.76, down from $45.60 last week and new yearly low. Steel scrap prices continue decline; heavy melting steel at Pittsburgh is down 50 cents to $14.75/ton, and down $1 in past 2-3 weeks.

US electric output for a week ended Oct. 4 was 1,695 GWHr, down 5.1% from 1929.

Sept. department store sales were down 7% from 1929, with daily avg. down 11%; first 9 months were down 6%.

US and Canada Sept. cars and truck production estimated 226,361, down 3% from August, 47% from Sept. 1929, and 40% from five-year avg. for Sept. First 9 months 3.061M, down 37% from 1929 and 18% from the five-year avg.

Mexico suffering severe inflation, with costs of “articles of prime necessity” doubling over past 2 months; blamed on currency weakness.

Companies reporting decent earnings: White Rock Mineral Springs, International Agricultural Chemical.

Joke:

“ Mother - Your face is clean, but how'd you get your hands so dirty? Small Son - Washin' my face.”

+ The Boring Stuff:

Pres. Hoover has called for consideration of modifying the Sherman antitrust laws, saying aim of our system should not be to produce competition that destroys stability of an industry. Recent examples where this may apply include the coal and oil industries. Administration will not relax enforcement of existing law, but seeks to start public discussion of antitrust laws to begin tackling the difficult subject of modification.

Editorial: In the past there have been regular campaigns to “incorporate” the NYSE. So far none have succeeded and the Exchange governors remain in full control of its members under clauses that require conduct to be in accord with business ethics and best interests of the Exchange. This self-regulation is invaluable in cases like the recent suspected short sale “riots”; the Exchange can deal with these cases effectively, while a law could not “short of prohibiting under heavy penalty” all short sales; this would be disastrous. “The problem lies in a domain where statute law cannot effectively go.”

Dr. H Schacht, former Reichsbank head, speaks at Bond Club luncheon regarding German situation. Says political situation misrepresented and German people wouldn't tolerate revolutionary measures. However, depression is grave, with 4M unemployed and people faced with deprivations that threaten their existence. Says German people will stand by obligations including Young Plan, but calls for modification as contemplated in the plan based on impossibility of meeting requirements.

US business has invested heavily in both France and Germany, but attitudes in those countries toward this investment differ. France while recognizing some benefit, is wary of letting traditionally French businesses be bought, and also dislikes idea of “speeding up” of industry by applying US methods, possibly destroying “the glamorous tradition which envelops her meanest trades”. Germany by contrast has welcomed US investment unreservedly and is “avid for Americanization of her industries” and application of modern methods. Some of this difference may be due to the unemployment situation, which is much worse in Germany.

Canada backs idea of tariff wall around British empire but rejects free trade within empire; offers reciprocal preferences to other dominions.

California facing severe water problem due to low rainfall and annual 6-8 months dry season. Boulder [later Hoover] Dam should help, but federal and state authorities are planning a statewide list of other projects to aid in water conservation through construction of dams and reservoirs.

New York's Social Register has grown from the proverbial “Four Hundred” to 15,000; proposed names are decided on by a six-member committee, from whose decisions no appeals are possible.

Meeting of NY City taxicab operators opposes Mayor Walker's taxi commission proposal for regulated monopoly.

Madison Square Garden to hold fifth World Series Rodeo Oct. 23 - Nov. 1.

Investment trust (similar to mutual funds) report: Executives reportedly more phlegmatic over losses “since they have been persuaded by ... statements of competitors that they are in the same boat as to the character of results accomplished over the past year.” They have also become accustomed to the once shocking reality of trust shares selling for less than net asset value; discounts of 20% or more are now the rule. Staffs have been reduced greatly, and some are now subletting office space. Almost all new trusts are now of the fixed type (similar to ETF/index fund).

Broad Street Gossip: Stocks, commodities, and optimism have all slumped, but wages have mostly been maintained at the high levels of last year, particularly at big corporations; this has enabled buying power to show a much smaller decrease than “general business and earnings.”

Some of market nervousness attributed to uncertainty over upcoming congressional elections and political situations in other countries.

Odd lot (small) buying reportedly increasing, but not in enough volume to affect the market.

Large volume and declines in leaders seen as indicating cleanup stage of selling wave had been reached, and overdue rally in the making.

Dow transportation average has been trading below last fall's low for some time. Although utilities have been weak recently, the utility average is above the fall low.

Conservative interests still keeping customers on the sidelines in spite of substantially lower prices.

Outlook for disposal of US wheat surplus said clouded by European bans on wheat imports attributed to fear of Russian dumping.

Commodities weak. Grains down sharply, wheat close to season lows. Cotton little changed. Copper buying slower; there's some concern recent active buying was mostly for stocking up, and if production is not curtailed further prices will fall more. Eggs hit 20-year lows. Cocoa futures continued up sharply on concern about Brazilian revolution.

Fed. Reserve reports money in circulation Oct. 8 down $5M to $4.487B, total Reserve Bank credit outstanding up $2M to $1.012B. Fed. Reserve member banks in NY city report brokers' loans down $158M to $2.905B vs. $6.713B in 1929, “all other” (commercial) loans up $18M to $2.466B.

Youngstown District steel makers anticipate no further reductions from current 53% production level for at least another week.

Michigan Republicans call for “a reasonable tariff on copper,” pointing to success of steel protection in maintaining prices.

Cuban Pres. Machado says in favor of proposed international plan for sugar stabilization.

NYSE seat sells for $275,000, increase of $17,000 over previous sale.

National Auto. Show to be held in NY and Chicago January; to exhibit 54 makes, 9 more than last year.

American & Foreign Power Co. reports on status of their operations in Brazil: service 264 cities and towns; business generally continuing normally; only damage reported is at Bahia where radical element destroyed some streetcars; past experience indicates that disturbances of this type generally caused only minor damage to property of electric power and light companies, with earnings tend to rise following settlement of the trouble.

Thursday, October 9, 1930: Dow 200.56 -3.06 (1.5%)

Assorted historical stuff:

Off-year election coming up in Nov. not expected to give Democrats control of the House or Senate, though they may gain more than in the usual off-year due to dissatisfaction with the economy.

Royal Bank of Canada Oct. letter advocates restoring prices to 1926 level [well above 1930 level] and stabilizing them there; disagrees with view that period of general price deflation strengthens business structure - “a period of decreasing prices has always been marked by widespread unemployment” and labor unrest.

Farm Board asks FTC to investigate “insidious campaign” against the Board by its enemies.

Provincial report for Bengal (largest and most populous in India): 83% of population agricultural, using 86% of available land; 6M people farming 31M acres, most live at subsistence level. Many suggestions made to increase agricultural productivity and attract long-term capital.

J. Mooney, GM VP and manager of exports, calls for recognition of Russia as necessary for development of normal trade relations.

A. Pinkerton, head of detectice agency, dies at 54 from effects of gassing in France during World War.

Strands of wire in the 4 suspension cables of the new Hudson River [later George Washington] Bridge, if placed end to end, would reach halfway to the moon.

Henry Ford now owns the Wayside Inn once frequented by Longfellow (Tales of a Wayside Inn, including that old midnight ride of Paul Revere); Mr. Ford drops in occasionally to see how things are going.

