Wednesday, August 27, 1930: Dow 235.47 +3.95 (1.7%)

Assorted historical stuff:

Editorial decrying the 1930 election campaign being waged using the new mass medium of radio: “A practically new kind of artillery is used, known as the radio which is charged with political hot air and fired, not at the opposing side but at the people ... the contestants count on keeping up the bombardment until the November elections by which time the people will be gassed into submission to one side or the other.” Cause of current depression is that “this, the richest nation on earth, with millions of idle money is not giving employment to a large consuming class,” but neither side in the campaign is offering constructive solutions.

Entertainment plans announced for American Bankers' Assoc. convention in Cleveland. Events include a revue entitled Next to Nothing, a “presentation of women's fashions in a musical comedy setting ... while planned to be of interest to the wives of the delegates, has been designed with dramatic plot to interest the delegates themselves as well.” Also planned are “boxing matches and ring entertainments, interspersed with music,” indoor polo games, golf, and a grand ball.

Lady Simon cites League of Nations and Anti-Slavery Society estimate that at least 5M slaves remain in the world.

Spanish govt. shakes up cabinet, installs new Fin. Min. J. Wals in “economic dictatorship” to stabilize currency. Peseta declines near record low.

Television program transmitted from Jersey City to New York, about 6 miles; longest distance transmission so far in US. D. Sarnoff of Radio Corp. says active use in the average home still some years away.

Airplane successfully lowered with huge parachute; only damage was bent propeller.

Changes in women's dress styles have enabled Princeton to reduce width of stadium seats from 19 inches to 17.5, allowing 6,000 more seats in stadium.

Market commentary:

Bulls encouraged by good steel and rail freight news; buying spread throughout the market, finishing strong in final hour. Particularly strong were US Steel (passed through recent resistance levels to over 170), American Can, Standard Gas, major rails, banks and trusts, and many trading favorites including Air Reduction. Bond market substantially more active; Dow 40 bond avg. up to new 1930 high of 97.10; preferreds strong; foreign govts. firm, US slightly off.

Babson statistical organization makes first change in bearish stance taken before last fall's crash; advises clients to use 20% of liquid funds to buy selected stocks including US Steel, GE, du Pont, National Dairy, General Foods, Standard Oil NJ.

Lt. Gov. H. Lehman says personal opinion as business man is that decreasing wages would prolong depression; says prosperity based on public buying power.

Strength in bond market has recently spread to lower grade bonds; taken as second phase in advance which should spread to preferred, then common stocks.

Economists say unemployment is biggest factor keeping business down and delaying recovery; point to loss of 1.6M factory jobs since last September.

Conservative observers now anticipate somewhat higher prices in advance of seasonal business upturn, but advise buying gradually on reactions rather than chasing stocks up; also advise clients to stay away from Vanadium, as it has been a favorite target for manipulation on both the long and short side.

Commercial credit continues down slightly; this may not be significant, however, since corresponding weeks in previous years have also been down. Banks have also been reducing loans on securities, though they remain high. Banks have been pouring surplus funds into investments, now at highest level on record.

Economic news and individual company reports:

Dow Jones reports first large increase in steel production in several months; US Steel ingot production in week ended Monday was at 66% vs. 62% previous week; industry average was 58% vs. 54.5%.

Rail freight loadings in week ended Aug. 16 were 922,823 cars, up 18,666 over previous week but down 179,744 or 16.3% from 1929.

First 37 rails report July net down 32.6% from 1929, but up 13.9% over June.

July cigarette production of 11.859B was new record high, up 10.6% from 1929; July production has increased a similar percentage for previous 3 years. First 7 months production of 71.284B is also a record. Cigars declined, although 5-cent cigars increased; snuff increased.

Companies reporting decent earnings: Fox Film, Columbia Pictures, National Power & Light, American Ice, Lehigh Valley (rail, helped by expense cuts).

Nine of Canada's principal breweries to merge, forming the Brewing Corp. of Canada.

Movie review:

Abraham Lincoln, directed by D.W. Griffith. “An almost unbelievable number of historical characters are brought to life in almost photographic likenesses,” as are the settings of battles and the Lincoln-Douglass debate. Walter Huston impressive as Lincoln; “The changes wrought by time and experience in the face of Lincoln are admirably achieved; the changes in his character are as beautifully portrayed by Mr. Huston's acting.” Other characters faithfully reproduced include cigar-smoking Grant also “indulging freely in whisky”, Lee, Sheridan, Douglas, and John Wilkes Booth. [Note: this film is in the public domain and viewable on youtube, or for download here (can't vouch for the quality), or on DVD at Amazon.]

+ The Boring Stuff:

Editorial: The recent revolution in Peru is of concern to US investors considered they have about $200M of loans and other investments there, but the new Peruvian govt. doesn't seem threatening to US investments. US experience with Mexican oil nationalization doesn't inspire much confidence in US ability to protect capital invested abroad, but “Mexico's subsequent plight has been an object lesson” against that policy. State Dept. says deposed Peruvian Pres. Legula was friend of the US, but sees no current reason for US investors in Peru to worry; “At the same time, it was said this country would follow its traditional policy of protecting American property if events made that necessary.” Main US investments are bonds, minerals, and oil.

Commodities mixed: Grains down with wheat weaker than corn. Cotton up sharply on short-covering. Copper traded down to 10 3/4 cents.

Market sentiment said more optimistic based on expected seasonal upturn in business. Some public and foreign inquiries on stocks reported, though mood is anxious with regard to price movements.

Union Trust of Cleveland reports improved business sentiment across country, general opinion that trade has passed bottom. Cites current general level of production below consumption. Says wages have declined somewhat, as has cost of living; predicts commodity prices may stay low for some time; says process of adjustment of price structure is difficult, but in the long run doesn't necessarily mean low profits if business adjusts operations properly.

L. Wakefield, Pres. First National Bank, defends banking groups against charges they are driving independent country banks out of business.

Crude oil production in week ended Aug. 23 was 2.471M barrels/day, up 6,950 from previous week but down 495,850 from 1929; gasoline stocks at refiners were down 1.410M in week to 39.842M.

Canadian steel ingot and castings production in July was 68,424 tons vs. 95,321 in June and 129,827 in July 1929.

Sugar industry conference meets in NY to deal with “demoralized” industry; Cuba offers some export cuts in exchange for production restrictions by others.

Great Atlantic & Pacific now operates 15,000 about stores; sales volume has almost doubled over past 4 years to $1.1B, or a quarter of total US chain store business. Company has expanded sales by adding food departments, and by sharply cutting prices on some commodities including coffee.

I. Nelson's (300 share stockholder) suit to force Warner Bros. into receivership dismissed in Delaware Chancery Court.

Company reports since July 1: 160 companies reported increased earnings vs. 1929 and 390 decreased; 734 dividends unchanged, 4 increased, 49 cut.

Tuesday, August 26, 1930: Dow 231.52. -2.90 (1.2%)

Assorted historical stuff:

Dr. D. Laird of Colgate U. claims at least 5% of US payrolls is wasted due to inefficiency caused by noise. Tests of typists found up to 30% increase in output when noise was reduced; noise apparently harms nervous system even when workers are used to it and don't consciously find it disturbing; typists used 25% more energy in a noisy room “as a result of pounding the keys harder and of muscular tension.”

Editorial: Gov. Roosevelt is considered heir apparent to former Gov. Smith as Democratic standard bearer, but now faces a tough situation: needs support from NY City Democrats but faces a brewing scandal in the City govt. now controlled largely by Tammany Hall and Mayor Walker. He's trying to arrange a limited investigation by the courts rather than one by a Republican legislature that could “run amuck” - but this could backfire if he looks like he's covering up.

Enlistments in Navy in year ended June 30 were 94,778 vs. 81,815 previous year; in Marines were 45,190 vs. 32,395; attributed to unemployment situation.

Japanese airmail to Europe and Americas now available; leaves Japan by boat, transferred to plane for Europe on reaching Siberia.

Peru Pres. A. Legula flees country, govt. in hands of military committee.

Latin American representatives to meet in Washington to “devise means to limit manufacture of narcotics to medical needs.”

Market commentary:

Following early advances, bears renewed tests of leading stocks, resulting in moderate declines. Market grew more unsettled following bad break in Vanadium on news of July loss. Oils continued weak. Recent trading favorites (United Aircraft, Radio) had sizeable setbacks. Bulls, however, encouraged by evaporating volume as decline progressed. Bond market very dull, most prices firm except Peruvian govt.

Farm Board chair Legge denies Board is being “radical or socialistic” in suggesting farmers cut back production to market requirements.

