January 9, 2010

Friday, January 9, 1931: Dow 173.04 +1.18 (0.7%)

Assorted historical stuff:

Washington report: Pres. Hoover may appeal to nation to avoid the renewed looming menace of an extra Congressional session; current legislative activities strongly suggest a “studied campaign of delaying essential legislation.” Rep. Parker (R, NY) defends Pres. Hoover: not one scintilla of evidence he's dictating rail consolidation plan to the ICC; no truth to charge that rails are being rescued after getting into trouble by engaging in “high finance.” Rep. LaGuardia (R, NY) blocks drought relief bill, seeking agreement that additional $15M added by Senate will be used to supply food not only to farmers but to industrial workers in cities. Some executive officials are rumored to want greatly increased Federal unemployment and drought relief efforts. Democratic party seen deeply obligated financially to its chairman, J. Raskob; his main issue is repeal of Prohibition.

Editorial: Senate is discussing a large loan to China. The idea is worthwhile; if China can be stabilized, "a field for foreign trade will be before us, the development of which will be of incalculable benefit to the people of the US." Part of the reason for China's troubles has been its silver-based currency; price of silver has declined from 69.4 cents in 1925 to under 30 cents now. However, judging by experience of other loans, "unless the money is applied under competent American supervision, it would be as useless as pouring water through a sieve."

Editorial by T. Woodlock: NY City transit unification bears close watching as a test case for “social” (public) control and planning. Current mess has a checkered history extending fifty years. All three of the private transit cos. have a past history of misdeeds; all parties have also failed to plan ahead for the city's needs, mainly due to “unmitigated demagoguery” of city politics. This has brought us to the current state where a passenger is lucky to get a strap, let alone a seat. Fundamental problems are not difficult, but politics has stood in the way of solutions.

Editorial: Gov. Roosevelt is abstaining from investigating corruption in the New York City government, saying this should be done by the legislature in a way free of political tactics and that the accused are entitled to protection from "suspicion and innuendo through publicity." He should apply the same standards to utility corporations and the hundreds of thousands of investors in them, rather than losing all impartiality and endorsing “ill-digested and in part grotesque measures.”

B. Marcus, Bank of US pres., testifies at bankruptcy hearing; says every physical asset of bank and affiliates can be accounted for, only losses sustained were due to depreciation.

German Fin. Min Dietrich says was misunderstood on elimination of unemployment insurance, wants to arrange with industry to employ more jobless men at lower wages, while reducing prices.

Sir Bhupendra Nath Mitra asks financial independence for India under new constitution; Mitra is leading financial authority at current round table conference organized by British govt.

Shawnee and Cherokee tribes claim over 1M acres in Northeast Texas valued at $50M; Land Commissioner J. Walker says tribes have valid claim, state should reach settlement.

P. Weidert, an Oregon farmer, reports using threshed wheat for fuel; at $16 a ton it's cheaper than coal at $20 delivered to his ranch, and it makes a hot, even fire.

New law in NY City requires many stores to have fire retardant ceilings and walls; expected to cost at least $75M and employ thousands of workers.

On Jan. 25, 1830, sales of stock on the “NY Stock & Exchange Board” totalled 465 shares; 16 issues were listed. This was considered a big day.

Market commentary:

Market wrap: Stock trading was much quieter, and mostly range bound; prices were lower early but staged good recoveries in the afternoon; trading picked up ofwhen prices were advancing. Bonds active, mostly firm; US govts. strong; foreign mostly higher; corp. high grade firm, speculative irregular. Commodities weak; grains mostly lower, cotton down slightly, copper buying sharply lower. Silver broke to new record low of 28 3/4 cents, down 1 1/4; attributed to heavy Chinese selling to finance imports and by speculators.

Sugar producer shares were strong; coppers were weak.

Conservative observers continue to recommend buying standard stocks on a scale during reactions; some favor stop-loss orders to protect currently held stocks.

Widespread reports since the beginning of the year have indicated rehiring of industrial workers; observers are awaiting the effects of this on business.

Stock market observers have been keeping an eye on commodities. While recent action in grains and cotton has been satisfying, continued decline in silver is somewhat disturbing. Much US export business depends on conditions in the Far East, where low price of silver has curtailed buying power.

It's uncertain if Bethlehem Steel will appeal the decision blocking the Youngstown merger; some expect Bethlehem interests to drop the plans due to changed conditions since last April.

Vanadium seems to be subject of a new contest between bulls and bears, judging by various rumors and market action.

Some companies with strong cash positions are maintaining dividends even though current earnings failed to cover them, being confident they can earn dividends when normal conditions return. Recent examples include Nash Motors and Goodyear.

Broad Street Gossip: An optimistic broker points out people's stock buying power is as great as in 1929 - at least in terms of number of shares. Charles M. Schwab sold his stocks long before the market hit its peak in 1929; the market continued to soar, leading Mr. Schwab to think he might be too old fashioned. But time proved Schwab right; “the 20 times earnings per share theory has been smashed ... and we have the same old market.”