Market commentary:

Market wrap: Stocks opened firm but then “developed sagging tendencies,” reaching new lows in many sections; volume was low most of the day. Signs of further bear pressure on leading stocks, particularly US Steel; rally attempts were weak and possibly due to short covering. Stocks drifted lower; however, “impressive resistance” developed at the lows with trading drying up and the tape halting frequently between transactions. Coppers and utilities weak. Poor sentiment was attributed to bad business news including declines in car loadings and steel production; this “offered little incentive to trading activities on the constructive side.” On the other hand some bear activity may have been deterred by the recent campaign against bear raids. Bond market generally weak; South American govts. sharply lower, heavy liquidation extended to other foreign govts.; US govt. steady; corp. and convertibles down.

An optimist reports looking at cars on the road and finding almost all needed a new tire or two; similarly for shoes, “and so it does all the way down the line from automobiles to the end of the alphabet. Everything wears out. You and the other 121,999,999 people must buy soon.”

W. Procter, Pres. Procter & Gamble: "In our opinion we have passed the bottom of the curve and business is slightly but unmistakingly better and in our opinion will continue to improve slowly."

Conservative observers keeping customers on sidelines despite lower prices, say “the market will indicate when it will be profitable to adopt the long side again.”

Use of stop loss orders has become more popular and may be intensifying breaks in the market.

Odd-lot (small) buying has markedly increased lately; considered good technically since stocks are paid for outright and removed from floating supply.

Economic news and individual company reports:

US electric output for Aug. was 7,879 GWHr, down 6% from 1929 and largest decline this year; first 8 months output is still above 1929 level; manufacturing areas showed largest declines while farming areas showed continued increases. Hydro was 32% of output, lowest this year, due to drought.

Steel ingot production in Oct. 6 week estimated at 56.5% vs. 60% previous week; US Steel 61%-62% vs. 65%; Sept. order spurt seems to have petered out.

Iron Age reports price weakness in both finished steel and scrap. American Metal Market sees no visible prospect of increased steel production for rest of year.

French foreign trade has declined through this year; first 8 months had imports of 35.0B francs and exports of 29.3B, vs. imports of 39.6B and exports of 32.8B in 1929; Aug. figures were 4.1B and 3.1B, lowest this year.

Dept. of Commerce says cable and radio reports received indicate trend to economic improvement in Europe and Far East, while South America is unchanged.

Ford passenger car registrations in first 8 months were 871,366 or 41.3% share of market, vs. 972,608 or 32 .8% share in 1929.

Agriculture Dept. volume index of agricultural exports for Aug. was 87, highest since Jan. and above Aug. 1929 and 1928 figures.

Companies reporting decent earnings: Procter & Gamble, General American Tank Car, Continental Can, Q.R.S. Neon Corp.

Joke:

“A bobbed haired waitress, very much out of sorts, sailed haughtily to the table at which sat a grouchy customer. She slammed down the cutlery, snatched a napkin from the pile and tossed it in front of him, then, striking a furious pose, snapped 'Watcha want?' 'A couple of eggs,' growled the customer. 'How you want 'em?' 'Just like you are.'”

Theater:

Bill “Bojangles” Robinson appearing at the Liberty Theater in musical comedy about adventures of a company of black soldiers in the World War. Cast includes “some of the nimblest dancing talent in Harlem ... Mr. Robinson seems to find it as easy to dance as the audience finds it easy to watch him, although one of his arms at present is in a sling, due to a bullet wound, the result of mistaken identity. His dogs do not bark; they purr.”

+ The Boring Stuff:

Editorial: Agriculture Dept. reported value of farm land Mar. 1 down 1% vs. 1929, attributing the decline to “abnormally large supply of available lands, and a readjustment of values to earnings”; only the second explanation is necessary. “There is but one principle of valuation, and that is the relation between price and earnings. That principle holds good whether it be in the Stock Exchange or on the farm.” In the postwar period wheat sold as high as $3.50 a bushel and corn $2.17; this naturally led to inflation of land values about 70% above prewar levels. When commodity prices fell back down, “liquidation was as inevitable as it was in the stock market after the break of a year ago.” That liquidation has been going on for 10 years and caused considerable pain, but is unavoidable. While those living on the land may “attach a sentimental value to it ... those who loan money on farm mortgages cannot have this feeling.”

F. Payne, Asst. Sec. of War, describes emergency industrial plan in case of war. While based on the plan used in 1917-1918, feels it will avoid mistakes made then; objectives are to control uses of raw materials, fix prices for commodities and services, and set needed regulations. There's no intention of taking possession of industries, but “they must do their duty ... as does the soldier.” Drafts of necessary bills are ready to submit to Congress when major emergency is declared.

Brazil govt. takes control of telegraph and cable companies, and suspends all airplane service.

Commerce Dept. says US textile makers will face increasing competition from Japan and other Asian makers, eventually moving to better quality goods; recommends establishing cotton mills in Far East using local labor.

Broad Street Gossip: “The Broadway trader who has been accumulating stocks since the early part of the year added nine issues to his list over the last week. He now has 41 different issues, not one of which he can sell at a profit. ... The shorts have made a lot of money over the last several months ... In the past, other chronic bears at times made a lot of money. But for some reason or other they didn't keep it.”

For the first time in almost a week, bullish rumors were making the rounds of “brokerage wires,” including a large buying order for US Steel and resolution of some “weak situations [that] ... might have brought considerable liquidation into the market.”

Market said still dominated by professional traders; this may account for targeting of theoretical support or resistance levels.

Short interest is reported to have declined substantially under cover of recent market activity.

Railcar loadings for week ended Sept. 27 had by far the largest drop so far this year vs. 1929 (21.0%); nonetheless, “there is reason to believe that the worst is past in so far as comparison.... with 1929 and 1928 is concerned,” since yearly peaks were Sept. 27 in 1928-29, after which they showed sharp seasonal declines.

Spanish currency declines on resignation of official from Central Exchange Office.

Lawrence Stern & Co. says consensus of reports from bond dealers is optimistic on bond market, less than 4% seeing a poor outlook; most see general business outlook as fair, with 20% saying it's poor; almost all favored bonds over stocks. Many dealers are now recommending “second grade” obligations as bargains.

Commodities mixed. Wheat down substantially, other grains mostly down slightly. Cotton up moderately after govt. crop forecast. Copper buying much quieter, price unchanged at 10 cents. Coffee and cocoa up sharply on fears Brazil revolution to interfere with crops.

NY City's 19 largest banks and trusts all showed lower deposits as of Sept. 24 vs. June 30; attributed to smaller volume of stock trading and lower business activity. Largest was Chase National with $1.852B gross deposits vs. $2.065B June 30; next was National City with $1.344B vs. $1.560B.

Middle West Utilities Sept. survey of 24 states they operate in shows relatively gloomy conditions, with Maine the only state showing improvement over 1929. Some states were more severely affected by drought including Illinois, Kansas, Kentucky, and Oklahoma; industrial activity was generally slow.

US Steel is to report unfilled orders as of Sept. 30 tomorrow; some decrease is expected.

Agriculture Dept. Oct. 1 estimate of US cotton crop was 14.486M bales, up 146,000 from Sept. 1 estimate.

Representatives of cotton trade to meet with administration and Farm Bd. officials to help with “continued decline and demoralization of the cotton market.”

Assoc. of Cotton Textile Merchants reports Sept. production of standard cloth was 182.4M yards, down 32.1% vs. 1929; sales were 292.0M, 160.1% of prod.

Production of footwear in Aug. was 27.8M pairs, up 15.4% from July but down 23.6% from 1929. First 8 months was 210.4M, down 12%.