J.S. Bache & Co. says current optimism has more sound foundation than the misplaced confidence of last spring. Bullish factors include recent gradual improvement in business news, easy credit, strong bond market, passing of drought scare, and declining margin loans. Stock buyers can also take heart from repeated ability of market to resist declining back to last year's lows. This seems a good time to deploy investment funds; if buyers wait until “every element of doubt is removed,” stock prices will be substantially higher; trying to pick exact bottoms is usually futile.

Bank of Nova Scotia points to general overproduction, says purchasing power not adequate to handle current production volume. This may be corrected by increased purchasing power, cutting production, or cutting prices. Current most important question is, at what price level will this happen (where will prices stabilize).

GM Pres. A. Sloan expects buildup of delayed car purchases due to depression, but sees little chance of improvement in second half. Thinks growing popularity of low-priced cars partly due to depression and partly to improvements in values offered. No plans for change in wage rates.

Economic news and individual company reports:

Fed. Reserve Bd. reports business activity down further in July; output of factories and mines (seasonally adjusted) down 6%; factory employment and wages down to lowest level since 1922; building contracts, freight loadings, and dept. store sales down; wholesale prices continued down sharply.

Census Bureau reports as of April 1 US has 2.508M unemployed, 2% of total population and 5.2% of estimated workers (those without jobs, able to work, and seeking work). Highest number of unemployed were in New York (364,617); highest percentage was in Michigan (8.2% of est. workers).

Internal Revenue collections for 1930 fiscal year ended June 30 were $3.040B; largest state was NY, $830.2M; cost of collection $1.13 per $100.

Fed. Reserve member banks report for week ended Aug. 20 shows loans on securities down $61M, all other loans (commercial) almost unchanged.

Agriculture Sec. Hyde committed $121.9M federal matching highway funds to be paid out to states on July 31, 1931; this should allow states to begin construction projects now to relieve unemployment, particularly in drought areas.

Companies reporting decent earnings: Autostrop Safety Razor (July earnings 60% ahead of 1929, heavy advertising this year).

Canadian Industrial Alcohol (whiskey) says sales held up well so far this year, but recent tightening of US border has severely curtailed them.

Movie review:

The Matrimonial Bed, an entertaining farce adapted from the French. Adolphe Noblet, a happily married man, suffers amnesia after a rail accident and is believed dead. He becomes a barber, remarries, and has 4 children. Five years later, his wife and old friends are marking the anniversary of his death, when his wife (now remarried) decides to change hairdressers and gets the shock of her life. “Innumerable complications” ensue. One friend hypnotizes the barber, causing him to wake as his former self and forget his current wife as well as “the ladies to whom he has shown more than ordinary attention as their hairdresser.” Finally, in order to free his former wife to be happy in her second marriage, he is hypnotized again and pretends to have a relapse and return contentedly to his second wife, although he does fail to recognize his children by name.

+ The Boring Stuff:

Aviation industry predicted to do better in 1931; while most will lose money this year, overproduction has been relieved, there have been fewer “unfortunate accidents” this year, and the new Watres airmail bill together with govt. buying should increase aircraft demand. Watres bill should also help loss-making passenger air business. Govt. is also developing 25,000 mile lighted airway system across country, and taking other steps to make travel safe and reliable.

Federal govt. spending $19,000 daily to fight forest fires in national forests.

US canned food production has increased almost 500% in past 25 years; attributed to large population shift to cities - from 40% in 1900 to 57% currently. Canners experimenting with new technology to counter frozen foods, including cans with glass sides.

Canadian govt. will reduce Soviet coal imports said to be partly produced with convict labor.

Some observers believe recovery may be slow, pointing out that in 3 previous depressions full recovery took 13-17 months. However, statistical dept. of a large utility department is more optimistic; predicts trade activity, now about 17% below normal, will recover to 5% below by next Feb. and normal levels by next July.

Recent rally has regained about 75% of the decline from July 28-Aug. 12, but has been on continued low volume under 2M shares/day.

Commodities mixed. Grains mostly slightly lower. Cotton up despite favorable crop weather. Buying of copper very low, with price deadlock continuing at 10.75 cents bid/ 11 cents asked. Cocoa breaks sharply to new record low at 6.5 cents (previous record 7 cents). Sugar also hits new low at 1.06 cents.

Standard Oil NJ's publication, The Lamp, warns oil refiners they must cut back operations to balance with lower seasonal demand in rest of year, criticizes past overproduction leading to long-term buildup of excessive inventories; calls for long-term rationalized program rather than emergency measures. However, E.B. Reeser, Pres. American Petroleum Institute, says industry is in best statistical condition of the year, with curtailment having been largely successful.

Agriculture Dept. estimates 1930 wheat production in 22 countries 2.287B bushels, up 4% from 1929. Believes wheat price decline near end.

Dept. of Commerce reports worldwide idle shipping tonnage on July 1 was 2.055M tons over 1929, increase of 60%; total tonnage was 66.441M. Index of full-cargo shipping rates was 83 in Q2, a new postwar low.

First 20 rails report July operating income down 30% from 1929 but up 17.8% from June. An small but increasing number of rails are not earning enough to cover dividends, and margin of safety is generally declining. Rails seen not offering much speculative opportunity due to increasing regulation of rates and earnings.

US auto production in July 262,363 vs. 335,477 in June and 500,840 in July 1929; first 7 months 2.481M vs. 3.726M.

Chicago territory steel demand improves; last week's sales best in month. Prices still seen too low for profitability.

British unemployment reported slightly improved in London and rural south, but still at crisis levels nationwide; up to 30% in manufacturing and mining sections.

Kreuger & Toll interests acquire control of large new Boliden copper mine in Sweden.

Pacific Gas & Elec. says spent $22.973M on new construction in first half, more than in 1929 first half; has added 3,000 to payroll in past year.

Monday, August 25, 1930: Dow 234.42 +1.79 (0.8%)

Assorted historical stuff:

US Dept. of Agriculture has extensive department producing educational films, including T.B or not T.B., Insect Allies, That Brush Fire, and Persimmon Harvesting and Storage in China.

Editorial: Administration is justified in waiting until December to decide on continuing 1% income tax rate reduction from last year, considering it was only enacted late last year as a temporary measure to encourage business shaken by the market crash. There are some possible measures that may allow the tax cut to be preserved. Even if a lean period forces an end to the cut, Treasury can look with pride to the past 9 years, in which a period of prosperity was used to improve national credit; in the year ended June 30, national debt was reduced $746M to $16.185B, bringing total reduction since 1919 to about $10B.

Editorial: Some have suggested banning short-selling as aid to business recovery. But recent market swings have not been due to short-selling but to public recognition of reduced earning power; similarly, farmland in corn belt has gone down by 2/3 from wartime level, though noone has been selling it short.

Alarmed by shrinking population, France budgets $45M to encourage large families; parents to receive $20 for second child, $30 for each additional.

German State Railways place $83.4M of contracts in cooperation with govt. in order to create 300,000 jobs.

Quebec Premier Taschereau dismisses threat of Soviet softwood, says small amount being sold below cost for propaganda purposes. Also notes imports of wood should be beneficial to US and Canada since fast disappearance of forests is causing concern to govts. and lumber and paper companies.

Illinois Republicans agree to abide by result of Prohibition referendum; Democrats have already voted for repeal.

Aircraft carrier to be built for Navy; capacity of 75-80 planes, to be ready in 3 years.

Market commentary:

Bulls encouraged by Pres. Hoover's statement tax cut may be continued, by some favorable business reviews, and by market action on Friday. Some unsettlement in oil group caused by decline in gasoline prices and high inventories in spite of recent reduction; however, weakness was moderate and didn't spread to other sectors. Major industrials and trading favorites strong, some reaching best levels since July peak. Tobaccos, banks and trusts, utilities strong. Bond market in Saturday session quiet but continued higher; most activity was in a few rails and industrials; Dow 40-bond avg. up to new 1930 high of 96.87.

Encouraging characteristic of rally has been ability of leading stocks to overcome isolated bad news and new lows in individual stocks and sectors.

Evidence of stocks passing to strong hands seen in decline of brokers' loans by $288M since June lows even as stocks have appreciated about 10%; also in the large increases in shareholder lists of many major stocks.

Former NY Stock Exchange Pres. S. Cromwell: “Investment has reached the proportions of a national habit ... Compared with the few hundred thousand who formerly constituted our investing class, there are today over 15M who own securities. ... Thus, the assumption that the corporate wealth of the country represents the entrenched power of a small class is a fallacy. Small investors in many cases are the principal owners of our industrial enterprises.”

Rep. S. Bloom (Dem. NY) returns from Europe, dismisses talk of tariff retaliation; says Europeans will buy wanted items in cheapest possible way. Says current business depression caused by fear or “bugaboo of hard times”; suggests increasing advertising to counter this.