P. Warburg, Manhattan Co. chair., blames depression on overproduction and artificial price support measures; discounts gold shortage as factor. Calls for US cooperation with other countries, criticizes tariffs. However, sees recovery ahead, believes current security prices will seem “incomprehensibly low” in a few years. J. Barnes, US Chamber of Commerce chair., says govt. and business must combine forces to assure recovery; two main problems are relieving individual anxiety about employment, and reassuring investors and industrialists on govt. attitudes toward investment of effort and capital in industry. R. Stephenson, Amer. Bankers Assoc. pres., says business must solve own problems to avoid attempts at govt. control.

Economic news and individual company reports:

National Auto. Chamber of Commerce recommends industry announce all new models in Nov. or Dec. each year; custom of announcing new models at various times has been very costly in recent years. C. Nash of Nash Motors says the one essential missing in current business situation is confidence. "I am sure that every sound business man will agree with me that we have scraped the bottom and are now returning to normal, healthy conditions, although a too rapid recovery is not to be anticipated." NY Auto Show committee says pleased with show attendance and reaction from around the country.

Ford worldwide production of cars and trucks in 1930 was 1.500M vs. 1.948M in 1929; industry share was about 42% vs. 35% in 1929. Chevrolet reports record-setting Dec. retail sales; total by all dealers was 46,753 cars and trucks, almost twice as many as any previous Dec. Review of new car registrations in first 11 months shows urban sections held up relatively better than rural districts; of geographic areas, Eastern US held up best, followed by Far West; South did the worst.

Fed. Reserve reports money in circulation Jan. 7 down $107M to $4.782B, total Reserve Bank credit outstanding down $125M to $1.248B. Member banks in NY City report brokers' loans down $47M to $1.879B; loans on securities to non-brokers down $90M to $2.027B.

New bond offerings in 1930 totalled $5.171B vs. $3.462B in 1929, $4.860B in 1928, and $6.687B in 1927. Largest borrowers were public utilities, accounting for 28.6% of total; next largest were municipalities at 20.3%.

Investment trust change in fashion is evident in offerings for 1930; new managed investment trusts (similar to mutual funds) were $263.4M, down sharply from $2.038B in 1929; new fixed investment trusts (similar to ETF's) were $400M vs. a nominal amount in 1929. Managed trusts are resorting to decisive measures to reassure investors, including regularly disclosing their holdings. Nevertheless, composing annual reports, after proving awkward enough for 1929, is doubly so for 1930; “so awkward is the situation that some reports are appearing without any remarks from the president whatsoever.” with

States with highest ratio of net debt to assessed valuation: North Carolina, 5.54%, Tennessee 5.50%. New York's ratio is 0.97%, California 1.19%.

Banking situation reportedly creating increased demand for Farm Board credit by individuals unable to get credit themselves, who seek it through cooperative marketing associations they belong to. This is happening particularly in the South.

Farm Board reportedly buying cash wheat over extensive area to avoid “demoralization of entire wheat price structure.”

Reduction of French bank rate to 2% has so far failed to put a stop to British gold drain; Bank of England holdings are now 146.6M pounds vs. 148.3M last week. British and French representatives continued discussions while awaiting results of French rate cut.

Japanese Fin. Min. J. Inouye sees definite business improvement; worst of gold drain over, buying stimulated by low commodity prices.

Tentative world agreement reached on sugar production after compromise between T. Chadbourne, chair. of Cuban delegation, and Germany; anticipated to be "vital factor in the revival of the world's sugar industry."

Curtis Publishing reports circulations of its three magazines (Saturday Evening Post, Ladies Home Journal, Country Gentleman) are up over this time last year.

Companies reporting decent earnings: Swift & Co. (meat packing), Douglas Aircraft (military planes).


The Criminal Code, a prison film. Although Walter Huston is distinguished as the warden, best performance is by Phillips Holmes as young man imprisoned for an unpremeditated crime who falls in love with the warden's daughter. Also excellent in minor roles are Boris Karloff as a murderer and Clark Marshall in a hysterical performance as Runch, the "squealer." [Note: A small segment from Youtube - by some accounts, this performance led to Karloff being cast in Frankenstein later in the year.]


"Willis - Hello, old man, where have you been? Gillis - Just got back from a camping trip. Willis - Roughing it, eh? Gillis - You bet. Why one day our portable dynamo went on the bum, and we had no hot water, electric lights, ice, heat, or radio for almost 2 hours."

The young Scotsman had been out for the evening with his best girl. When he returned home, he found his father sitting up waiting for him. "Have you been out with your lassie again?" "Aye, dad. Why do you look so worried?" "I was just wondering how much the evening cost." "No more than half a crown, dad." "Aye? That wasn't so much." "Well, it was all she had."

No comments:

Post a Comment