Mexican oil companies anticipate increase in Canadian business due to planned new Canadian reprisal tariffs on US oil.

Pacific Gas and Southern California Edison have committed to buy 20M pounds of copper, covering estimated requirements until the end of next year.

Wednesday, October 8, 1930: Dow 203.62 +0.86 (0.4%)

Assorted historical stuff:

Pres. Hoover speech marking 150'th anniversary of battle of King's Mountain [major Southern battle in American Revolution]: One test of our system of govt. is the practical results: US has more youth in higher education than rest of the world combined; compared to the most advanced European countries, US has double the rate of homeownership per capita, consumes 4 times as much electricity, has 7 times as many cars, etc. Equally important is intangible qualities - sense of freedom, security, confidence in future progress. Sees govt. involvement in business except in emergency as destructive of equal opportunity and tyranny through bureaucracy; business practices which would dominate the country for selfish purposes likewise destroy equality of opportunity.

Lord Barnby, former Fed. of British Indust. Pres., asks collaboration of central banks with Bank for Int'l. Settlements in conservation of gold as circulation reserve, sees this as means of ending declining values and world trade depression.

Editorial: Revolution in Brazil seems to have gotten off to a good start, having captured two southernmost states and three others. Investors are naturally concerned about safety of large amount invested there by countries including the US England and France. However it would be foolhardy for Brazil to repudiate these obligations since they can't live without foreign trade and loans. “The revolution may be regarded as similar to a presidential election in the United States, where an administration may be changed, but the government remains unchanged.” There is some concern that a military struggle may further damage the country's finances.

Henry Ford speaks in London, favors abolition of all tariffs and predicts within 2 years no Ford products will be imported into Europe, but all manufactured there.

Wm. Wrigley providing building in Chicago to give winter shelter for 2,000 men.

New Southern Air Fast Express airline to offer 19-hour service between Los Angeles and Atlanta.

Market commentary:

Market wrap: Bears were notably absent at the market open, possibly temporarily deterred by NYSE's “pronunciamento against bear raids.” Moderate starting rally, however, brought a reappearance of the bears, “who pounded against one pivotal issue after the other,” starting with GE and AT&T. New yearly lows in these were followed by a “steady stream of liquidation” spreading to almost all sections of the market; many stop loss orders hit. US Steel was bear's next target; while they successfully forced it to a new yearly low at 151 1/4, it quickly rebounded; this was followed by a vigorous final-hour rally in the general list. Bond market more active, prices generally lower; some firmness in highest grade corporate.

“Many wild rumors have circulated in Wall Street recently concerning the standing of firms, individuals, institutions, etc.” Reports have been entirely unconfirmed, but have circulated widely and influenced trading.

Market was looking for results of the NYSE statement against bears; “there was considerable uncertainty as to just what action could be or would be taken.”

T. Girdler, Republic Steel Chair.: “Steel prices are touching bottom”; large buyers now placing orders for future delivery; “Prices of many steel products have dropped to a point where many large consumers themselves realize any further decline would serve no constructive purpose.”

F. Hulswit, Amer. Commonwealth Pwr. Pres., says co. will buy now for future needs; based on study of current conditions believes bottom of depression passed.

C Denny, Erie Railroad Pres., speaking to Traffic Club in St. Louis, says in his opinion business has passed bottom of the depression.

Economic news and individual company reports:

Rail freight loadings for week ended Sept. 27 were 950,381 cars, down 2,131 from prev. week, 252,758 or 21.0% from 1929 week, and 246,584 from 1928.

New bond offerings in Sept. were $424.0M vs. $202.8M in Aug. and $209.3M in Sept. 1929; first 9 months were $4.426B vs. $2.488B in 1929.

Farm real estate values were 115% of prewar level on Mar. 30 vs. 116% in 1929; attributed to large supply of land, lower earnings, and tighter mortage credit.

Steel ingot production in Sept. was 2.868M tons and 55.1% of capacity vs. 3.095M and 59.46% in Aug., and 4.528M and 92.35% in Sept. 1929.

Automobile output reportedly declined further in past week and is now approaching low of July-Aug. Rest of the year looks weak due to seasonal factors, though introduction of new models a month early in Nov. may help to some degree. Some of weakness blamed on reduced farm buying.

Companies reporting decent earnings: Consol. Gas of Baltimore, Scott Paper, Melville Shoe, National Fruit Products.

Kroger Grocery and S.H. Kress join Woolworth in announcing Sept. sales increased over 1929.

Joke:

“The passerby stopped and looked at the man struggling vainly with his broken down motor car. 'Excuse me,' said the stranger, 'but perhaps I can help you. There are one or two things I can tell you about your make of car.' The owner straightened himself up and looked at the other. 'Please keep them to yourself, old chap,' he remarked, warningly: 'there are ladies present.'”

+ The Boring Stuff:

Editorial: The peak traffic year for rails was 1920; the net operating income for 1920 would have been $1.150B based on the rates set late in the year by the ICC. In the intervening 10 years, rails have invested about $6B in capital expenditures, yet operating income for 1928 was $1.173B, for 1929 was $1.252B, and for 1930 will probably be below $1B; “failure of railroad net operating income to grow in proportion to investment in railroad plant ... is developing increasingly ominous proportions.” Faith in growth is good, but “there is a limit to all things human - even in this country.”

Editorial by T. Woodlock, former ICC member: Damage cases, in which rail customers sue to recover “unreasonable” or “discriminatory” payments (generally for freight shipping), have mushroomed to the point where they take up 2/3 of the ICC's docket; system must be reformed to reduce number of cases.

Brazilian troubles attributed to low coffee prices, friction between states of Minas Geraes and Sao Paulo; conservative president-elect J. Prestes is from Sao Paulo. US investments in Brazil total over $500M, mostly govt. bonds.

W. Washburn, NY State Securities Bureau head, asks NYSE for any evidence of circulation of false rumors by short sellers, says will prosecute them under section 926 of Penal Law (“False rumors as to stocks, bonds ...”), providing for fine of up to $5,000 and up to 3 years imprisonment.

First metal-base highway being tested in Springfield, Ill.

Foreign exchange and bonds of several countries particularly unsettled on political instability, including Germany, Spain, and Brazil.

Consensus on stocks seems to be optimistic for the “long-pull” outlook but pessimistic on near-term price movement; many brokers are advising staying on sidelines, which should create a pent-up buying demand that “will scramble into the market at the first sign that a turn has been reached.”

Chart readers encouraged by support quickly developing following violations of former support levels on Monday. Failure to follow through on this decline may indicate a halt to the downtrend. Another market student points out recent swings have been 24-26 days long, indicating current reaction may be near end.

Opinion differs over source of recent liquidation; possibilities include investment trust and foreign selling.

Opinion differs over significance of recent weakness in scrap steel prices, with some authorities saying market is returning to normal after some short covering.

E.F. Hutton notes many small stocks have already been thoroughly deflated, with selling now concentrated in trading leaders. Full recovery is not to be expected while news continues discouraging, but history shows this changes when least expected; “in the long run we think people will look back upon this period as having offered attractive investment and speculative opportunities for the long pull.”

Conservative observers advise against any buying until “market has stabilized itself.”

Commodities weak. Wheat and other grains sharply lower. Cotton down moderately, closed slightly above years lows. Copper buying continues in good volume at $.10/pound, though it's unclear what proportion is for stocking up vs. current demand.

