Blast from the Past

Last month, I wrote about my adventures in 1930 primary sources.  I did a lot of 1930s reading for this month's business column, but truthfully, I've been reading old magazines for years, just because I'm kind of obsessed with historical pop culture.  What always surprises me is the optimism of those early depression years--during what may well have been the worst financial crisis in American history, people mostly expect things to get better.  This gives me pause whenever I examine our "green shoots", even though I'm very sure we've got much better fiscal and monetary policy than our ancestors did.

Now you can experience some of the magic of cognitive dissonance yourself, through a blog that simply summarizes the daily newspaper from 1930.   A sample of yesterday's entry:

Economic news and individual company reports:

US merchandise exports in May fell to $322 million, lowest for any month since July 1924. Imports fell to $285M, lowest since August 1924. Attributed to general decline in business and commodity deflation.

Metro-Goldwyn-Mayer production plans for upcoming year include 50 feature films, 60 comedy/novelty shorts, and 104 Hearst Metrotone newsreels.

Ford Motor Company has found it's practical to salvage materials from antiquated cars; currently has 120 men dismantling the old cars at a rate of 375 every 16 hours, plans to expand the operation.

Goldman Sachs continues to hit new record lows, now selling at less than one sixth its 1929 high.

Growers and packers are uniting to try and cope with a large oversupply of cling peaches. Number of cases has increased from 1.5 million in 1910 to almost 15 million in 1928. Similar glut conditions in the raisin grape industry.

Heard on the Street:

"'Things are getting back to normal,' remarked the head of a Broadway house. 'Again the main topic of discussion among our customers is the 18th amendment.'" [Prohibition]

The Boring Stuff

Commerce Department reports a reduction of $561M in net capital exports from the US during 1929. This includes money spent abroad for tourist travel, investments abroad, payments of debt abroad, etc. One major result was an inflow of gold of $307M, or about 3% of total world gold stock. This may be causing problems by reducing money supply in the rest of the world; it would be good to smooth out these major fluctuations in US capital exports.

Many stock buyers are waiting for commodity prices to stop declining. Q2 earnings are also expected to be poor. Therefore we can expect bears to launch another attack on the Dow Jones panic low of 198.69 reached last Nov. 13. Based on the history of previous bear markets, however, it's likely this level will not be substantially broken, if at all. Also further declines are expected to be dull and low volume as is typical of the tail end of bear markets.

Last Friday marked the anniversary of the low from the panic of 1921 when the Dow 20 Industrials hit 64.90 and 20 rails hit 65.52. A couple of months later the greatest bull market in this country's history began.

Actual market bottom:  Dow 42.48 on April 1st, 1932.