Anticipated improvements in rail freight, steel operations, and commodity prices haven't come yet; figures for second half of August are awaited with interest.

Many companies in the recent boom diversified outside their main business; most didn't find success and some are now reversing the process.

Economic news and individual company reports:

Guaranty Trust seasonally adjusted index of business activity was 76.0 in July vs. 82.6 in June and 109.3 in July 1929; index hit new low for current depression, but still well above low points of 1921 depression. Improvement not yet seen in August; next few weeks will be examined with interest; recovery in near future likely to be weak; seasonal improvement expected Sept. and Oct. but full recovery may be delayed some months.

New car registrations in 23 states reporting for July were 75,386 vs. 74,253 in June and 126,815 in July 1929.

Companies reporting decent earnings: American Tobacco (Lucky Strike cigarettes), New England Power Assoc, Standard Gas & Electric.

Upcoming movie news:

Second Greta Garbo sound film released, Romance - her “deep sonorous voice” is no longer surprising, but another interesting facet of her screen presence. No actress in Hollywood photographs better; melodrama with fine cast stars her as Italian opera singer Rita Cavallini in ill-fated romance with Tom Armstrong.

Political joke:

“'Politics is very uncertain.'
'Very,' agreed Senator Sorghum. 'Even after a man succeeds in being elected, he doesn't know whether he's going to take credit for what happens or whether he's going to get the blame.'”

+ The Boring Stuff:

Post Office is revamping air mail contracts to help aviation industry [currently unprofitable]. Companies bidding for air mail contracts will be expected to have “sound and conservative financing” and refrain from “promiscuous sale of stock”; bidders must post $250,000 bond; Postmaster General may require adoption of any standard equipment considered necessary for safety or reliability; current requirements include 2-way radio and planes with avg. speed of at least 100 mph; carriers will be allowed to carry passengers on mail routes.

Indian boycott reportedly extended to British-owned banks in India.

Paris Metro has 72 miles of operating lines, carried 850M passengers last year.

Japanese liner Chichibu Maru has one of world's most powerful radio sets, with night range of 9,000 miles.

Commodities up. Cotton up slightly. Wheat, other grains up.

Market technical position considered best since April peak; downward swings have been progressively smaller, and August support came in at higher level than June; also, rallies in May and July only recovered 50% of previous decline, while August recovery has recovered about 66% of previous decline. This suggests current rally isn't just short-covering or rebound from oversold position, but accumulation based on anticipated fundamental improvement.

Irving Fisher's index of 200 commodities for week ended Aug. 22 was 82.8 vs. 83.8 in previous week.

Gasoline price in Chicago resale market down to 5 5/8 - 6 cents/gallon from 5 3/4 - 6 3/8 a week ago.

Youngstown district steel operations to advance to 57% of capacity this week from 56.5% avg. past week.

Heavy melting scrap steel up 50 cents/ton to $12.50-$13.00 in Chicago.

Uruguay first half exports $64.6M, up $11M over 1929; imports $44.0M, down $3M.

Mexico 1931 budget about 280M pesos vs. 293M in 1930; amount allocated to reducing public debt about 40M vs. 26M.

Class 1 rails installed 55,660 new freight cars in first 7 months of 1930 vs. 42,552 in 1929. Cars on order Aug. 1 were 19,627 vs. 36,335.

Lumber production in past 7 weeks has been about 290M feet, 30% below 1929 levels; production is about 6% above shipments and 10% above orders.

Commerce Dept. reports auto industry has wisely cut production in order to bring dealer inventories down into line with demand, both in US and abroad.

GE selling about 70, yield 2.3%, earnings in 1929 were $2.24.

Chicago Great Western Pres. V. Boatner says rail is continuing aggressive improvements in spite of lower revenues; says must prepare for business upturn.

American Tobacco reports Lucky Strike sales in first 7 months gained 3.539B, while total cigarette sales gained 2.031B. Expected net for 1930 is about $42.5M, vs. previous record of $30.6M in 1911 before trust was broken up.

Ford sells four 5-AT tri-motor all-metal planes to Army.

Drug, Inc. proprietary products include Bayers Aspirin, Sal Hepatica, Ipana Tooth Paste, Castoria, Cascarets, Life Savers, Vicks Vaporub.

Favorites of the week August 18-August 23, 1930

No Journal was published Sunday, August 24, 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.

August 23:

[Note: Behavioral finance before its time dept.] New book Why You Win or Lose, by F. Kelly, columnist, speculator, and “amateur psychologist.” Practical approach to psychology of stock market. An important principle is to be contrary (do opposite of what most are). Says most common mistake is vanity, leading to taking small profits and large losses. Next is greed; next is “will to believe.” Also believes it necessary for traders to be illogical, since everyone else is usually being logical. Finally, recommends being cautious.

[Note: Strangely unfamiliar dept.] Editorial: A bright spot in the depression is California, now in a strong financial situation by a number of measures. Bank deposits and life insurance are up; commercial and agricultural real estate is more active; securities issued are almost back up to first half 1929 level; department store sales are down, but Wells Fargo points out they're doing better than rest of the US. All in all, California “is carving out for itself a future prosperity that must in time rival that of the eastern seaboard.”

[Note: Insert joke about lotsa dough here.] Attorney General charges price of bread in New York controlled by racketeer ring with enormous profits.

[Note: Don't go long ... check ... don't go short ... check ... stand quietly in corner ... check.] Conservative observers still advise staying out of market until “next important move has been demonstrated by the action of leading stocks.” Also counsel against taking short positions due to range-bound market.

August 22:

[Note: Strangely familiar dept.] T. Thatcher, Solicitor General and selected by Pres. Hoover to investigate bankruptcy reform, says thousands of wage earners taking advantage of lax Bankruptcy Act to live above means, cheat creditors, and “pay their debts with postcards.” Estimated loss from bankruptcies $750M annually.

[Note: I'm pretty sure Da Vinci invented the sectional bookcase.] O. Wernicke, inventor of the sectional bookcase, dead in Florida.

August 21:

[Note: Yikes!] Actuarial Society of America survey reports death rate for passengers travelling on scheduled airlines is 1 in 5,000, or 200 times railroad death rate; safety increases by 63% after pilot has had 400 flight hours.

[Note: Sign this guy up dept.] E. Woollen, Pres. Fletcher Savings & Trust, catalogs some of the follies recently committed by businessmen: thinking rate of business in early 1929 could last; thinking the depression was caused by the market crash (the crash came 4 months after the depression had inexorably started); thinking the depression was caused by bad psychology; thinking our economy independent of the rest of the worlds'; “mortgaging future income for luxuries.”

[Note: Strangely familiar dept.] J. Barringer, National Cash Register GM, optimistic on foreign sales, and on general business outlook in Europe. “Germany, in my belief, is recovering from the world-wide depression, and France seems to be entirely over it.” Believes US depression has hit bottom and “we are slowly but surely on the upward trend.”

August 20:

[Note: Perils of trying to predict history dept.] Editorial: Gandhi's reported peace terms are due to his recognition of the inevitable collapse of his campaign for complete independence. “He has accomplished nothing for India, but has caused considerable bloodshed, much suffering, and has disrupted trade with Britain which has had a direct influence upon our business.” England is pledged to help prepare India for self-governing dominion status, but India too must do its part; movements like Gandhi's set back this goal.

August 19:

[Note: Perils of trying to make two good calls in a row dept.] R. Babson (economist, made good bearish call in fall 1929) calls drought damage overestimated, says Midwest farm and general business situation will improve markedly in final quarter. Also notes commodity production has declined about 30% vs. 10% decline in consumption; predicts shortages soon, restarting of production to supply demand. Doesn't yet recommend buying stocks, but feels “time is approaching when buying opportunities may appear.”

August 18:

[Note: Strangely familiar dept.] Financiers and economists “somewhat befuddled” by current business situation; economy has descended from “the heights of the greatest business prosperity the world has seen,” and it's difficult to “get their bearings in the new scheme of things.” Most are “watching and waiting rather than predicting.” Of course, things will eventually turn around, “and when the upturn does come it will be based on the most solid foundations in many years.” In the meantime, the market is marking time.

[Note: Strangely familiar dept.] External trade of foreign countries generally declines vs. 1929; Canada July trade down about 25%; Argentina exports first 7 months down 35.4%; France first half trade down about 10%, Italy July trade down about 30%,

[Note: Now testing doors that reopen slightly, then slam shut again twice as hard, then repeat until obstacle eliminated] NY City testing new subway cars with doors that just stop when something gets in the way instead of completely reopening.