Class 1 rails net operating income in first 8 months was down 32.9% vs.1929; best area was southwest, down 18.2%; only 3 rails had increase.

American Petroleum Inst. reports gasoline stocks at refineries Oct. 4 were 36.441M barrels, down 781,000 in week; refineries operated at 67.2% vs. 71% prev. week; oil production was 2.387M barrels/day, down 2,800 from prev. week and down 500,100 from 1929.

Agriculture Dept. and Farm Bd. sponsor acreage reduction campaign for cotton aiming to reduce acreage from 45.8M acres to under 40M.

US soft (bituminous) coal production in Sept. was 38.6M tons vs. 35.7M in Aug. and 45.1M in Sept. 1929; first 9 months was 339.6M tons vs. 387.3M in 1929; hard (anthracite) coal production in Sept. was 5.3M tons vs. 6.2M in Aug. and 6.5M in Sept. 1929; first 9 months was 51.0M tons vs. 52.6M in 1929.

British registered unemployed on Sept. 29 were 2.162M vs. 2.110M on Sept. 22 and about 1.190M a year ago. Labor Party adopts resolution declaring application of definite socialistic principles as only possible remedy.

German mortgage banks continue to do well selling long term mortgage-based bonds (pfandbriefe) to banks and foreign buyers; rates are high and delinquencies remain low at 2%-3%.

Uruguay exports in first half were $64.6M, up $11.0M over 1929; imports were $44.0M, down $3.1M.

Detroit Bd. of Commerce employment index on Sept. 30 was 74.8, vs. 80.8 on Sept. 15, vs. 83 on Aug 31, and 119 on Sept. 30, 1929.

NY City to sell $75M in bonds Oct. 21; sale conforms to Comptroller Berry's policy of confining city bond sales to one offering a year.

National Poultry, Butter, and Egg Assoc. asks for concerted action against “radical legislation” designed to create new marketing machinery.

Agreement reportedly reached for merger of Gillette and AutoStrop Safety Razor Co.; financing to be announced shortly.

Tuesday, October 7, 1930: Dow 202.76 -8.34 (4.0%)

Assorted historical stuff:

Pres. Hoover addresses AFL. Praises cooperation of labor and business after fall market panic, says measures adopted “served as a practical system of unemployment insurance”; notes public works and construction by rails and utilities in first 8 months was $4.5B vs. $4B in 1929; “a new and improved tool has been added to the working kit for the solution of our future problems.” Says some regulations that lead to destructive competition and instability may need to be modified. Praises scientific and labor saving development as gain to employers, workers, and consumers; recognizes problem of “technological unemployment” but believes new discoveries and inventions will absorb workers displaced from older industries.

NY Stock Exchange warns bear operators against “raiding tactics.” Article XVII, Section 4 of the Exchange constitution forbids buying or selling securities for the purpose of “bringing about a condition of demoralization in which prices do not fairly reflect market values.” Recent aggressive attacks on leading securities together with several recently circulated unfounded rumors have caused the Exchange's Business Committee to “decide upon a firm attitude.” Committee has warned members that all messages sent over private wires must be kept on file, and called several members in for questioning yesterday.

Uprisings break out in 4 Brazilian states; Pres. W. Luis declares “state of siege” throughout republic; banks in Rio de Janeiro closed for 15 days; banks in Santos and Sao Paolo also closed; coffee breaks to lowest price since 1915, and Brazilian coffee exchanges suspend trading indefinitely.

Prohibition Bureau estimates illicit liquor production in US in year ended June 30 at 876.3M gallons; estimates consumption at 40% of 1914 level.

British R-101 airship crashes [killing 48 on board]; Rear Adm. Moffett blames fire, loss of life on use of hydrogen, urges lifting of ban on exporting helium.

Scientific research is of increasing importance to industry, with corporations including GE, AT&T, du Pont, and GM maintaining their own research labs. Many important industrial applications began as pure research, some of it in these industrial labs. Bell Labs now researching “two-way television, color television, sound picture making, and research on the three-dimensional photo camera.”

Higher education suspected of discouraging marriage in women students. Of living graduates of Wellesley College, less than 1/3 are married at the present time; of 400 women just graduated from Northwestern, only 23 stated in a final poll that “matrimony was their preferred career.”

Atlanta sues to force Census to increase population from 270,367 to 360,692; Houston protests it would suffer great injury by being demoted to third city in South.

Market commentary:

Market wrap: Stocks dropped sharply on moderate volume; attributed to reports of “serious outbreaks” in Brazil, to unsettled industrial conditions at home, and to decline of several representative stocks to new yearly lows “with unsettling effect on the entire market structure.” After early selling had spent itself, market turned dull and drifted irregularly on small volume, with little professional activity seen in either direction; disturbingly, trading dried up completely on any rallies. Some issues showed further weakness as session progressed including utilities, rails, insurance, Eastman Kodak, Allied Chemical, AT&T, US Steel. Bond market active and irregular; corp. bonds generally weak; US govt. firm; South American govts. down sharply, other foreign govts. irregular.

Harvard Economic Society says current business statistics are not reassuring though there's still time for normal seasonal gains to materialize.

Natl. Assoc. of Manufacturers annual trade survey reports signs of upturn; while slump in trade and employment has been sizeable, current favorable signs include reasonable level of inventories, wage scale generally holding, labor peace, and optimism found in survey sent to members: prospects for winter were called excellent by 2%, good by 18%, fair by 59%, and poor by 21%. J. Edgerton, President, criticizes “emotional proposals” advocating govt. solutions for unemployment as unworkable, praises Smoot-Hawley tariff as moving tariffs away from politics.

Dow closed at a new yearly low, and within 4.07 points of the Nov. 13 panic low of in 198.69. There was 1 stock at a new yearly high and 93 new lows.

Economic news and individual company reports:

Fed. Reserve member banks weekly report for Oct. 1: loans on securities up $22M to $8.483B, “all other” (commercial) loans up $79M to $8.530B.

Rails initially pleased about statement in Hoover's speech that rails should be assured of returns sufficient to maintain them in strong enough condition to extend relief in national emergencies. Upon further reflection, however, “the prospect of repeated requests of this sort from the government was not very cheerful.”

Class 1 rails net operating income in Aug. was $95.6M, a return of 3.38% on property investment, vs. $141.8M and 5.1% in 1929; first 8 months was $555.3M, return of 3.59%, vs. $828.4M and 5.48% in 1929.

American industries most affected by “five year dumping program” of Russia form temporary “Joint Conference on Unfair Russian Competition” to gather information; industries represented include lumber, matches, sausage casings, glue, coal and manganese.

Companies reporting decent earnings: Woolworth.

Joke:

“Cashier - You will have to bring someone here to identify you before we can cash this check. Do you have any friends in town? Stranger - No. I'm a tax collector.”

+ The Boring Stuff:

Editorial: Some AFL officers have blamed depression on lack of workers buying power, calling for higher wages. Henry Ford is optimistic on future, seeing ever increasing wages and living standards based on intelligent management and improving productivity. This could happen if we had leadership with the right capacities and a public with the “enlightened selfishness” to select them, but both of these are in doubt. This recalls Walter Lippmann's “drift or mastery”; perhaps the best we can do is drift in the right direction.

Editorial: Wheat for December delivery, which on Monday a week ago sold below $.76 a bushel, closed the week over $.82. This looks like a return of reason. While the wheat outlook is not good, it's not disastrous as implied by the recent market plunge. Russia will be exporting some wheat but the amount is unclear; “as in most bear stories the size of the animal is likely to be greatly overestimated.” On the other hand, Europe will be 100-150M bushels short of last year, and the US will be using a sizable amount of wheat for animal feed.

Henry Ford's visit to Paris has focused attention on battle for European auto market among US carmakers. GM bought control of Opel last year, and GM Pres. A. Sloan has pointed out the potential of this market. Due to recent tariffs, US carmakers are shifting from setting up European assembly plants to manufacturing all or most of the car parts in Europe.

Germany awaits formation of new govt. following surprise radical election gains. Radical govt. seems unlikely; Communists are opposed on principle, and Fascists have only the vaguest practical program, having “promised everyone everything.” Likely solution is moderate parties uniting behind Breuning cabinet, but there are important disagreements to be settled: Breuning govt. wants to cut unemployment benefits to balance budget, while Social Democrats feel they're already too low; on the other hand, Social Dems. want to raise income taxes while Breuning parties say they're already too high.

Canada plans to spend about $90M to stimulate industries not benefitting from their new tariffs, mostly on rail and highway construction; some money to go for direct unemployment relief. One important project is national highway from Nova Scotia to Vancouver.

Supreme Court opens fall term; Arizona sues to stop work on Boulder (later Hoover) dam.

US govt. is trying to reintroduce musk-ox (looks like small buffalo) in Alaska after it's been wiped out by hunters; importing herd from Greenland. Musk-ox is not thought to compete for food with reindeer, which was already reestablished in Alaska by the govt.

Whaling is almost a lost art in the North Atlantic but is successful in the North Pacific and thriving in the Antarctic region. Companies operating whaling fleets include the California Sea Products Co. and the Mexican Whaling Co.

Discussions continue on city acquisition of BMT and IRT; questions include financing of purchase, and method of operation of the combined city transit company; Mayor Walker understood to be against direct city operation, possibly in favor of quasi-public operating company.

Representatives of Bronx civic organizations testify that removing the 6th Ave Elevated line would cause serious hardship for the traveling public.

Recent declines in many high-grade issues attributed to liquidation by investment trusts reducing their portfolios; blue chips considered more attractive to sell since they haven't declined as much as more speculative stocks. One such case in the past two days has been AT&T, which has also attracted some short selling anticipating poor Q3 earnings; the stock now yields 4.5%, and has over 500,000 shareholders. Another case is US Steel; the preferred and common shares are now both about 150, each paying annual dividends of $7.

While some predict a midweek rally, conservative observers advise clients against trying for it, and don't advise buying even gradually until the market shows the ability to move forward for more than a day or two.

Tax selling (for establishing losses and lowering taxes) reported to have been much larger than expected recently.

Copper surplus expected to increase, though it's hoped that the current low price will now start forcing small producers to stop production.

Steel price's better stability vs. copper attributed to consumer policy of buying only necessary requirements instead of buying ahead.

Commodities mixed. Most grains moderately higher, corn up substantially. Cotton down slightly. Rubber down sharply; coffee plunges on Brazilian unrest; raw sugar futures up sharply on technical recovery from last week's liquidation. Copper buying continues active, but thought to be largely for stocking up.

Rails in several territories, as well as grain shippers and millers, filing petitions with the ICC about recently lowered grain rates.

Only 2 of 52 rails show gain in loadings vs. 1929 for 2 weeks to Sept. 13; rails serving auto industry do worst.

Atchison Topeka and Santa Fe Rwy. expected to earn about $14.50/share this year vs. early estimate of $18; decline attributed to lower revenues and to keeping promise to administration to help business and employment situation by keeping up high level of maintenance and improvement work in the first half.

World sugar crop for 1929-30 estimated at 30.045M short tons vs. record 30.435M crop in 1928-29.

Lumber industry continues to hold production close to or under new orders; for week ended Sept. 27, orders were 8% above production of 269.0M feet.

World production of Ford cars and trucks in Sept. was 97,885 vs. 99,142 in Aug. and 161,305 in Sept. 1929.

Julius Kayser (one of the largest makers of silk products) stock about 20, dividend recently reduced from $4 to $2.50, earnings for year ended June 30 were $2.83, earnings for previous 3 years totalled $26.19.

Monday, October 6, 1930: Dow 211.10 -3.08 (1.4%)

Assorted historical stuff:

Editorial: France's accumulation of gold is starting to “threaten the smooth workings of the world's reserve banking machinery,” although a previous episode in the 1870's turned out fortunately through sheer accident. This recalls the German maxim about trying to forecast the future: “It always comes out different.”

Southern California has become a tourist mecca; in 1929, 1.067M visited, spending $418.5M; as many as 1 in 10 stayed, with population of 10 Southern Calif. counties growing from 1.424M to 3.284M in the past 10 years.

Times are changing in Manhattan real estate. In the past 15 years many landlords did as little as possible for tenants; repairs were kept to bare necessities unless tenants paid, and “requests for redecorating were as often as not received with dignified silence.” Recently, a tenant requested a number of quite expensive jobs; the landlord's letter back concluded “Our decorator will be around in the near future to arrange for the work at your convenience.”

Judge G. Hahn of Cleveland rules against lawsuit to stop planes flying over property that was based on ancient Roman legal principle “whosoever controls land controls it from the center of the earth to the zenith”; decides effective possession of property only extends 500 feet up.

Berlin radio engineers build mammoth loudspeaker audible over a 25 mile diameter, plan to attach speaker to a balloon anchored 3,000 feet high to broadcast concert to the city. Loudspeaker creates airwaves that can be felt 150 feet away.

Market commentary:

Market wrap: Saturday short session opened mixed, advanced moderately on low volume with activity concentrated in recent bear targets; short-covering was apparently active; majors including US Steel, GE, Westinghouse, American Can, GM showed strength. Late in the session a vigorous bear attack started in AT&T and spread to rails and other investment stocks; sharp drops in these spread to other sections and early gains were wiped out; market closed weak. Bond market moderately active; investment grade and US govt. firm; lower grade and speculative issues weak; German bonds mixed, other foreign govts. mostly firm.

Week in review: Dow at Tuesday's close was about 6 points from last Nov. panic low, dropping about 40 points in 3 weeks. Improvement in grain markets brought some optimism as week closed, and pressure lifted from stocks. Interest rates broke to lowest levels since war, though weekly bank reports showed encouraging increase in commercial loans and currency circulation. Steel prices mixed; rail figures weak. Bond market opinion generally gaining enthusiasm.

G. Verity, Pres. Amer. Rolling Mill Co.: “I think it is pretty well conceded that we have reached or passed the bottom of this depression and from now on can look to gradually improving business”; industry should be back to normal by end of Q1 1931; company business in Sept. up 25% over Aug.; Business recession has been costly, but cost will be recovered thanks to removal of “deadwood acquired in prosperous times.” Looks forward to tremendous prospects in all industries.

S. Archer, Pres. Archer-Daniels-Midland, says Sept. business largest of any month this year, inventories remain low; “with the more general feeling of optimism that is being manifested, we expect the holding off tendency which has been so pronounced to give way to more liberal buying from now on.”

AFL Pres. Green says worker's buying power key to prosperity. Suggests policies to combat depression including buying ahead, cutting overhead other than wages by modernizing equipment and cutting waste, improving product quality, and increasing advertising. Notes optimistic business signs but sees danger in increasing number of wage cuts.