[Note: The Zeppelin scene really is unforgettable - can anyone find it on online so I can link to it?] Howard Hughes presents Hell's Angels. “More spectacular scenes of fighting in the air probably have never been photographed, but the story around which these scenes are built is stupidly improbable. ... views of the huge Zeppelin plowing through the clouds toward London have been photographed with striking beauty. ... to escape the pursuing British planes, the captain of the airship ... commands about a dozen members of the crew to step off into the void - without parachutes - 'for Kaiser and for Fatherland.' Then ... the big Zeppelin is finally set aflame by a British plane ... [that] dives directly down upon it, crashing it in twain.”

Saturday, August 23, 1930: Dow 232.63 +1.36 (0.6%)

Assorted historical stuff:

New book Why You Win or Lose, by F. Kelly, columnist, speculator, and “amateur psychologist.” Practical approach to psychology of stock market. An important principle is to be contrary (do opposite of what most are). Says most common mistake is vanity, leading to taking small profits and large losses. Next is greed; next is “will to believe.” Also believes it necessary for traders to be illogical, since everyone else is usually being logical. Finally, recommends being cautious.

Editorial: A bright spot in the depression is California, now in a strong financial situation by a number of measures. Bank deposits and life insurance are up; commercial and agricultural real estate is more active; securities issued are almost back up to first half 1929 level; department store sales are down, but Wells Fargo points out they're doing better than rest of the US. All in all, California “is carving out for itself a future prosperity that must in time rival that of the eastern seaboard.”

Attorney General charges price of bread in New York controlled by racketeer ring with enormous profits.

First transatlantic pay load flight by heavier-than-air craft to carry cargo of souvenir postcards and bank correspondence from New York to Paris via Bermuda and Azores in Oct.; specially designed Bellanca seaplane with Wright motor being constructed.

Fokke-Wulfe Co. of Germany constructing “fool-proof” plane able to fly and land itself.

Market commentary:

Bulls encouraged by $27M reduction in brokers' loans in spite of rising market (considered good technical indication of stocks passing to strong hands), and by resistance of major shares to some weak spots (including coppers, rails, Goodyear, Warner). Bears had some initial success in spreading declines to market leaders, but effective support came in and buying spread in afternoon; most leaders closed up. US Steel, GM, Radio, Vanadium, American Tobacco advanced strongly. Utilities strong. Investment grade bonds stronger, Dow 40-bond average at new 1930 high of 96.73; govts. steady; convertibles weaker.

Some desperation observed in bear camp: “The bulls in their most excited moments did not bring forth such absurd ideas as some of the bears are talking about.”

Market considered technically strong; bears unable to prompt widespread liquidation as in past breaks due to low margin positions, short interest still large.

Pres. Hoover, after conference with Treasury Sec. Mellon, refutes earlier report that 1% income tax cut won't be continued; while there have been some indications of reduced revenue and increased spending early in fiscal year, there's no ground for making a firm prediction yet, and help should come from a number of areas including trade rebound (temporarily depressed due to imports in advance of tariff), and expense cuts. Mellon also says hopes tax cut can be maintained.

Moody's reports “prosperity index” for July at 86.77; this level has in recent times always meant “thorough liquidation or deflation,” and all recent recoveries have started from this level. “We are, therefore, inclined to regard the present level of business activity as the approximate level from which recovery will begin.”

Conservative observers still advise staying out of market until “next important move has been demonstrated by the action of leading stocks.” Also counsel against taking short positions due to range-bound market.

Savings banks deposits have been increasing in the depression (reverse of usual seasonal pattern) due to consumers cutting spending and saving more; also some investors have transferred balances from brokers to get higher interest. This does increase the potential call on the banks' resources that may happen on short notice.

Economic news and individual company reports:

July income tax (personal and corp.) receipts were $29.699M, down $5.037M from 1929. Tobacco tax receipts $42.982M, up $2.782M. All Internal Revenue collections were $86.055M, down $3.765M.

Bradstreet's and Dun's reviews both report some improved sentiment, and slightly better manufacturing activity and buying of fall goods.

Initial weekly bank reports have not yet shown the usual seasonal increased demand for currency or commercial credit.

Movie companies reach antitrust settlement with govt. agreeing to end practice of denying films to independent exhibitors.

Companies reporting decent earnings: Kansas City Power & Light, Tide Water Assoc. Oil (sales down but cut expenses more), Pig'n Whistle (restaurants).

American Tobacco reports July sales of Lucky Strikes up 583M over 1929, best gain so far this year.

Tongue twister:

“If a Hottentot tot taught a Hottentot tot to talk ere the tot could totter, ought the Hottentot tot be taught to say aught, or naught, or what ought to be taught her?”

+ The Boring Stuff:

Editorial: Chief Justice Hughes says country's greatest current need is “improvement in the administration of justice.” This is now threatened by organized corruption. Recent scandals involving judges in New York have made Gov. Roosevelt instruct the Appellate Division to investigate further. This is a serious matter; “if our institutions are to be kept safe from the debauchment of organized and capitalized crime there must be purity and competence in official action.” The problem is partly caused by political influence; the solution to this must be practical, not academic; Justice Hughes calls for members of the bar to work toward this goal, but the public should be also included in the effort.

Republican leaders expect former Pres. Coolidge to make one of the major speeches for party's fall campaign.

Farm Board member C. Williams urges cotton growers not to sell at current prices unless they have to, says “it would be a moral crime for a creditor unnecessarily to force sale at present price levels.”

Tax Commissioner M. Graves proposes corporations should be given federal tax credits to offset local taxes, eliminating interstate competition for industry. Says corporate taxes in general are too high, would be better to use personal income and wealth as the two primary tax bases.

German Ministry of Posts approves new buildings and improvements totalling $50M, expected to provide work for 125,000.

Editorial: Pres. Hoover is considering tightening the bankruptcy code to better protect creditors. He should consider closing a loose end in present legal procedure allowing any small stockholder to bring receivership proceedings on grounds of “poor management.”

I. Nelson, holder of 300 shares of common stock, files suit to force Warner Bros. into receivership.

Commodities mixed; grains mostly slightly higher; cotton almost unchanged; cocoa down to new record low of 7 cents/pound; raw sugar down to new record low of 1.08 cents/pound; coffee down to post-1921 low of 5.45 cents/pound.

Some disappointment that expected August improvement in freight loadings hasn't yet materialized.

Trade has been declining drastically (to 1922 levels in July), while trade surplus has slightly increased. However, Commerce Dept. sees a hopeful sign in larger proportion of exported finished goods; in Q2 these were $532.6M, down 18% from 1929 but a smaller decline than any other category. While markets for agricultural goods are basically limited by population growth, potential markets for finished goods are seen much larger as foreign purchasing power grows.

Treasury may not reduce national debt as much as past year, but law does require about $400M in current year to be dedicated to “sinking fund” for this purpose.

Money markets seem to be anticipating some near-term business revival; more difficult to obtain 6 month loans at recent 3% rate.

BLS reports July building permits in 288 cities were $164.1M, up 2.4% from June.

BLS reports retail food prices July 15 were down 2.5% vs. June 15 and 9% since July 15, 1929.

Fresh vegetable exports in year ended June 30 were $12.045M, up 8% from previous year.

Japan exports to US in first half were $108.9M vs. $185.3M in 1929.

Canadian Premier Bennett reportedly will propose emergency tariff revision to assist some depressed industries next month; believed that administration wants to cut back Canadian spending in US from $900M level in 1929 to $400M within 18 months by placing high tariffs on goods producible in Canada.

Canadian bond sales in year to Aug. 16 were $446.4M vs. $386.2M in 1929 and $302.6M in 1928.

Venezuela crude oil production in July was 374,970 barrels/day vs. 378,708 in June and 348,170 in July 1929.

Guatemala grants Swedish Match 30-year monopoly on all matches in exchange for 7% $2.5M loan.

Retail radio equipment sales in Q2 were $87M vs $92M in 1929.

Friday, August 22, 1930: Dow 231.27 -1.71 (0.7%)

Assorted historical stuff:

Dr. R. Goddard to carry out experiments financed by D. Guggenheim with aim of shooting rockets 50-75 miles “into the upper air.” Goddard has been “experimenting along this line since 1912.” Thus far maximum height attained by man is 8 miles.

T. Thatcher, Solicitor General and selected by Pres. Hoover to investigate bankruptcy reform, says thousands of wage earners taking advantage of lax Bankruptcy Act to live above means, cheat creditors, and “pay their debts with postcards.” Estimated loss from bankruptcies $750M annually.

Former Gov. Al. E. Smith says prosperity will be 1932 election issue, Democrats will take control “and will make this a happy and prosperous nation.”

Just 16 years after Germans invaded Belgium during the world war, Belgium now advertising in German magazines inviting tourists to visit.

Dr. D. Comstock, inventor of Technicolor, announces new refrigerator with no moving mechanical parts using mercury aspirator. [Note: Einstein and Szilard came up with a rival nonmechanical refrigerator; I believe neither caught on due to improvements in mechanical refrigerators.]

O. Wernicke, inventor of the sectional bookcase, dead in Florida.

Market commentary:

Leading stocks were fairly firm early, though some weak spots developed in rails (bad July earnings and further traffic decline in Aug.) and then in coppers (dividend concerns). Gillette plunged on report Auto Strop merger abandoned. Bears attempted to spread weakness into the general market, causing leading issues to give ground slowly in later trading. Limited public buying seen; movements driven by professional operations. Bond market more active, corp. up, foreign govts. firm, US govt. dull, little changed; Dow average of 40 bonds up to another new 1930 high of 96.67, best since Nov. 1928.

Editorial: Weather Bureau map for Aug 19 shows much improvement; drought has been substantially relieved across much of the country, though large sections are still affected. This should help both current crops and planting for fall. This improvement in a fundamental industry should help general business.

H. Thayer of West & Co.: “Personally, I believe we have seen the worst, both in the stock market and in business circles, and I look for substantial progress to be made in share prices and in earnings.”

While the 1920-21 depression and stock market pattern has been cited as remarkably similar, some are pointing out that whereas now credit is cheap and market valuation still relatively high, in 1920-21 opposite conditions applied.

Repeated low-volume days below 2M shares shows lack of large public buying; this, however, is typical of “a bear swing bumping along the bottom.” Public usually doesn't enter market on a large scale until there's clear evidence of business upturn.

Reports from many sections of the country of buyers' strike; “Merchants complain that their shelves are not being emptied by the ultimate consumer.” However, economists believe conditions are such that any better retail demand would be felt immediately by manufacturers.

Economic news and individual company reports:

Total first-half earnings reported by 193 representative companies were $505.4M vs. $754.3M in 1929, $582.8M in 1928, and $523.2M in 1927. This reflects a sharp profit fall in Q2, since Q1 profits were $317.8M, 5% above the 1928 level. Sectors doing best compared to 1929 were food, electrical equipment, chemicals, rail equipment (down about 10% avg). Worst were tires, mining, oils, autos (down about 45% avg).

Treasury officials say continuation of this year's 1% cut in income taxes looks unlikely; rates for next year will depend on how much depression has cut revenue.

Companies reporting decent earnings: Scott Paper, City Ice & Fuel.

Cigarette production in July was 11.859B, up 1.134B from 1929.

Wrigley spending heavily on advertising, but getting its money's worth. “There are probably no centers of population of any size in this country or Canada ... where it is possible to walk very far without being reminded in one way or another of the delights of ... Wrigley's gum.”

Testimony starts in govt. antitrust case against many major West Coast movie companies. Charges include giving preference for movie exhibitions to theaters owned by the group companies. Much of the countries most prominent legal talent involved, case will naturally be appealed to Supreme Court if govt. wins.

Upcoming movie news:

D.W. Griffith to premiere first sound film on Monday, Abraham Lincoln, starring Walter Huston in title role. Gloria Swanson's newest film, What a Widow!, to be released Sept. Eddie Cantor's Whoopee, produced entirely in Technicolor by F. Zeigfeld and S. Goldwyn, to be released shortly after. Lee Shubert (theater impresario) to produce four talking films this season.

Journalism joke:

“A budding journalist was told never to use two words when one would do. He carried out this advice in his report of a fatal accident ...
'John Jones struck a match to see if there was any gasoline in his tank. There was. Age sixty-five.'”

+ The Boring Stuff:

Editorial: J. Gerard, former ambassador to Germany, has come out with a list of 59 men he calls the true rulers of the US; their influence and power determines who rules directly, and the President and other politicians are “mere vassals to this coterie” (list is mostly prominent industrialists, some financiers and publishers). He also says they could straighten out the British empire to a high degree of prosperity in 10 years or so. This is hero worship carried to absurdity; these men's secret of success is lifelong concentration in their particular field; “to assign to them super-powers of government” is to make them into demigods who can do anything.

W. Kennedy, service manager at Saks, comes out against “glib, high-powered salesmen.” When customers take goods home and “effects of the salesmen's arguments have cooled, there is ill will toward the store and a merchandise return.”

Commerce Committee of the ABA recommends revision of Sherman antitrust law empowering the FTC to decide in advance if an agreement among businesses is in restraint of trade, thus preventing future litigation and immunizing businessmen involved from criminal prosecution.

France maintains top spot as world tourist destination in 1929; visitors spent $400M, of which $130M came from US.

French govt. and French Line contract to build 1,170 foot super-liner at cost of about $27.5M.

Treasury officials see little possibility of assessing anti-dumping duty on Russian manganese.

Chairman Legge urges farmers to substitute other feed for corn, believes this can make up shortage; believes many farmers already doing so.

Commodities mostly down; wheat down slightly, other grains up; cotton down. Hog prices continued higher.

W. Farish, Pres. Humble Oil & Refining, comments on reason for lowest gasoline prices in 2 years in spite of successful curtailment of production; price decline blamed on lack of confidence industry can maintain current “sensible scale of operations.”

Fed. Reserve member banks report brokers' loans down $27M in week ended Aug. 20 to $3.128B.

US Electric output in week ended Aug. 16 was 1,671 GWHr, down 2.8% from 1929.

Average of 8 iron and steel products holds at $45.80/ton, at low for 1930, vs. $50.61 avg. in 1929.

General wholesale price level declined in July, and in last week of July was almost 20% below 1929 level. Wholesale prices of farm products fell 10% between June 15 and July 15, to postwar low of 111% of 1913 level, and declined further to 109% in last week of July. Farm prices rebounded to 112% in early August, while non-agricultural prices continued to decline.

Volume of freight traffic handled by class 1 rails in June was 34,419B ton miles, down 15.5% from 1929; first half was 212.251B ton miles, down 11%.

New life insurance sales in July reported down 2.2% from 1929. First 7 months were up 2.3% from 1929.

Exports of electrical equipment in first half were new high of $71.150M vs. $70.315M in 1929.

Orders for fabricated structural steel in July estimated at 284,000 tons vs. 276,000 in June.

Steel scrap markets showing signs of improvement; no definite uptrend, but scattered transactions at higher prices.

Rumors continue of modification to Spanish oil monopoly.

IBM reports foreign sales growing consistently so far in 1930.

Thursday, August 21, 1930: Dow 232.98 +2.30 (1.0%)

Assorted historical stuff:

Movie business seems to be recovering after recent slump; decline in attendance attributed to heat wave (only 400 theaters in US are refrigerated), recent run of movies depending too much on “spectacle, color, and singing,” not enough on “good plots, interesting dialogue, and popular stars.” Upcoming movies include Moby Dick with John Barrymore, Common Clay, Dawn Patrol, The Big House, and Animal Crackers with the Marx Brothers. Most movie companies except Warner Bros. still expected to have good earnings for the year.

Actuarial Society of America survey reports death rate for passengers travelling on scheduled airlines is 1 in 5,000, or 200 times railroad death rate; safety increases by 63% after pilot has had 400 flight hours.

Commerce Dept. plans Southern “transcontinental airway” from Birmingham to San Diego. Airway from New York to Birmingham via Richmond already exists.

J. Richardson leading plan for comprehensive air and rail service across Canada. Canadian govt. may create Communications Dept. covering radio and aviation.

New wingless aircraft based on rotor principle being tested at Mamaroneck; backed by Walter P. Chrysler and H.E. Talbott, Jr.

London considering “fostering the acceptance of compulsory peaceful settlements of all disputes” for dominion countries.

New Australian plan for balancing budget coming under criticism for bias toward tax increases (including new 2.5% sales tax) rather than cuts in expenditures.

Iraqi King Feisal rumored trying to organize new oil company to break monopoly held by Iraq Petroleum Co. controlled by US and European oil interests.

NY State industrial deaths in July were 164, down 31 from June and down 52 from July 1929.

Market commentary:

Bulls got some good economic news in Iron Age report of improvement in steel production. US Steel responded, rallying to highest levels since July top. Other major industrials including American Can and J.I. Case followed. Utilities rallied strongly. Sears, Paramount, and Loews stood out in other categories. Prices turned irregular in late afternoon; coppers and some oils weak on dividend concerns. Banks, trusts, and insurance strong. Bond market dull but broadly higher.

E. Woollen, Pres. Fletcher Savings & Trust, catalogs some of the follies recently committed by businessmen: thinking rate of business in early 1929 could last; thinking the depression was caused by the market crash (the crash came 4 months after the depression had inexorably started); thinking the depression was caused by bad psychology; thinking our economy independent of the rest of the worlds'; “mortgaging future income for luxuries.”

Baar, Cohen & Co. believe stocks headed higher, “and we think within a few days sufficient momentum will be generated on the bull side to start the advance in earnest.” Foresee general business improvement, even if only seasonal, and halt in commodity price decline.