Economic news and individual company reports:

Irving Fisher's index of 200 commodities for week ended Oct. 3 was 82.3 vs. 83.1 in previous week and 94.7 in 1929.

New car registrations for Aug. were 203,737 vs. 254,098 in July and 376,886 in Aug. 1929; first 8 months were 2.111M vs. 2.965M.

F.W. Dodge reports construction contracts awarded in 37 Eastern states during Sept. were $331.9M vs. $347.3M in August and $444.4M in Sept. 1929. First 9 months was $3.685B vs. $4.601B in 1929. Residential construction in Sept. was $98.5M, highest total since May.

Youngstown district steel operations down 1% this week to 53%; consumers said unwilling to book heavily due to mixed business and price picture.

US Ambassador W. Edge asks French Commerce Min. to rescind recent doubling of duty on US raw and refined lard.

Federal grand jury indicts six former employees of Manhattan Elec. Supply for manipulation of the stock; tactics included employing a group to send out letters, market sheets, and telegrams to the public, and paying money to brokers in return for advising customers and the public to buy the stock.

Movie:

Cecille B. DeMille's Madame Satan: Theme is “the eternal triangle.” Bob Brooks is dissatisfied with his marriage and turns to a pretty vaudeville singer. His wife Trixie decides to win him back; masquerading as Madam Satan, she walks into a masked ball aboard a Zeppelin “singing a vigorous song of defiance and woos her husband away from the temptress.” Meanwhile, lightning strikes the Zeppelin and “all the characters are sent hurtling through the air in parachutes.”

+ The Boring Stuff:

Editorial: Rails are facing increasing competition from passenger buses and freight trucking. They've done a good job of cutting expenses since the depression of 1921, cutting expenses and letting 350,000 employees go; further large savings are unlikely. They must now try to increase traffic through competition. For passenger traffic this can be done through rates, while for freight, service is also important - rails should offer door-to-door service and handle less than carload amounts as trucks do.

Editorial by T. Woodlock, former ICC member: The ICC (Interstate Commerce Commission, regulates railroad operations) disposed of 2,120 cases in 1929; a rather complicated calculation shows each commissioner disposes of a case every 2 1/2 official working hours. In reality commissioners must work 80 to 90% of their waking hours including Sundays and holidays, and depend on staff to do much of the research. “Raw material” on which commission decides cases includes about 50M words of oral testimony a year and scores of thousands of exhibits; published record of decisions is about one volume/month.

Recent statements by Pres. Hoover seen as advocating more tolerant treatment of rails by the ICC; Hoover said to be concerned about rails' recent revenue decline. Rails have complained about ICC's stinginess on rates while they're being called on to assist in various emergencies, at substantial cost to their revenues.

NY Trust Co. branch at 57th St. and Fifth Ave. to be decorated with one of largest murals in the city, a 200 foot canvas depicting 4 centuries of NY shipping and architecture ranging from an early Dutch merchant ship to “a speed-boat of today shooting beneath Brooklyn Bridge.”

Municipal bonds continue strong, especially highest grade; Wall St. Journal avg. of 20 long-term state and city bonds yields 3.94%, lowest since May 1928.

Expanding number of state and municipal bond issues expected to result in increased employment rolls in the near future; about $400M will be voted on in Nov.

Broad Street Gossip: Foundations for a bull market are now strong as they've been in years, though an early and sustained uptrend can't be taken for granted. Favorable factors include brokers' loans down drastically, much money available for investment, low rates, low inventories, and record low commodity prices; these are the opposite of conditions when past panics happened. In the Oct.-Nov. crash many rushed to buy stocks because they were cheap, with even John D. Rockefeller, Sr. buying and advising others to; now most stocks are well below those bargain levels.

Recent notable stock movements: Banks, trusts, and insurance companies closed sharply lower on the week. Newmont Mining (copper) stock now at 64, which is below its total earnings for the 3 years ending Dec. 31. Woolworth has shown strength on expected Sept. sales improvement. Technicolor has rallied nicely over the past few days; attributed to large short interest and bargain hunters speculating on prospects of color movies.

Conservative observers continue to advise remaining on sidelines until market has shown ability to hold upturns.

Bear traders who had covered shorts earlier in the week were reported selling the market again on Friday and Saturday, encountering little resistance.

Economists closely watching trend in electric power output in coming weeks; should reflect any improvement in industry.

Some attribute decline in Montgomery-Ward Sept. sales to declining farm buying power.

Commodities weak. Grains down moderately in dull market. Cotton again down moderately despite midmorning rally.

US-Europe trade stats: about 40% of total US foreign trade; total trade surplus including merchandise and service of $612M in 1928 and $412M in 1929 (merchandise surplus alone was over $1B each year); US investments in Europe at end of 1929 were about $4.3B, not including war loans from US govt. of $6.6B; estimated net balance including merchandise and service trade, debt payments, and capital investments was surplus of $418M in 1928 and $688M in 1929.

Agriculture Dept. reports production of wheat for 1930 in 30 countries was 2.802B bushels, up 5.9% over 1929.

US officials say will probably not know if Russia will import wheat until winter, when Soviet collections of grain from farmers will be complete.

Movement launched in Texas for law to curtail cotton planting due to low prices. Gov. Moody advises calling on Farm Board instead to bring about drastic cuts in cotton acreage nationwide by recommending concerted action in all cotton states.

Congress expected to appropriate between $5M and $25M for loans to farmers to purchase seed in drought areas.

Railway Age reports Aug. freight car orders were 565 vs. 4,257 in 1929; locomotives were 25 vs. 84; passenger cars were 62 vs. 0. For first 9 months freight cars were 33,137 vs. 66,190 in 1929; locomotives were 330 vs. 672; passenger cars 623 vs. 1059.

Bonds called in advance of maturity in Oct. were $43.4M vs. $49.2M in Sept. and $19.2M in Oct. 1929; first 10 months was $352.2M, lowest since 1924.

NYSE committee on business conduct asks members to send to it all telegraphic communications sent or received in 2 weeks ended Oct. 3 relating in any way to the financial conditions of members of the exchange.

National Auto Show reports applications for space in the 1931 show's parts and equipment sections at near record volume.
Chesapeake & Ohio Rwy. reportedly saving substantially on maintenance thanks to new equipment, though interest charges are higher due to capital outlay.

Companies reporting decent earnings: Beatrice Creamery.

Favorites of the week Sept. 29-Oct. 4, 1930

No Journal was published Sunday, Oct. 5, 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.

Oct. 4:

[Note: Strangely familiar dept.] Salmon O. Levinson urges temporary suspension of “organized short selling” on NYSE as means to end business pessimism.

Oct. 3:

[Note: I find this speech fascinating. It clearly contradicts the image of Hoover as oblivious or do-nothing - he's not in denial about the severity and human consequences of the crisis, and he sounds strangely like a modern economist in his explanation of what caused the crisis and in defending the necessity to take action. The second paragraph in particular sounds uncannily familiar, especially the part quoted about the periods of stability becoming longer and recessions milder – could this be a feature of the period when a debt bubble is ballooning to its final humongousity before bursting? ]
Pres. Hoover's address to American Bankers' Assoc.:

Past year has been a severe shock to economic system, disorganizing it and slowing consumption to 85%-90% of normal. This has caused “a great human problem ... unemployment, privation, and fear”; however, it's not a new experience but typical of recurrent crises in the past.