J. Barringer, National Cash Register GM, optimistic on foreign sales, and on general business outlook in Europe. “Germany, in my belief, is recovering from the world-wide depression, and France seems to be entirely over it.” Believes US depression has hit bottom and “we are slowly but surely on the upward trend.”

Some disappointment reported by market observers and steel industry leaders that normal seasonal improvement in business hasn't developed yet.

Continued weakness in freight car loadings as of Aug. 9 is surprising, but may reflect some lag from factory openings; Aug. 16 should then show improvement.

Economic news and individual company reports:

Iron Age sees moderate improvement in steel trade, though definite turning point not yet reached. Steel ingot production at 53%, but improved in past few days; some indications of larger orders in September. Discrepancy with yesterday's report of decline explained by extra “day or so” included in Iron Age report.

Agriculture Dept. reports uneven weather conditions; much of country except West has had some relief from drought, but followup rain needed in many areas.

Bankruptcy cases pending as of June 30 were 61,430 vs. 59,113 in 1929. Liabilities in cases concluded were $948.3M vs. $883.6M in 1929.

Company reports since July 1: 137 companies reported increased earnings vs. 1929 and 341 decreased; 649 dividends unchanged, 3 increased, 41 cut.

Companies reporting decent earnings: Public Service NJ, Atlas Plywood.

Curtis Publishing (publishers of Saturday Evening Post, Ladies Home Journal) selling about 114, annual div. $6, first half earnings $5.07/share vs. $4.83 in 1929.

Joke:

“Farmer's Wife (to druggist) - Now, be sure and write plain on them bottles which is for the horse and which is for my husband. I don't want nothin' to happen to that horse before the spring plowin'.”

+ The Boring Stuff:

Editorial: Some have suggested higher wages (to increase general buying power and demand) as a solution to the depression. While wages and salaries are a major part of the buying power of the US (estimated at over $50B of total $90B national income in 1928), this proposed solution would make things worse by overtaxing business, possibly leading to a relapse. Wages are the workers' cut of the cost of production, and there is currently too much production. Therefore, increasing wages would just be “piling up surplus goods at higher cost to capital.”

New Zealand PM promises bill taxing all male workers $7.50 to provide relief for unemployed.

New regulations on use of industrial alcohol seen by some as distinctly tightened, but this is denied by Dr. Doran of Bureau of Industrial Alcohol; sees new requirements as no more strict, but merely more voluminous.

NY City Health Dept. reports week ended Saturday had lowest mortality record of the year.

Commodities generally up. Grains up strongly. Cotton closed up slightly after resisting selling pressure; second up day in a row, and first day since Aug. 8 that new season lows were not reached in intraday trading. Hog prices up to new yearly high.

Conservative observers still advise caution, believe only the most nimble trader can profit in current conditions. Those inclined to buy are advised to wait for reactions to buy leading stocks gradually, and to reduce long positions on rallies.

L. Critchell of Prince & Whitely returns from 5,000 mile motor trip through Midwest and Canada, reports generally optimistic feel on business, with as many reporting business improved over last year as reporting decreases; also noted heavy tourist traffic, difficulty finding accomodations at many major hotels.

Some bears have been profitably selling stocks that issue rights (to existing shareholders to buy additional shares).

American Metal Market says drought had “unfavorable sentimental influence upon business,” but little or no long-term effect.

Treasure Sec. Mellon denies making statement on general business situation.

Mackay & Co. reports foreign govts. and corporations obtained about $750M in bond financing from the US market between Nov. 1929 and Aug. 1930; largest borrower was Canada at $230M in 22 issues.

Price of heavy melting steel scrap up $0.25 to $15.75/ton.

Chemicals used in US were mostly imported prewar; now, US is the world's largest producer of chemicals; annual production estimated at almost $7B.

Wednesday, August 20, 1930: Dow 230.68 +2.89 (1.3%)

Assorted historical stuff:

Times reports Gandhi willing to end civil disobedience campaign if British and Indian govts. adopt policy of dominion status for India and free political prisoners.

Editorial: Gandhi's reported peace terms are due to his recognition of the inevitable collapse of his campaign for complete independence. “He has accomplished nothing for India, but has caused considerable bloodshed, much suffering, and has disrupted trade with Britain which has had a direct influence upon our business.” England is pledged to help prepare India for self-governing dominion status, but India too must do its part; movements like Gandhi's set back this goal.

Port of Bombay imports of cotton in June down 44% vs. 1929; drop in cotton trade badly affecting British cotton mills.

Editorial: Labor Sec. Davis has favored higher wages for foreign workers to increase their purchasing power and prosperity. This is putting the cart before the horse. The more important way to help foreign workers is by free markets so their products can be sold here. This will enable European businessmen to raise pay.

Spanish Premier Berenguer says decline of peseta currency “entirely fictitious,” blamed on “speculation whose threads are obscure.” Finance Min. Arguelles resigns. Govt. trying to cut budget “ruthlessly” to stabilize currency, including by delay of payments to contractors on public works already constructed.

British Air Ministry promises regular air routes across Atlantic; also considers establishing seadromes 300 miles apart on one route.

Court of Appeals in Denver decides interstate transportation of stolen plane is federal offense; Dyer act was previously only applied to cars.

Market commentary:

Bulls encouraged by resistance to repeated bear efforts Saturday and Monday following explosive rise Friday; buying movement spread broadly across the market early. Major industrials strong including US Steel, GE, Westinghouse, as were major utilities and rails (Consol. Gas, New York Central). Steel news caused some irregularity, but good buying appeared on setbacks. Bond market firm; corp. and preferreds up; govts. steady; Dow 40 bond average at new yearly high of 96.61.

E. Johnson, former Pres. Victor Co. (merged with RCA), returns from trip to survey conditions in Europe; feels general US business recovery under way, will be comparatively rapid up to a certain point; thinks stock prices somewhere near bottom.

Conservative observers even more cautious than usual; believe recent rally due to oversold condition, and decline will resume when short-covering ends.

Some market students encouraged by repeated support above June lows, advise buying leading stocks if they again approach these levels.

J.H. Oliphant & Co. finds Dow action this summer technically interesting; 6 times since June, market has found strong support after declining to 215-218 level.

Bears reportedly less confident after last week's action, though short interest remains large. Public participation still seen small.

Increase in credit outstanding in first half was interpreted bullishly, but has stopped since mid-June. “This may mean that stimulus to business in the form of credit expansion induced by Federal Reserve policy has reached its effective limits ... ”

Economic news and individual company reports:

US rail freight loadings for week ended Aug. 9 were 904,157 cars, down 14,178 from previous week and 187,966 from 1929; worst decline yet vs. 1929.

Steel production industry-wide was at 54.5% last week vs. 56% previous week and 58% two weeks ago; US Steel at 62% vs. about 62.75% previous week and 64% two weeks ago. Decline was unexpected; some improvement had been rumored.

Oil curtailment still working: Gasoline in storage at refineries Aug. 16 was 41.252M barrels, down 1.477M in past week; refineries operated at 72.6%, up from 69.1%; crude oil production was 2.464M barrels/day, down 16,800 from previous week and 478,000 from 1929.

Public utility earnings generally higher year over year in each month, though declining month by month this year. June net earnings of 95 utilities were $83M vs. $79M in 1929, but lowest of year so far and down from high of $92M in Jan.

NY City budget for 1931 expected over $600M vs. $569.8M this year.

Companies reporting decent earnings: Exchange Buffet (restaurant).

Jokes:

“'My razor's awfully blunt, dear. I can scarcely shave with it.'
'Why, Charles, you don't mean to tell me your beard is tougher than the linoleum!'”

“A young officer at the front wrote home to his father:
'Dear Father: Kindly send me 50 pounds at once: I lost another leg in a stiff engagement and am in the hospital without means.'
The answer was: 'My Dear Son: As this is the fourth leg you have lost ...'”

+ The Boring Stuff:

Editorial: “Railroad Samaritans” seem regularly called upon to make sacrifices for the public good. Railroad security owners note that operating earnings are down 33% in first half, and rail earnings were only 3.61% of property investment vs. 5.52% in 1929. Provisions of the Transportation Act assuring a fair rate of return to railroads seem to mean little.

France reportedly has labor shortage - only 2 workers available per 3 open positions, importing mine workers.

Pres. Hoover names drought relief committee; Agriculture Sec. Hyde is chair. General rains over past 2-3 days have turned corner for current conditions, but real burden of drough expected to be felt next winter; govt. seeks to be ready to offer aid to affected areas.

Henry Morgenthau, former ambassador to Turkey, will raise funds for Gov. Roosevelt's reelection campaign [son Henry became Treasury Sec.; grandson Robert, now 90, has been New York County District Attorney since 1975].

Treasury Sec. Mellon: “I believe that just as soon as much of the products on the market at present are disposed of the business depression will better itself. The curtailments in output without a question will correct the present condition within a short time.” [Note: Mellon later denied saying this.]

Commodities fluctuated, rallied late; cotton touches new low below 10.7 cents but rallies to close up near 11 cents; grains sharply lower in afternoon but rally to end slightly lower; refined sugar down to 4.40 cents.

Radio Corp. again subject of rumors of pool operations; prominent bull operators reported involved; volume on Monday was 10% of all NYSE turnover.

Out of 1,316 NYSE-listed stocks, 81 are selling below $4 a share.

Average price for bright leaf tobacco in Georgia markets drops to record low of 9.68 cents/pound vs. 18.67 cents in 1929.

Standard Oil NJ denies report they are negotiating to obtain Spanish oil monopoly in exchange for loan.

Lawsuit to block merger of Bethlehem Steel and Youngstown Sheet & Tube seen disrupting steel industry, since almost all large steel companies except US Steel and Jones & Laughlin are at least indirectly involved. Steel industry seen benefitting from any early settlement.

Federal expenditures for July and first 15 days of August were $403.1M, up $29.1M from 1929; total receipts were $197.4M, down $54.8M; customs receipts were down over $36M.

Agriculture Dept. estimates wheat production in 20 countries at 2.261B bushels vs. 2.178B in 1929. US estimate is 820.6M vs. 806.8M in 1929.

Commercial Credit Co. (auto and industrial financing) reports larger delinquencies in first half, but improved trend recently; as of June 30, percentage over 2 months past due were 0.47% of car notes and 1.42% of industrial receivables and open accounts. Company expanding industrial financing due to lower car sales.

Total car financing in June was $141.9M on 332,852 cars vs. $179.0M on 384,520 in 1929.

Some good news on July sales and earnings from Kansas City Southern (rail - July earnings up over 1929), US Rubber Co. (high tire sales in July/August).

Chrysler introduces roadster listed at $535, lowest price ever for a Chrysler car.

A couple of weak car stocks: Stutz, down below 2, high of 34 in 1929, all-time high of 724 ten years ago. H.H. Franklin, down to 6, high of 46 in 1929.

Melville Shoe (shoe retailer - brands include Thom McAn, John Ward) selling about 36, dividend $2, earned $3.99/share in all of 1929, and $2.33 in first half.

Tuesday, August 19, 1930: Dow 227.79 -0.23 (0.1%)

Assorted historical stuff:

First billion barrels of crude oil took 40 years to produce; second took 8, third 5, fourth 3.5 [current rate is about 80M/day, or a billion barrels every 12 days].

Creation of “railway czar” position “similar to those of the moving picture industry and baseball” suggested as a way of stabilizing railroad freight rates.

C. Kai-Ngau, Bank of China GM, says China trade situation damaged by chaos, overproduction of silver. “In 1929, China actually imported from abroad food-stuffs to extent of over $200M Chinese currency. For China, known throughout its history as an agricultural country, it really is absurd ... This is a life and death problem for our people.” Recommends adoption of gold standard.

New Curtiss plane expected to develop 800hp, fly at 250-300 mph, tested at Roosevelt Field [Long Island, also used by Lindbergh for 1927 transatlantic flight].

“New York State Economic Council states $10M is wasted annually in government in New York State.”

Roxy, theater manager in NY City, “every week saturates his movie house with with an elegant odor which is 'in keeping with the picture.'”

New generation of the Barrymore acting family takes to the stage; Lionel, Ethel, and John are the eighth; now Ethel's daughter, also named Ethel, is to play the part of Seraphine, daughter of title character Scarlet Sister Mary, to be played by the senior Ethel.

Market commentary:

Bears more cautious starting the week, content to “play for small technical reactions” but not following up aggressively. 1-3 point declines early in majors including US Steel, American Can, AT&T, but pressure lifted about noon; good recoveries in leading stocks and general market firmer. Majors ended at day highs, some bullish demonstrations in individual stocks including United Aircraft. Oils, utilities, and rails quiet; banks and trusts weak. Bond market dull; rails strong, preferreds weaker, govts. steady.

“Seasoned common stocks” are now selling to yield about 1.5% above commercial paper rate (3%). In 33 year history of the Dow Jones averages, stocks without exception have been profitable long-term investments when average yield was 1% or more above the commercial paper rate.

R. Babson (economist, made good bearish call in fall 1929) calls drought damage overestimated, says Midwest farm and general business situation will improve markedly in final quarter. Also notes commodity production has declined about 30% vs. 10% decline in consumption; predicts shortages soon, restarting of production to supply demand. Doesn't yet recommend buying stocks, but feels “time is approaching when buying opportunities may appear.”

Still little public buying seen in stock market; activity mostly professional. Large and increasing short position, which should eventually be a buying factor.

Option market said more active, puts (bets on stock prices to decline) more difficult to buy than calls.

Harvey Firestone, Pres. Firestone Tire & Rubber, states America is on eve of greater prosperity than past 10 years. Expresses belief in Ford's statement there will soon be work for everybody. Says company has met depression by cutting overhead and lowering prices; plant now running night and day, 6 days a week.

Economic news and individual company reports:

Weather favorable over much of country, providing some relief of drought conditions.

Fed. Reserve member banks report “all other” (commercial) loans up $9M to $8.481B in week ended Aug. 13; loans on securities down $58M to $8.376M.

S.W. Straus report of building permits issued for July in 589 leading cities and towns finds volume of planned construction was $187.6M vs. $184.7M in June; reverse of usual seasonal decline, but down 36% from 1929.

Labor Dept. reports retail food prices down 2.5% in month ended July 15, and 9% in year.

Coca Cola seen taking advantage of low sugar prices by buying a year's supply in advance. Has enjoyed increased sales every year since 1922.

R.J. Reynolds selling about 49, earned $3.22/share in 1929, expected to earn more in 1930, yield 6.1% based on $3 annual div.

Several cigar stocks selling at yields over 9%, including General Cigar (9.3%), Congress Cigar (16%), Consolidated Cigar (13.8%).

Companies reporting decent earnings: Drug Inc., General American Tank Car, Fox Film, Fifth Avenue Bus Corp, International Salt.

Nostalgia department:

“It wasn't so many years ago when: Automobilists wore linen dusters ... No one had appendicitis ... Milk was delivered in tin cans ... There were livery stables everywhere ... Girls sometimes wore cotton stockings and high-laced boots (you were not supposed to know it) ... People generally kept their tonsils ... It seemed necessary to control hatpins by legislation ... Everybody in the audience was scared when the express train came rushing head-on in the motion picture.”

+ The Boring Stuff:

Editorial: Now that drought emergency has largely lifted, we can approach issue of relief in a calmer way. Outside of an extreme emergency calling for charity, for which the Red Cross is best suited, the role of government in direct relief should be limited; “the initiative for help must come from the local communities themselves.” The banking system can help by providing credit to tide the affected people over; the Federal Intermediate Credit Bank system helps to do this for agriculture, and local banks should cooperate by reducing rates; this would put “relief measures on a business basis.”

Western Union moving to new offices at 60 Hudson St skyscraper. Currently handles about 85% of US telegraph business, has 1.896M miles of wire, 30,707 nautical miles of ocean cable, and 25,061 offices.

Commodities break sharply. Cotton down sharply to new season lows under 11 cents. Grain prices down sharply on more favorable weather, concern over competition between nations holding grain surpluses. Silver market firmer over past few weeks, price now over 36 cents/ounce.

Bears have been citing some stocks selling at high price-earnings ratios and low yields; however, these stocks have historically sold at high valuations, and “almost invariably have justified” this by later growth in earnings power.

Harvard Economic Society says business declined further in first half of July but then steadied; concerned about decline in construction, which recovery depends on significantly, but sees increase in future months due to easy credit; sees drought moderating but maybe not delaying recovery if crop damage not too bad.

Swiss trade down in first half; imports 1.287B francs, down 21M; exports 924M, down 90M. Production of Swiss watches down 30%.

German trade improved in July vs. June; imports and exports both higher, surplus of 41M marks.

Youngstown district steel operations to remain unchanged this week at 56.5% of capacity.

July freight cars ordered were 1,306 vs. 794 in June and 242 in July 1929; orders for 7 months were 31,749 vs. 59,371.

US aircraft and parts manufactured in 1929 was $61.973M vs. $21.162M in 1927.

New construction contracts in NY metropolitan area for week ended Aug. 16 were $3.103M/day vs. $2.649M in July and $2.803M in 1929.

NY State receipts from all sources in first 7 months were $255.9M; expenditures were $261.6M.