Main cause of most of these crises is an inflationary boom leading to destructive results, in this case in our stock markets and in worldwide overproduction of many commodities. Some fatalists believe these crises are inevitable, but the same was once said about typhoid or cholera. Govt., economic and business leaders have already accomplished much in past decade; as a result, “the period of stable prosperity between storms is longer, the period of the storm is shorter, and the relief work far more effective.”

Unprecedented cooperative measures so far by business, bankers, labor, and govt. have been effective at maintaining demand to some extent, but we should also think of prevention. The banking system can play an important role due to its large influence in directing credit, both by restraining unwise expansion and speculation during booms and by instilling confidence and making credit accessible during recovery. Rails and utilities could also act as “balance wheel” through public works and construction.

While depression is worldwide, US doesn't need to wait upon recovery in rest of the world but can lead the way as it did in 1922. Our resources, people, and scientific discovery are unimpaired. Depression is “but a temporary halt in the prosperity of a great people.”

[Note: Strangely familiar in the receipts; strangely unfamiliar in the expenditures.] Income tax receipts for fiscal Q1 (July 1 - Sept. 30) were $554.4M vs. $609.4M in 1930, total ordinary receipts were $868.9M vs. $1.015B, and total ordinary expenditures were $715.6M vs. $722.7M. Gross public debt on Sept. 30 was $16.081B vs. $16.720B in 1929.

[Note: Ay Chihuahua! dept.] British Imperial Conference hopes to solve problems of empire free trade, India, and Palestine, knitting empire into an “economic and imperial whole.”

[Note: Sheer Genius dept.] NY City Community Council recommends construction of world's largest airport on artificial island just south of Governors Island in New York Bay, and construction of subway from Manhattan to Staten Island and on to Brooklyn, with stations on Governors Island and the airport.

Oct. 2:

[Note: Interesting data point on what's depression-proof.] Amer. Beauty Congress told women spend almost $750M/year on cosmetics with no decline this year; 30% spend over $150/year.

[Note: I made this joke last week, about a laptop.] “The owner of a cheap watch brought it in to the jeweler's shop to see what could be done with it. 'The mistake I made, of course,' he admitted, 'was in dropping it.' 'Well, I don't suppose you could help that,' the jeweler remarked. 'The mistake you made was picking it up.'”

Oct. 1:

[Note: Strangely familiar dept.] National City Bank monthly business review: Thus far business in Sept. has shown some improvement, but not strongly enough to convince that the uptrend is here to stay. However, without minimizing the depression, which is caused by serious and fundamental maladjustments, we also shouldn't “magnify the difficulties out of all due proportion.” While it's true no two depressions are identical, they have been studied for many years and general characteristics are fairly well understood; business activity indexes in July and Aug. touched lows of 1921, “warranting the assumption that the decline must have nearly, if not entirely, run its course.”

[Note: Always keep your eye on the freight loadings dept.] Rail freight loadings for week ended Sept. 20 were 952,512 cars, down 13,201 from previous week, down 18.4% from 1929, and down 16.7% from 1928.

Sept. 30:

[Note: Strangely unfamiliar dept.] Editorial: “New economics” statements that consumers are now buying too little and saving too much have just enough truth to be “dangerous pabulum for the popular mind.” Consider the savings people have in banks and life insurance. “Is it conceivable that it can be for the general good ... that these savings should not be made and that the money should be spent in consumption? Will the country be better off as a whole if the mortgage on the home is allowed to remain and instead a second car placed in the garage? The question answers itself. ... Thrift and extravagance succeed each other as do the tides, and the wheel invariably comes full turn. ... A little patience is all that is necessary ...”

[Note: Strangely unfamiliar dept.] US Steel policy of keeping as many workers as possible and distributing available work among them has been favorably commented on in many quarters; “the recommendation is made in the financial district that the adoption of such a policy by other large employers ... would do much to alleviate unemployment this winter.”

[Note: Ay Chihuahua! dept.] Baar, Cohen, & Co. contrast current stock market with debacle last fall. Back then, business had been declining since June but the market kept rallying; now business has hit bottom and should improve, but the market “ignores this condition just as it ignored the business decline ... A year ago the public was in the market up to its neck - in fact, in some cases, above its head. Today the public is afraid to own stocks. We know of no better indication that a turn for the better is near.”

Sept. 29:

[Note: Planning for brutal world domination is one thing, but when you mess with perfectly good securities you have officially Gone Too Far.] Editorial: Market reaction to Hitler's tirade in court was a crying shame: “It is a wonder, as well as a pity, that good securities must be made a football of a bombastic radical who since [1919] has succeeded in making an ass of himself.” Germany has had a hard time since the war; Hitler has taken advantage for his own selfish purpose. He formed his present party in 1921 with no platform but opposition: to Parliament, to capitalism, to rights of the Jews, and now to the Young plan. Four months later he tried to march on Berlin to “save” Germany, which showed no interest. They are even less likely to adopt his program now that much progress has been made toward reconstruction. Hitler's testimony showed his true colors. “The almost certain reaction will be a wave of disgust that will line up the people against any further progress of his party ... it is likely that his career will prove like a glass of soda water now frothing but quickly simmering down to nothing.”

[Note: Strangely familiar dept.] Dr. B. Anderson of Chase Nat'l. Bank criticizes Fed. Reserve use of open market operations; allows they may have been necessary to arrange war financing at low rates, but use has increased greatly since, mainly to lower rates; doing this “can generate almost incredible abnormalities in the monetary picture.”

[Note: Doctor: You could live so much longer if you gave up drinking, smoking, and gambling. Patient: You call that living??] W. Graham, Pres. Great Britain Bd. of Trade, notes British spend $325M/year on drinking, smoking, and betting; suggests unemployment would be much improved if they used the money to buy commodities instead.

[Note: Passengers then had to wait 45 minutes in the friggin' taxi line] Air travel record set at Newark Airport when 114 passengers landed or departed within 2 hours.

[Note: Correct priorities dept. ] Knute Rockne, Notre Dame head coach, to join R. H. Gibson & Co. as special partner; will devote his time to brokerage business except during football season.

Saturday, October 4, 1930: Dow 214.18 +3.14 (1.5%)

Assorted historical stuff:

Editorial on Pres. Hoover's speech at the ABA convention: “Without minimizing the severity of the depression or setting any dates for recovery, he sees nothing to fear. ... There was no attempt to belittle the situation or to convince his audience that prosperity was just around the corner. A bad business situation can never be talked away ...” Instead we must face the facts, find the causes, and tackle them with all our strength. “The man who will not be whipped cannot be whipped.” This depression, like most, is the aftermath of an inflationary boom. But it's “not a permanent situation; it is more like the headache that is supposed to come the morning after a night of dissipation.” The recovery comes when consumption and production balance again; this process has been underway for over a year and won't stop. It may, however, have been slowed down by unnecessary pessimism and fear; this should be tackled both by bankers and by the general public.

In past 20 years, average steel prices have gone up 26% while average wages have gone up 133%.

German Chancellor Breuning seen likely to pursue dictatorship to enact program; several provisions would require 2/3 majority in Reichstag since they infringe Constitution, and this is unlikely to be attainable. Stock market again declines, possibly due to foreign market declines and fear of impending strikes.

French govt. takes steps to halt “flood” of Russian imports, including licenses requiring equal amount of French exports to Russia.