US shoe production in June was down 4.295M pairs, or 15.2%, from 1929; first half was down 14.118M pairs, or 8.2%.

Fairchild Analytical Bureau reports textile prices down 48% from peak in July 1928.

US Steel wages in 1929 amounted to 39.34 cents/dollar of revenue vs. 41.68 cents in 1928; net earnings were 18.51 cents/dollar vs. 11.50 cents in 1928.

IRT subway division revenues from advertising for 11 months ended May 31 were $1.776M, up 15.9% from 1929.

Fox Film first half net $2.84/share vs. $2.03 in 1929; Pres. H. Clarke says company doesn't anticipate any dividend cut. Stock down sharply early on rumors of bad movie attendance July and August, but decline was checked by earnings report.

Walter P. Chrysler says company improving competitive position in depression though sales and earnings down. First half sales were 65% of 1929 level vs. 57% for industry excluding Ford. First half profit $0.77/share vs. $4.06 in 1929. Management policy seen aimed at gaining share at expense of profits, also keeping strong balance sheet by cutting expenses and keeping inventory low. This should give company stronger position when depression ends.

Monday, August 18, 1930: Dow 228.01 -0.53 (0.2%)

Assorted historical stuff:

Editorial: Adversity of the depression has its benefits, including a return of the virtue of thrift. “With unemployment and destitution in evidence” people are more inclined to provide for the future of themselves and their children; in boom times this is easily forgotten. This trend is seen in savings deposits - they gained $273.8M in the first half vs. a decline of $82.7M in second half of 1929; July has shown a further gain for the first time in six years (normally people withdraw money to pay for vacations, etc). Life insurance also shows the trend, with new policies in the first 7 months up 1.5% over 1929.

Pres. Hoover directs $125M of federal roadbuilding funds, with matching state funds, to be made available Sept. 1 instead of Jan. 1.

Former French Pres. Poincare warns Germany that France will not stand for any revision of Versailles treaty, saying German idea of revision is “immediate or progressive remaking of the map of Europe at the pleasure of the Reich.”

Canadian govt. bars most immigration except farmers; policy considered temporary due to unemployment.

Martinez De Hoz, Pres. Argentine Rural Society, says world overproduction in agriculture due to protective tariffs, will exist for years, perhaps decades.

NY City mass transit lines carried about 834.287M passengers in Q1, up 12.326M from 1929. Revenues were $40.314M, up $532,000.

NY City testing new subway cars with doors that just stop when something gets in the way instead of completely reopening.

Movie companies still deciding how to make foreign sound films; possibilities include dubbing foreign voices onto US actors, filming with foreign actors in US, or filming abroad. Paramount filming in Paris using foreign actors in 10 different languages. J. Lasky, Paramount production VP, says this isn't as expensive as it sounds; also notes not much demand yet for color or widescreen films; will test three-dimensional film process.

Dept. of Agriculture testing 58-year old sample of honey at regular intervals. “Like liquor, honey does not deteriorate with age but mellows, the mellowing being manifested in a gradual darkening of the sweet syrup.” Sample is white clover honey; but now resembles blackstrap molasses, “tastes not unlike buckwheat honey.”

Market commentary:

Bears attacked early, hoping market had been weakened technically by extensive forced short-covering Friday; forced early declines in US Steel, American Can, Vanadium, Radio, and other trading favorites. Attempts to extend initial losses met strong buying; urgent short covering resumed in last hour, giving vigorous rebounds in US Steel, Vanadium, J.I. Case, and other trading favorites. Bond market quiet, govts. and high grade corp. firm, convertibles higher.

Financiers and economists “somewhat befuddled” by current business situation; economy has descended from “the heights of the greatest business prosperity the world has seen,” and it's difficult to “get their bearings in the new scheme of things.” Most are “watching and waiting rather than predicting.” Of course, things will eventually turn around, “and when the upturn does come it will be based on the most solid foundations in many years.” In the meantime, the market is marking time.

Level around 215 seen as double bottom, having brought out strong buying support both in late June and past week.

Short interest seen still large in spite of forced covering in past few sessions.

Earnings reports since July 1: higher earnings reported by 120 companies, lower by 307, dividends unchanged by 594, increased by 3, cut by 39.

Economic news and individual company reports:

Some rains in drought-affected areas, improving crop conditions, though further rains would help. Stocks of railroads in affected areas stronger.

External trade of foreign countries generally declines vs. 1929; Canada July trade down about 25%; Argentina exports first 7 months down 35.4%; France first half trade down about 10%, Italy July trade down about 30%,

BLS reports July wholesale prices down 3.4% from June and 14% from July 1929.

Bureau of Securities (prosecute securities fraud) took 124 actions against 444 individuals and companies in first 7 months, vs. 104 against 342 in all of 1929. Increase in prosecutions of “bucket-shop operators and other fraudulent stock manipulators.” Total customer losses $37M.

Companies reporting decent earnings: Jewel Tea, Virginia-Carolina Chemical, Republic Stamping & Enameling.

Movie:

Howard Hughes presents Hell's Angels. “More spectacular scenes of fighting in the air probably have never been photographed, but the story around which these scenes are built is stupidly improbable. ... views of the huge Zeppelin plowing through the clouds toward London have been photographed with striking beauty. ... to escape the pursuing British planes, the captain of the airship ... commands about a dozen members of the crew to step off into the void - without parachutes - 'for Kaiser and for Fatherland.' Then ... the big Zeppelin is finally set aflame by a British plane ... [that] dives directly down upon it, crashing it in twain.”

+ The Boring Stuff:

Editorial: Russia is being charged with “dumping” manganese (used in steel production). This matter is difficult to investigate properly considering we don't have diplomatic relations, but we shouldn't block Russian imports until we have definite evidence of dumping. Even if we get this evidence, it's the steel industry and consumers that would suffer from any additional tariff; Russia supplies about half of manganese imports, and local production and is only about 5% of requirements.

NY City has 665,829 motor vehicles, up 31,346 this year.

Market seen mostly professional, little public buying. Public also not seen liquidating on declines due to stronger margin position than last fall. Public not expected to enter market on large scale until business fundamentals show improvement; when this happens, stocks should “move ahead decisively.”

Friday's rout of bears provided “electric spark” needed to revive bull spirits. Fundamentals considered positive for business and market, including easy credit, low inventories, and low brokers' loans; however, “it took considerable fortitude to withstand the pessimism which saturated the speculative community during the first two weeks of August.” Some fear that drought had postponed business revival to spring, but drought scares regularly break out in August; bulls held to positive view and accumulated stocks as they were sold by bears, reducing available supply of stocks and resulting in lower volume and narrower price swings. Friday's action “served dramatic notice that stocks were no longer for sale in sizable quantities on price recessions.” This makes the bear position dangerous.

Commodities mostly down. Cotton down sharply to lowest level since 1919-20 depression; Oct. contract at 11.36 cents. Grains generally lower.

Irving Fisher's wholesale index of 200 commodities for week ended Aug.15 was 83.8 vs. 83.1 previous week.

July retail sales generally down. July sales for 48 chain (low-priced) store systems were $221.8M, down 5.8% from 1929; first 7 months sales were up 1.6%. Sales for 519 department stores were down 9% in July and 5% for first 7 months. Mail order, grocery, and general merchandise store sales also mostly down.

New NY Stock Exchange listings in July were $1.113B vs. $783.8M in June and $944.6M in July 1929; of that total bonds were $300.1M vs. $122.2M and $64.9M; stocks were $812.4M vs. $661.6M and $879.8M. Most of July's total was a $621.2M stock issue for Transamerica Corp. Listings for first 7 months were $6.544B vs. $9.001B in 1929.

US exports of grain and grain products were $246.4M in year ended June 30 vs. $330.9M previous year.

World copper production in July was 143,613 short tons vs. 174,507 in 1929.

International Cotton Congress to be held in July 1931, to examine causes of depression in cotton industry and possible remedies.

Little forced marketing of livestock due to drought seen to date. Receipts of cattle at all public markets in July were down 13% from 1929.

Canadian rail loadings in week ended Aug. 9 were 61,272 cars, down 6.4% from 1929 but up 5.5% from previous week. Year-to-date decline was 11.1%.

GM sales to domestic and foreign dealers in July were 70,716 cars and trucks vs. 87,595 in June and 157,111 in July 1929. Dealer sales for first 7 months were 844,195 vs. 1,361,296 in 1929. Brands include Chevrolet, Pontiac, Olds, Marquette, Oakland, Viking, Buick, La Salle, and Cadillac.

United Aircraft [later became Boeing, United Technologies, and United Airlines] continues to operate profitably in 1930 as most aviation companies are losing money, although sales and profits are far below last year. Net income for 1930 estimated at $2.10/share vs. $4.52 in 1929.