“Competent observers” doubt that Russia is attempting to rattle world business or is in a desparate state; more reasonable explanation is that it is trying to reduce its current sizeable trade deficit by increasing exports.

Chicago payroll funds again exhausted after paying salary checks to firemen and police; Tribune reports no more money available until State Supreme Court rules on validity of emergency $12M bond issue.

Air mail terminals are becoming popular night attractions; crowds attracted by roar of motors, flames shooting from huge exhaust pipes, sudden blaze of light as plane takes off. Pilots often cater to public by buzzing the fields after takeoff.

Last year US made 842.8M pencils, 23.1M mechanical pencils, 248.3M pen points, 13.9M fountain pens, and 588,768 typewriters.

Teterboro, New Jersey has 11 officials, including mayor and 5 council members; voting population is 12, and total population 26.

Market commentary:

Market wrap: Leading stocks worked gradually higher on low volume; grain markets also strong. Positive tone attributed to lower brokers' loans and constructive speechs by Pres. Hoover and Farm Bd. Chair Legge; “powerful bankers” also reported more optimistic on market. Some isolated weakness at midday in rails, Montgomery Ward, and Fox, but leading stocks resisted any pressure and worked upward into the last hour. Merchandising shares strong, led by Woolworth. Bond market increasingly active as day progressed; corp. generally strong with isolated weak spots; foreign issues stronger; US govt. narrowly mixed.

Bulls encouraged by rallying tendencies late Thursday, indicating support that came in at Tuesday's lows was still effective. Based on precedent in June, July, and August, a technical rally at least to a Dow of 225 was expected. Many prominent brokers also believe this is a good point to buy for long-term investment.

Large reduction in brokers' loans was taken as an indication of stocks passing to strong hands.

Recent increase in foreign buying reported, possibly due to instability abroad; some investment demand also expected from Oct. interest and dividend payments.

Salmon O. Levinson urges temporary suspension of “organized short selling” on NYSE as means to end business pessimism.

Economic news and individual company reports:

Pres. Hoover announces govt. expenditures for current fiscal year (June 30, 1930-31) estimated at $4.135B, down $67.9M from June 30 estimate.

Bradstreet's and Dun's weekly trade reviews: cooler weather over much of US enlarged retail and wholesale buying; however, seasonal gains remain irregular and short of vigorous revival. Sharp market fluctuation in week may be confusing the picture. Many lines of business showing more week to week irregularity than usual.

Youngstown District steel operations expected at 54% next week, unchanged; steel manufacturers less optimistic on continued price uptrend due to continued weakness in steel consuming industries.

Gasoline in Chicago wholesale market is 5 3/4 - 6 1/4 cents vs. 5 7/8 - 6 1/4 previously.

Company reports since July 1: 277 companies reported higher earnings vs. 1929 and 557 lower; 1297 dividends unchanged, 68 increased, 136 cut.

Joke:

“Nervous Suitor - Mr. Jackson, er - I would like to - er - that is, I have been going out with your daughter for five years.
Parent - Well, what do you want - a pension?”

+ The Boring Stuff:

Editorial: Like Prohibition and the tariff, the electric industry is in line to become a major political football. It has grown with unequaled speed, with plant investment now almost half that in the rail industry; the problem of setting rates is not solved and involves “intricacies of detail” hard for the public to understand; and companies in the field have so far been “notably successful,” with a tendency to consolidate. “Thus the industry as a whole presets a shining mark for the political agitator's guns and a promising hunting ground for 'progressives' of all kinds and colors. Much tumult and shouting is ahead of us.” We can't hope to solve every issue at once, but for starters one interesting claim to settle would be the one by Mr. Carlisle, Niagara Hudson Power Chair., that they sell power to consumers 33% cheaper than the government-run Hydro of Ontario while also paying taxes. This seems like a clear question of fact that might start shedding light on the issue.

League of Nations to adopt plan guaranteeing loans of up to $140M for nations that are victims of aggression.

NY Gov. Roosevelt says industrial employment down 19% from a year ago, says crisis will be averted if all who can, offer work.

Detroit Mayor Murphy meets with industrial leaders to discuss ways of finding work for 150,000 unemployed; almost all Detroit industrial CEO's attend. Some small scale programs agreed on including employment agency and public works; large scale relief probably depends on increase in auto production.

Chinatown, San Francisco now has its own post office, brokerage, bank, and phone exchange, all operated by Chinese-Americans.

G. Houston, Pres. Baldwin Locomotive Works, says most of US motive power is obsolete; as of Dec. 31, only 21% of locomotives in use had been built in the past 10 years. Says equipment could be modernized, saving money with little new financing, by switching funds from maintaining old equipment to buying new.

Decline in the Dow in Sept. 1929 (start of the bear market) was 37.72 points; decline from Sept. 10-30, 1930 was 35.52.

Recent break in stock prices may have been discounting poor Q3 earnings; however, Q4 earnings comparisons will be more favorable since they'll compare with a period last year when business was already significantly depressed.

Conservative observers still advise staying on sidelines, reducing long positions on rallies.

Some feel rails may be attractive at current prices; should be first to feel business improvement, and some now have high yields on current dividends.

F.J. Lisman & Co. see possibility of “old-fashioned bull market in bonds” in Nov. and Dec.; see bargains in bonds a notch below highest-rated.

Commodities mixed. Grains again up strongly; wheat up sharply in spite of bearish crop news. Cotton off moderately. Copper buying continues strong at 10 cents; considerable indication that bottom has been reached, since this price is hurting all producers.

Increasing attention being given to possible cuts in capital gains tax, with administration apparently in favor. Current tax is 12.5% on assets held more than 2 years; possibilities include lower rate or graduated tax reducing rate as asset is held longer, up to no tax for 15 year holding period.

Fed. Reserve open market operations have been reduced recently; holdings of banker's acceptances and govt. securities have only increased slightly in the past several weeks, against usual seasonal pattern.

Unitization becoming more popular in oil industry as remedy for waste and overproduction; defined as “progressive, cooperative development of oil pools,” rather than uncontrolled development with curtailment later imposed.

US has been a large importer of gold through 1930; for first 9 months, imports were $264.4M and exports $112.2M. Sept. import balance was $3.2M.

Bond Buyer reports state and local borrowings in Sept. were $72.6M vs. $95.4M in Aug. and $100.3 in Sept. 1929; first 9 months were $1.037B vs. $967.5M.

Voters decide on about $400M of municipal bond issues in near future, mostly in Nov. elections; several huge proposals including Gov. Huey Long's $135M public works program in Louisiana, a $100M New Jersey issue mostly for highways, and a $31M issue for Golden Gate bridge construction.

Canadian bond sales in Sept. were $31.7M vs. $47.8M in Aug. and $21.8M in Sept. 1929; first 9 months were $494.0M vs. $407.3M.

European production of feed grains (corn, barley, and oats) estimated at 43.9M short tons, down over 19% from last year.

NYSE seat sells for $258,000, down $2,000 from last sale.

US Steel reduces tin plate prices for first half 1931 delivery by $0.25 to $5.00 - $5.10; expected to benefit can makers.

Dodge Bros., a division of Chrysler, reduces prices $100 on its 6 and 8 cylinder car lines, to $755 - $1,095, say sales are ahead of expectations.

Companies reporting decent earnings: Western Maryland Dairy.

Loose-Wiles Biscuit stock about 55, dividend $2.60, earnings in 1929 $4.58/share, earnings in 1930 expected higher.